Chevron sees downstream loss in second quarter

By Michael Erman

NEW YORK (Reuters) - Chevron Corp (CVX.N) expects its refining and marketing operations to post a loss in the second quarter, somewhat restraining earnings that will be mostly driven by record oil and natural gas prices, the second-largest U.S. oil company said on Thursday.

The company said its refining and marketing results are expected to drop "well in excess" of $500 million in the second quarter, from a profit of about $252 million in the first quarter.

It said those operations were hurt by planned and unplanned maintenance at its refineries, higher operating expenses and the accounting impact of rapidly rising crude oil prices.

Chevron expects its earnings from exploration and production to be higher than the $5.13 billion it posted in the first quarter as oil prices have continued their steady rise.

Analysts, on average, expect Chevron's overall earnings per share to rise over 40 percent from first quarter levels.

The San Ramon, Calif., company said the price it received for a barrel of oil in April and May rose more than 20 percent from first quarter levels to an average of $109.19 per barrel. Its average international price for liquid hydrocarbons was $106.14 per barrel in those months, up from $86.13 in the first quarter.

Its production in the first two months in the quarter fell about 2 percent from first quarter levels to an average of 2.54 million barrels of oil equivalent per day. It produced about 2.63 million barrels of oil equivalent per day in the year earlier quarter.

Over the past two quarters, weak refining profits have kept big, integrated oil companies from realizing as much upside from the record oil prices as possible.

The company said its loss from refining and marketing would come even as benchmark refining margins have improved.

It said input volumes at its U.S. refineries fell to 772,000 barrels per day in April and May from 894,000 barrels per day in the first quarter. Input volumes at its international refineries fell about 1 percent to 955,000 barrels per day in the first two months of the quarter.

Chevron also expects its after-tax charges from corporate and other activities to be between $250 million and $300 million for environmental remediation and other corporate items.

Chevron shares closed up $2.34, or 2.5 percent, at $96.25 on the New York Stock Exchange on Thursday.

(Reporting by Michael Erman; Editing by Andre Grenon)