Business

Chevron will slash as many as 7,000 jobs due to plunge in profits

SAN RAMON, Calif. -- Chevron will eliminate up to 7,000 jobs, the company said Friday, a grim disclosure that accompanied its third-quarter financial results that were marred by a plunge in profits fueled by weak prices for crude oil, although refinery and retailing profits surged.

For the quarter that ended in September, Chevron earned $2.04 billion on revenue of $34.32 billion.

Compared to the year-ago third quarter, profits plunged 63.6 percent and revenue tumbled 37.2 percent, San Ramon-based Chevron reported.

"We anticipate reducing our employee workforce by 6,000 to 7,000," John Watson, Chevron's chief executive officer, said in a statement.

Chevron didn't disclose the anticipated locations for the job cuts over the next two years. In July, Chevron announced it would eliminate 1,500 jobs.

A spokesman for the Pascagoula Refinery, however, said the layoffs would not affect the Mississippi plant.

"While the layoffs referenced do not involve the employees of the Pascagoula refinery, we are sensitive to the current market environment and its impact on our company as a whole," Alan Sudduth, spokesman for Chevron in Mississippi.

So far in 2015, Chevron has eliminated 600 jobs in the Bay Area, all in the East Bay, according to official notices filed with state labor officials. That includes August job cuts of 430 in San Ramon and 70 in Richmond the government filings show.

"We are working on reducing costs throughout the company," Watson told analysts during a conference call Friday to discuss the financial results.

The job cuts are being driven by Chevron's decision to slash capital expenditures and spending on exploration over the next few years.

Capital and exploration spending for 2016 will range from $25 billion to $28 billion, which would be roughly 25 percent below the budget for 2015, Chevron said.

"We expect further reductions in spending for 2017 and 2018, to the $20 to $24 billion range, depending on business conditions at the time," Watson said.

Upstream operations, consisting of exploration, development and production, produced earnings of $59 million in the third quarter, down 98.7 percent from year-ago profits $4.65 billion.

Downstream operations, consisting primarily of refinery and retailing operations, totaled $2.21 billion, up 59.4 percent from the year-ago third quarter.

Chevron's U.S. downtown operations achieved a profit of $1.25 billion in the third quarter, up 54.4 percent from a year ago. Those operations include the company's refineries in Richmond and El Segundo.

The increase was due, in part, to higher profits on sales of refined products, such as gasoline.

The earnings results topped Wall Street's expectations. Per-share profits were $1.09 and analysts had guessed the earnings would equate to 79 cents a share.

Chevron's shares rose less than 1 percent in trading during the early hours of the session.

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