Chevron: $500 million in 2016 losses, but “remarkable progress”

(Photo by Joe Raedle/Getty Images)

Chevron Corp., the first major U.S. oil company to report 2016 year-end earnings, posted losses of almost $500 million, its first annual loss since at least 1980.

But the pain appears to be over: After $588 million in losses in the fourth quarter of 2015, and $2.2 billion in losses in the first two quarters of 2016, the company recorded profits of $1.3 billion in the third quarter of 2016 and $415 million in the fourth.

Over the full year, Chevron lost $497 million or 27 cents per share compared with earnings of $4.6 billion or $2.45 per share in 2015.

“Our 2016 earnings reflect the low oil and gas prices we saw during the year,” Chairman and chief executive John Watson said in a statement. “We responded aggressively to those conditions, cutting capital and operating expenses by $14 billion.”

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The company chopped exploration expenses to $191 million in the fourth quarter, a drop of $1.2 billion or nearly 86 percent. The exploration budget fell to $1 billion on the year, a drop of $2.3 billion or almost 70 percent. In total, Chevron slashed capital and exploration spending to $22 billion in 2016, a cut of about $11 billion.

“We’ve made remarkable progress in bringing our costs down,” Watson said on the morning’s call with analysts. He expected to continue to cut spending if oil prices stay under $55 per barrel.

Fourth quarter 2016 revenues rose to $32.5 billion, up more than $2 billion or about 8 percent over the year prior.

And this year’s earnings should improve, Watson said, via tight spending, cost control and production growth. “Look, we expect to ramp up this year,” Watson said. “We just want to do it efficiently.”

U.S. crude was trading at $53.10 at midday, down about 60 cents on the day. Chevron shares had fallen by about $2.50, or 2 percent, to $114.