Chevron sees third quarter sharply down
NEW YORK (Reuters) - Chevron Corp (CVX.N) said on Tuesday it expects its third-quarter net income to be significantly below the $5.4 billion it earned in the second quarter due to a sharp drop in its refining margins.
The second largest U.S. oil and gas company said in an interim report that one-time items also should hurt third-quarter earnings.
Refining margins are expected to be a drag on third-quarter earnings for integrated oil and gas producers as well as independent refiners as refining margins dropped by more than half from second quarter levels in some U.S. regions.
Chevron said international benchmark margins also were considerably lower.
Moreover, the amount of oil Chevron processed at its U.S. refineries fell about 8 percent to 812,000 barrels per day, mostly due to planned and unplanned shutdowns at its El Segundo Calif., and Pascagoula, Miss., refineries.
A crude unit at the Pascagoula refinery has been out since an August 16 fire.
The company processed 1.04 million barrels of oil per day at its international refineries, up from 942,000 barrels in the second quarter.
Chevron's worldwide production for the first two months of the quarter fell about 1 percent from the second quarter to 2.6 million barrels of oil equivalent per day.
The company's crude oil prices during the period rose nearly 15 percent to $67.44 a barrel from second-quarter levels. Its international liquids prices rose over 9 percent to $65.26 a barrel.
Still, the company said it expects earnings at its exploration and production unit would be lower than the second quarter, as higher oil prices would be more than offset by lower U.S. natural gas prices, declining production and one-time charges.
U.S. natural gas prices fell 12 percent to $5.75 per thousand cubic feet (mcf) during July and August. International gas prices rose to $3.75 per mcf from $3.64 per mcf in the second quarter.
Chevron expects to post $700 million in charges during the quarter, offset slightly by a $260 million gain from the sale of marketing assets in Belgium, the Netherlands and Luxembourg.
Analysts were expecting the company to post third-quarter earnings of around $2.17 a share, according to Reuters Estimates. It had posted second-quarter earnings, excluding one-time items, of $2.37 a share.
Chevron's $5.4 billion second-quarter result included a $680 million one-time gain as well as losses of $160 million from debt reduction.
Shares of Chevron fell 2.9 percent to $90.12 in after-the-bell trading on Tuesday afternoon.
ConocoPhillips (COP.N), the third largest U.S. oil company, said last week that profit from its refineries would be significantly lower, but gains from asset sales would bolster its profits.
Marathon Oil Corp (MRO.N) -- a smaller competitor -- also issued an interim report on Tuesday. It said it expected its production to rise nearly 10 percent in the quarter, but also sees its refining and wholesale margins to be about half last year's level.
(Reporting by Michael Erman)
