Chevron became the latest player in the oil industry to report a loss in the fourth quarter Friday, as the red ink from the oil bust spreads to bigger companies.
Chevron, the second-largest US oil company, announced a $588 million loss for the quarter ending December 31. Wall Street analysts had not expected a quarterly loss, Chevron's first since 2002.
Chevron's move into the red comes on the heels of fourth-quarter losses over the last week or so from large oil services companies, with Baker Hughes and Schlumberger both losing about $1 billion.
The increasingly grim results reflect the pain from plunging oil prices that has caused oil companies to cut capital budgets, prompting a chain reaction of belt-tightening among the service companies that drill wells and provide pumping tools.
"It's ugly out there," said Blake Hutchinson, an oil services analyst at energy investment bank Howard Weil in Houston, Texas.
Hutchinson said the outlook in oil services has worsened significantly since the previous round of earnings reports in October, prompting him to slash earnings estimates by as much as 50 percent in some cases.
The oil industry believes there will be a recovery, but has no prognosis on when, he said.
"You're just taking millions of barrels out of the market right now," Hutchinson said. "Every day we spend down at this level is another three days we're going to spend at $100 oil."
On Thursday, Caterpillar, which sells industrial equipment to the oil and mining industries, reported a fourth-quarter loss of $87 million behind a 22.6 percent drop in revenues to $11 billion.
With no sign of a turnaround in either the oil or mining markets, Caterpillar has cut nine facilities and about 5,000 jobs since September.
- More cuts ahead? -
Chevron's quarterly loss compared with net income of $3.5 billion in the year-ago period, reflecting a bruising stretch for its exploration and production business, which lost $1.4 billion in the quarter, due to a $1.95 billion loss in the United States.
In the US, Chevron garnered just $35 a barrel for oil sold, compared with $66 a barrel a year ago. Natural gas results were also hit hard by a commodity-price slump, with prices falling from $3.34 per thousand cubic feet to $1.54 per thousand cubic feet.
Chevron last year announced job cuts of as much as 8,500 and accelerated reductions to its capital budget. In December, it announced a 2016 capital budget of $26.6 billion, down from $34 billion in 2015 and $40.3 billion in 2014.
On Friday, the oil giant hinted at more belt-tightening ahead.
"Our 2015 earnings were down significantly from the previous year, reflecting a nearly 50 percent year-on-year decline in crude oil price," said Chevron chief executive John Watson in a statement.
"We're taking significant action to improve earnings and cash flow in this low-price environment. Operating expenses and capital spending were reduced $9 billion in 2015 from 2014, and I expect similarly large reductions again in 2016."
Chevron shares fell 2.3 percent to $83.92 in late-morning trade.