By Ernest Scheyder
(Reuters) - Second-quarter profit at oil producer Chevron Corp (N:CVX) tumbled 90 percent, missing analysts' expectations, amid weakness in oil prices
Chief Executive John Watson bluntly said the results were "weak" and that he was working to slash costs by renegotiating supply contracts. Earlier this week, he laid off 2 percent of the company's staff.
"Multiple efforts to improve future earnings and cash flows are underway," Watson said in a statement on Friday.
Chevron earned a net income of $571 million, or 30 cents a share, compared with $5.67 billion, or $2.98 per share, a year earlier.
Excluding one-time items, Chevron earned 97 cents a share. By that measure, analysts expected earnings of $1.16 per share, according to Thomson Reuters I/B/E/S.
Shares fell 2 percent to $91.25 in premarket trading Friday.
Chevron would have posted a loss had it not been for its downstream unit, which makes gasoline, lubricants and other refined products, where profit quadrupled to $2.96 billion.
Refining units tend to be far more profitable when oil prices are low, a key advantage for Chevron and other large energy companies as an internal hedge for times when core operations, such as oil production, is weighed down by weak prices.
Chevron's upstream unit, responsible for the company's oil and natural gas output, lost $2.22 billion, after earning more than $5 billion in the same quarter last year.
In all, production rose 2 percent to 2.6 million barrels of oil equivalent per day (boe/d), largely due to Chevron's Permian shale operations in Texas and output from Bangladesh.