Chevron profit jumps with oil, output growth slow

NEW YORK/SAN FRANCISCO Fri Jul 29, 2011 1:36pm EDT

Motorists are shown at gas pumps at a Chevron gasoline station in Burbank, California July 31, 2009. REUTERS/Fred Prouser

Motorists are shown at gas pumps at a Chevron gasoline station in Burbank, California July 31, 2009.

Credit: Reuters/Fred Prouser

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NEW YORK/SAN FRANCISCO (Reuters) - Chevron Corp, the second-largest U.S. oil company, booked a 43 percent jump in quarterly profit, beating estimates as high oil prices and fat refinery margins offset weaker output.

The numbers out on Friday were the latest in a string of huge profits from the industry, which got a boost from the highest oil prices in nearly three years. Exxon Mobil Corp and Royal Dutch Shell Plc also benefited from acquisitions and shifts into new projects.

Chevron's better-than-expected second-quarter performance was largely due to the strength of its U.S. and international refineries, according to Oppenheimer & Co analyst Fadel Gheit.

Still, the oil and gas production business yielded nearly 90 percent of Chevron's earnings. "This is the most leveraged company to oil price in the whole group," Gheit said.

Its profit rose to $7.7 billion, or $3.85 per share, from $5.4 billion, or $2.70 per share, a year earlier. Analysts had expected $3.56 a share, according to Thomson Reuters I/B/E/S. Revenue rose 30 percent to $69 billion.

Shares of Chevron were down 0.7 percent to $104.30 by midday on the New York Stock Exchange amid a broad sell-off.

OIL OUTPUT SLIPS, OUTLOOK TRIMMED

Chevron reported 2.69 million barrels per day (bpd) of oil-equivalent output, compared with 2.75 million a year-ago.

Chevron trimmed its 2011 oil and gas production forecast to 2.76 million bpd due to a slower ramp-up of its Perdido project in the Gulf of Mexico and a pipeline problem in Thailand. Chevron had targeted 2.79 million bpd, or 1 percent growth.

"The full-year production impact of these two items is about 30,000 barrels per day and they are approximately split between the two," said George Kirkland, vice chairman and executive vice president for upstream and gas.

But it stuck to its 2011-2014 average annual production growth target of 1 percent, and 4 percent to 5 percent for 2014-2017.

European benchmark Brent oil prices averaged $117 per barrel in the second quarter, up from $79 in the same quarter in 2010 and $11 higher than the first quarter. Chevron said in April that it switched to Brent from the U.S. benchmark when calculating production-sharing changes.

Higher crude prices mean Chevron must leave more production in the hands of state-owned partners. The new target still assumes oil prices of $79 per barrel, whereas with Brent at $111 per barrel Chevron sees output at 2.73 million bpd.

On Thursday, Exxon reported a 41 percent rise in quarterly profit that missed analysts' forecasts.

Exxon has aggressively pushed into U.S. natural gas, while Chevron has made a more deliberate move with two deals in the Marcellus shale in the past year. Kirkland signaled there would be no more big deals.

"We're very close to putting together what we want in the Marcellus," Kirkland said. "There will be additional additions, small additions there, where it makes sense."

As for Bulgaria, where the San Ramon, California-based company has added 1.1 million acres to its interests in Romania and Poland, he said seismic work would likely begin next year.

In the Gulf of Mexico, while some operators have expressed frustration at the pace of permitting, Kirkland said its near-term drilling program was on track with two more deepwater rigs due to join its three already working there now.

Chevron shares are up 15 percent in 2011, outpacing an 8 percent rise in the Chicago Board Options Exchange oil companies index and a 10 percent rise in Exxon's stock.

(Reporting by Matt Daily in New York and Braden Reddall in San Francisco, editing by Dave Zimmerman, Phil Berlowitz)

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Comments (3)
USAPragmatist wrote:
They need a tax break!

Jul 29, 2011 10:10am EDT  --  Report as abuse
fischer1 wrote:
If that is the case, then why aren’t gas prices coming down? It should be branded as racketeering…

Jul 29, 2011 11:08am EDT  --  Report as abuse
ginchinchili wrote:
We have a contingent of radicals running our country who have determined that it’s more important to subsidize this company, and its enormous profits, than to than to raise the debt ceiling and avoid default. Our nation is being brought down by fools. And there are so many stupid Americans that follow these tea party radicals just because they’re not smart enough to see the entire picture. They haven’t figured out yet that the debt “crises” is a fabricated crisis, just like the Iraq “crisis” was fabricated. The Republicans might as well be saying, “if we raise the debt ceiling we’ll wake up to a mushroom cloud,” and the Republican supporters will buy it. It really is that easy. “Wow, I sure don’t want to be waking up to a mushroom cloud. We’d better stop those Democrats from raising the debt ceiling or we’ll be facing “nucular” annilation.”

So, their stupidity has dragged us into an unnecessary war that cost us over 4,500 American lives and about $4 trillion dollars. Now their stupidity is threatening to drag us back into a recession and possibly a depression, along with ruining the hard earned full faith and credit of the country they profess to love. Folks it doesn’t get any crazier than this.

But it begs the question, what’s next? If they will force our country into these two unnecessary and totally avoidable catastrophies, what else are the capable of doing? What other warnings do the rest of us need before we do something about their over-reaching, their trampling on our democracy? We have no more excuses. Our complacency is now just as much at fault as the radicals determination to destroy our country (in the name of saving it).

Both of these detrimental acts that the right has dragged us into are both big, big enough to make it clear that we can expect more on the way, and worse. What’s going to happen after the next terrorist attack? How much of the Constitution will they suspend in order to “save America” like they claimed during the run-up to the Iraq War or our current debt fiasco? Could they be stopped? I doubt it? If we can’t stop them now, what’s to prevent them from suspending the Constitution? What will protect American Muslims from being picked up and put in “camps” in the name of protecting America? Would that really be that much more radical than prevaricating our nation into a major war that wasn’t necessary, where every excuse we were given was proven to be a lie? Would rounding us Muslims, and anyone else they might feel the need to round up, like Muslim sympathizers, really be that much more extreme than forcing our country into an unnecessary recession, and possible depression, just to keep from making billionaires pay a little more in taxes at a time when the nation needs it?

I really wish all Americans would be required to study the rise of the Third Reich, though I doubt that that would do any good. Those on the right are not smart enough to put two and two together. They would see the Nazis as being analogous to America’s “liberals”, defined as anyone who doesn’t think like them.

Jul 29, 2011 1:47pm EDT  --  Report as abuse
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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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