Chevron sees "sharply lower" Q4 refining earnings

SAN FRANCISCO (Reuters) - Chevron Corp (CVX.N) warned on Monday that fourth-quarter results would be "sharply lower" than the previous quarter due to a further deterioration in refining margins and its shares slipped about 1 percent.

"Refining indicator margins worldwide for the full fourth quarter declined to the lowest levels of the year," said the second-largest U.S. oil company, adding its exploration and production results would be in line with a quarter before.

Refiners' margins have been squeezed globally as rising prices for their input, oil, are not matched by improved demand for what they produce due to persistent economic sluggishness.

Fourth-quarter refining margins dropped by more than $4 on the U.S. West Coast to $11.83 per barrel, after holding up well for much of the year. Refining margins on the Gulf Coast fell by nearly $1 a barrel to $11.56, while margins in Singapore were hit even harder, down $2 at $2.46 per barrel.

Output from Chevron's refineries at home and abroad was down on the previous quarter, while its chemicals arm is expected to see earnings drop as well, the company said.

The downstream impact will cloud over a quarter that might have been a fresh start for the company under its new CEO, John Watson. Like rivals Exxon Mobil Corp (XOM.N) and BP Plc (BP.L), Chevron will report against comparable numbers that are no longer inflated by a mid-2008 oil surge above $140 a barrel.

Benchmark U.S. crude oil prices averaged $76 per barrel in the fourth quarter of 2009, up from $68 in the third and $59 in the same quarter a year before.

PRODUCTION KEEPS GROWING

Chevron's U.S. oil-equivalent output in October and November was up 2 percent to 759,000 barrels per day from 745,000 the previous quarter, while international output was 3 percent higher in the first two months, at 2.014 million bpd.

The total of 2.77 million bpd lent weight to Chevron's expectation in late October that it would exceed its overall 2009 output forecast of 2.66 million bpd.

Chevron shares fell 0.9 percent to $80.15 in after-hours trading, after closing 1.8 percent higher at $80.88 on Monday.

The stock got a lift on Monday after Citigroup increased its long-term oil price estimate and upgraded its view of Chevron and BP, among other big oil companies.

Chevron's stock, after rising just 4 percent in 2009, had already jumped 5 percent to start the current year, helped by a similar rise in the Chicago Board Options Exchange index of oil companies .OIX, boosted by stronger crude oil prices.

Chevron reports fourth-quarter results on January 29. Prior to Monday's update, analysts had expected a profit of $3.2 billion, or $1.77 per share, on revenue of $43.5 billion, according to the averages on Thomson Reuters I/B/E/S.

That is up a bit from $1.72 per share in the previous quarter, but down from $4.3 billion in profit on $45 billion in revenue in the fourth quarter of 2008.

(Reporting by Braden Reddall; editing by Gunna Dickson and Andre Grenon)