Chevron posts record earnings; loss from refining
NEW YORK (Reuters) - Chevron Corp (CVX.N) 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.
U.S. oil prices averaged slightly less than $125 a barrel in the quarter, nearly double prices from a year earlier. But gasoline prices only rose 25 percent during that same period, resulting in weak profit margins for the fuel.
Chevron, the second largest U.S. oil company, said net income rose to $5.98 billion, or $2.90 a share, from $5.38 billion, or $2.52 a share, last year.
Analysts, on average, expected the company to earn around $3.02 a share, according to Reuters Estimates.
Exxon Mobil Corp (XOM.N), the top U.S. oil company, posted the highest-ever quarterly profit by a U.S. company on Thursday, bringing in nearly $11.7 billion, but still disappointed investors due to weak production.
Sales in the quarter jumped 49 percent to $80.96 billion.
Income from the company's exploration and production business nearly doubled to $7.25 billion.
The company'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 productions to host countries as oil prices rise.
The company posted a $734 million loss at its downstream refining and marketing business, versus a profit of $1.3 billion a year earlier.
The company said weak profit margins as well as planned refinery maintenance in the United States hurt results at that unit.
"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 around $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.
Earnings from the company's chemicals unit dropped more than 60 percent to $41 million.
Chevron shares rose 25 cents at $84.81 in morning trading on the New York Stock Exchange on Friday. As of Thursday's close, the stock was down about 9.4 percent this year, underperforming the Chicago Board Options Exchange's oil index .OIX>, off about 7.8 percent over the same period.
(Reporting by Michael Erman, editing by Jeffrey Benkoe and Derek Caney and Carol Bishopric)
