Chevron Corporation reported a loss of $8.3 billion for the second-quarter 2020, the worst quarterly decline in a generation, and warned: "COVID-19 significantly reduced demand for our products and lowered commodity prices."
Chevron lost $1.59 per share on an adjusted basis while recording revenues around $13.49 billion. In the same quarter last year, the oil giant earned $2.27 per share on $36.32 billion.
The earnings bloodbath was mostly due to a collapse in demand for the company's energy products and a 60% YoY plunge in its average price per barrel of oil and natural gas liquids.
The quarterly loss was also due to a massive write-down of $1.8 billion in energy assets. The company fully impaired its $2.6 billion Venezuela operations from its books following U.S. sanctions.
Chevron shares slid 3% on the earnings announcement.
"The past few months have presented unique challenges," said Michael Wirth, Chevron CEO, in a statement.
"The economic impact of the response to COVID-19 significantly reduced demand for our products and lower commodity prices. Given the uncertainties associated with economic recovery and ample oil and gas supplies, we made a downward revision to our commodity price outlook, which resulted in asset impairments and other charges," said Wirth.
Chevron warned, "demand and commodity prices have shown signs of recovery, they are not back to pre-pandemic levels, and financial results may continue to be depressed into the third quarter of 2020."
Despite the considerable loss, Wirth claimed the company would "protect the dividend, invest for long term value, and maintain a strong balance sheet."
But, it is hard to believe Chevron can justify maintaining its dividend at such a high cost with the economy now reversing and demand for energy products likely to falter in the back half of the year.