Chevron, Statoil, Total join oil earnings boom

NEW YORK (Reuters) - Chevron Corp said on Friday record oil prices drove second-quarter earnings up 11 percent to its highest-ever profit, but weak margins from gasoline production led to a big loss at its refining operations.

Chevron, the second-largest U.S. oil company, joined Norway's StatoilHydro ASA and France's Total SA in posting huge earnings due to soaring crude prices.

U.S. oil prices averaged slightly less than $125 a barrel in the quarter, nearly double year-earlier levels. But gasoline prices only rose 25 percent in that same period, resulting in weak profit margins for refining and marketing operations.

This latest round of profits ends an earnings season for the major oil companies that was notable for the magnitude of the earnings and generally weak output. The huge hauls also made them targets for environmentalists and politicians, some of whom called for windfall taxes on oil industry profits.

Crude prices hit as high as $147 a barrel last month, but since then have dropped precipitously, losing about 15 percent of their value in just over two weeks.

Argus Petroleum analyst Phil Weiss said if crude continues to drop, oil companies could push through fatter margins at their refining businesses.

Still, he noted exploration and production is the core of their businesses, and a pull-back could mean lower earnings sequentially.

"Production is where these companies need to focus," Weiss said, noting output was also weak at Exxon Mobil Corp, the top U.S. oil company, and Royal Dutch Shell Plc, the world's second-largest non-government-controlled oil company.

"The industry as a whole is making lots of money and generating lots of cash flow," he said. "None of them are in danger of seeing production dry up, but you start to worry -- are they really going to take all this cash and just buy back stock?"

CHEVRON HAULS IN NEARLY $6 BLN

Chevron said net income rose to $5.98 billion, or $2.60 a share, from $5.38 billion, or $2.52 a share, last year.

The company posted a $734 million loss at its downstream refining and marketing business -- a more than $2 billion swing from its year-earlier profit as weak profit margins and U.S. refinery maintenance hurt results.

"Clearly 3 percent lower (gasoline) demand is going to have an effect on downstream numbers at least until we see a real meaningful correction in the feedstock costs," said Lewis Ropp, who helps manage about $60 billion at Barrow, Hanley, Mewhinney & Strauss.

Still, Ropp said Chevron's profit was impressive due to the high oil and natural gas prices.

"The commodity price just overwhelms any weakness in any other areas," he said.

Chevron's production fell about 3 percent to 2.54 million barrels of oil equivalent per day. Chevron said production rose slightly, excluding the effect of contracts that give a higher share of production to host countries as oil prices rise.

Exxon Mobil posted the highest-ever quarterly profit by a U.S. company on Thursday, bringing in nearly $11.7 billion, but it still disappointed investors due to weak production.

RISING OIL PRICES LIFT ALL OIL PRODUCERS

Total said second-quarter net income surged 39 percent to 4.7 billion euros ($7.3 billion) and beat analysts' estimates, thanks to high oil prices and a small increase in production as new fields came onstream.

The start-up of a gas field in the UK's North Sea and an offshore oil field off the Republic of Congo helped lift Total's output by 1 percent to 2.353 million barrels of oil equivalent per day.

StatoilHydro, the Nordic region's biggest company, reported record second-quarter profit on Friday but missed forecasts in adjusted terms, sending its stock lower. Its quarterly net income rose 36 percent to 18.92 billion crowns ($3.7 billion).

Second-quarter production met analysts' average expectations, rising to 1.71 million barrels of oil equivalent per day from 1.67 million a year ago.

The company also said it would not make any new investments in Iran, closing off a possible new growth area due to pressure from the United States to isolate the Islamic republic over its nuclear ambitions.

Chevron shares fell 25 cents to $84.31 on the New York Stock Exchange on Friday. Shares in Norway's majority state-owned StatoilHydro dropped 6.7 percent to 157.50 crowns. Total shares fell 1.2 percent to 48.79 euros.

(Editing by Jeffrey Benkoe and Braden Reddall)