Chevron earnings slump in June half

Softer oil and gas prices punched a $US7.5 billion ($A8.9 billion) hole in half year earnings for US energy giant and Gorgon operator Chevron.

Chevron overnight reported that June half earnings had slumped to $US3.6 billion, down from a whopping $US11.1 billion in the same half of 2008, when oil prices were on their way up to highs around $US150 per barrel.

The slump in earnings cut June quarter earnings to $US1.75 billion, down from $6 billion in the June 2008 quarter.

Despite the big fall, Chevron said it was encouraged by a steady decline in key operating costs, labour and materials from late 2008, which had offset the "precipitous" fall in the crude oil price since mid-last year.

This decline in costs was expected to continue throughout 2009, provided oil prices did not significantly rebound, the company said.

Chevron said it was actively managing its development schedules and contracting and procurement activities to capture the greatest benefit from the decline in costs.

The decline in key input costs comes at a perfect time for Chevron, as it prepares to make its final investment decision on the $50 billion Gorgon project at Barrow Island and commences Front End Engineering and Design work on its $25 billion-plus Wheatstone project at Onslow.

Gorgon, which is 50 per cent owned by Chevron, is expected to win final approval within six weeks, while Chevron approved FEED for its wholly-owned Wheatstone field was approved late last week in a bid to start production in 2016.