Chevron, the US’s second-largest oil company, reported first-quarter earnings of $3.6bn, more than a third higher than the year before and beating analysts’ expectations, but announced further cuts to spending after the collapse of global oil demand.

While the company bucked a trend of deep losses in a sector hit by the plunge in crude prices, it said it would reduce capital spending to as low as $14bn this year, a further 12.5 per cent drop after sharp cuts to the capital spending programme announced last month.

Total revenue was down to $31.5bn for the quarter, a drop of about 11 per cent, but still marginally above analysts’ expectations. First-quarter diluted earnings per share of $1.93 were almost three times greater than the consensus forecast from analysts and well above the $1.39 per share from a year earlier. Cash flow from operations of $4.7bn also exceeded forecasts.

Mike Wirth, Chevron’s chief executive, said the deeper capital spending cuts were consistent with the company’s “longstanding priorities”, including protecting its dividend. Chevron held its dividend for the quarter at $1.29 per share, following an 8.4 per cent increase in payout during the previous quarter.

Royal Dutch Shell on Thursday slashed its dividend in a move widely seen as a watershed moment for the oil industry and its supermajors. 

Mr Wirth said the first-quarter performance was driven by strong downstream margins and increased Permian production. Asset sales in the Philippines and favourable tax items totalling $440m boosted earnings in the period, as did a $514m gain from foreign-currency effects.

While international upstream earnings rose last year thanks to the foreign-currency effects, earnings in the US upstream business fell from about $750m in the first quarter of 2019 to $241m this year, mainly due to lower oil and gas prices. 

Chevron’s average crude oil sales price in the first quarter was $37 a barrel compared with $48 a year earlier. Oil prices have fallen 70 per cent since the beginning of January, although April’s steep decline will become visible only in producers’ second-quarter results.

The company has cautioned that financial results in future periods “are expected to be depressed as long as current market conditions persist”.

In late March, Chevron said it was cutting capital spending by $4bn, or 20 per cent, to $16bn, with half of the cuts to fall on the Permian shale operations. The latest reductions announced on Friday will take total capital spending to a new 2020 low of $14bn.

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