Chevron Corp., the No. 2 U.S. oil company, said that its second-quarter profit fell 71% and that it put its entire land-based natural gas drilling operation on hold, citing dismal demand.
"By the end of the year, we will not have a single gas land-rig running," George Kirkland, a Chevron executive vice president, said in a conference call.
Chevron, based in San Ramon, Calif., and other oil companies are taking a hard look at their finances after a woeful six months in which slumping energy demand slashed profits for every international integrated crude producer.
Royal Dutch Shell said it would cut jobs and capital spending. Such a decision would have raised concerns several months ago about a price spike should the global economy rebound. In the current environment, cutting capital spending may be inevitable.
Chevron said net income was $1.75 billion, or 87 cents a share, for the three months that ended June 30. That compared with $5.98 billion, or $2.90, in the same period last year.
The company said its net income suffered from a weak U.S. dollar, resulting in $453 million in reduced earnings. That compares with an income benefit of $126 million in the same period last year.
Analysts surveyed by Thomson Reuters expected earnings of 95 cents a share.
Revenue fell 51% to $40 billion.
Chevron's production numbers stood out when compared with those of other major oil companies reporting earnings this week.
Chevron boosted net oil-equivalent production by 5%. On Thursday, Royal Dutch Shell, Europe's biggest oil company, said its production declined 6%. Exxon Mobil Corp., the world's biggest publicly traded oil company, said production fell 3%.
Shares of Chevron rose $1.77, or 2.6%, to $69.47 on Friday.