WILLISTON, N.D. (Reuters) - Chevron Corp (CVX.N), the second-largest U.S. oil producer, reported a higher-than-expected quarterly profit on Friday as sales of chemicals, lubricants and other refined products helped offset plunging crude prices CLc1.
That drop in crude prices, about 60 percent since June, has eroded margins across the oil industry and forced scores of companies to slash spending budgets. Royal Dutch Shell (RDSa.L), a so-called international oil company like Chevron, said on Thursday it would cut its spending over the next three years by $15 billion.
Taking similar steps, Chevron executives slashed the company’s 2015 capital budget by 13 percent to $35 billion.
“We enter 2015 with the financial strength to meet the challenges of a volatile crude price environment and with significant efforts under way to manage to a lower cost structure,” Chief Executive Officer John Watson said in a statement.
Indeed, the strength of the company’s downstream operation, which sells those refined products, proved to be the main bright spot for Chevron this quarter, with profit in the division spiking nearly fourfold.
Earnings in Chevron’s upstream unit, which finds and produces oil and gas, dropped 45 percent.
In total, Chevron posted fourth-quarter net income of $3.47 billion, or $1.85 per share, compared with $4.93 billion, or $2.57 per share, a year earlier.
Analysts on average had expected earnings of $1.63 per share, according to Thomson Reuters I/B/E/S.
Foreign currency conversion charges dented earnings by $432 million, Chevron said.
Production between the quarters held steady at 2.58 million barrels of oil equivalent per day.
Shares of the San Ramon, California-based company fell about 1 percent to $102 in premarket trading on Friday.
Reporting by Ernest Scheyder; Editing by Franklin Paul and Lisa Von Ahn