Chevron Corp. (NYSE: CVX) reported its second-quarter financial results before the markets opened Friday. The oil giant had $0.30 in earnings per share (EPS) on $40.36 billion in revenue compared to Thomson Reuters consensus estimates of $1.16 in EPS on $30.91 billion in revenue. The same quarter from the previous year had $2.98 in EPS on $57.94 billion in revenue.

U.S. upstream operations incurred a loss of $1.04 billion in second quarter 2015 compared to earnings of $1.05 billion from a year earlier. At the same time, International upstream operations incurred a loss of $1.18 billion in second quarter 2015 compared to earnings of $4.21 billion. The decrease was due to sharply lower crude oil realizations and higher depreciation expenses, primarily reflecting impairments.

In terms of the downstream business, U.S. downstream operations earned $731 million in second quarter 2015 compared with earnings of $517 million a year earlier. International downstream operations earned $2.23 billion in second quarter compared with $204 million from the previous year. The increase was due to higher margins on refined product sales, and a $1.6 billion gain from the sale of the company’s interest in Caltex Australia Limited.

The board of directors announced a quarterly dividend of $1.07 per share payable September 10 to shareholders of record on August 19. On an annualized basis this would put the dividend at $4.28 and the yield around 4.7%.

Consensus estimates call for EPS of $4.09 for 2015 and an EPS of $5.91 in 2016. However, looking at the expected earnings the dividend exceeds the earnings (at least in 2015), meaning that in order to pay this dividend the company will have to dig into its cash balance or take out loans. At the end of the second quarter the company had $12.52 billion in cash, cash equivalents and marketable securities.

John Watson, Chairman and CEO of Chevron, commented on earnings:

Second quarter financial results were weak, reflecting a crude price decline of nearly 50 percent from a year ago. Our Upstream businesses were particularly hard hit, as lower prices reduced revenues and triggered impairments and other charges. Downstream operations continued to deliver strong financial performance, reflecting both high reliability and improved margins.

He continued:

Multiple efforts to improve future earnings and cash flows are underway. We’re getting our cost structure down, through renegotiations across the supply chain and by sizing our contractor and employee workforce to reflect lower activity levels going forward. We’re actively managing to a smaller capital program, as projects currently under construction come online and as potential new projects are paced and re-bid. In addition, our 4-year divestment program is ahead of pace.

Shares of Chevron closed Thursday down 0.2% at $93.03. Following the release of the earnings report, shares were down 1.8% at $91.35 in early trading indications. The stock has a consensus analyst price target of $109.61 and a 52-week trading range of $88.74 to $129.53.

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