Chevron posted a loss for the second quarter as it reported $2.8 billion in impairments, surprising the Street.
The stock was 1.8 percent lower in premarket trading (See what shares are doing now. )
The San Ramon, California-based company recorded impairments and other charges on assets in its upstream exploration and production business that were expected to produce revenues insufficient to cover costs, Chairman and CEO John Watson said in a statement.
Chevron posted a loss of $1.5 billion, or 78 cents per share, in the second quarter, compared with a profit of $571 million, or 30 cents per share, in the year-earlier period.
Excluding the charges, adjusted earnings per share came in at 35 cents. Analysts polled by Thomson Reuters had expected earnings per share of 32 cents.
Revenues were $29.3 billion, down about 27 percent from $40.4 billion in the second quarter of 2015.
Losses in the company's U.S. and international upstream operations widened from the year-earlier period.
"The second quarter results reflected lower oil prices and our ongoing adjustment to a lower oil price world," said Watson.
Downstream refining earnings also fell on weak refining margins.
Refiners have seen their profit margins squeezed this year as prices rise for crude oil, the feedstock for gasoline. U.S. crude prices rebounded about 85 percent from the lows of January through the end of the second quarter.
Earlier in the oil price downturn, integrated oil companies' refining operations offset battered production segments.
The amount of gasoline sitting in storage in the United States is about 15 percent above the five-year average, RBC Capital Markets said in a note ahead of earnings. As such, the firm expects weak profit margins from refining crude oil into gasoline to persist at least through the spring of 2017.
Chevron left its quarterly dividend unchanged at $1.07 ahead of earnings on Wednesday. The company hasn't raised its dividend since the second quarter of 2014.
The company's cash flow from operations in the first half of 2016 sank more than 60 percent year over year to $3.7 billion.
Earlier this month, a group of integrated oil companies led by Chevron announced it would invest $36.8 billion in a project that will boost production at Kazakhstan's Tengiz field. The investment decision is one of the largest since the beginning of the oil price downturn.