Certain sectors of the economy have held on, or even thrived, during the coronavirus pandemic. Energy is not one of them.
The latest piece of evidence for this is Chevron's (CVX 0.80%) fourth quarter of 2020 earnings, which were released on Friday. In the quarter, the oil and gas giant suffered a decline of almost 31% in total revenue and other income, to $25.25 billion. On a non-GAAP (adjusted) basis, the company posted a net loss of $11 million ($0.01 per share), against the nearly $2.8 billion profit of Q4 2019.
Analysts tracking the stock had expected a profit; collectively, they were forecasting adjusted per-share net income of $0.09. They also believed the company would earn more on the top line, as their average revenue estimate was $27.6 billion.
Like other oil and gas companies, Chevron has found it difficult to adjust to the considerable economic challenges posed by the coronavirus pandemic. The outbreak has weakened demand for the industry's products, and Chevron and its peers are in batten-down-the-hatches mode. They are slashing expenditures in an effort to ride out the current conditions until the pandemic subsides and demand starts to at least approach previous levels.
"When market conditions deteriorated, we swiftly reduced capital spending by 35% from 2019 and also reduced operating costs, demonstrating our commitment to capital and cost discipline," CEO Mike Wirth said. All told, outside of severance costs, operating expenses were cut by around $1.4 billion from the previous year's level.