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UPDATE 3-Chevron sees sharply lower 1st-qtr profit

 * Chevron sees lower Q1 earnings
 * Chevron shares down 2 pct, Exxon down 0.5 pct
 (Adds more financial details paragraphs 7-8, updates shares)
 SAN FRANCISCO, April 9 (Reuters) - Chevron Corp CVX.N
warned that first-quarter earnings would be sharply lower than
the previous quarter as lower oil and gas prices took a toll
and refined-product margins shrank significantly.
 The second-largest U.S. oil company said on Thursday the
earnings would include $100 million in write-offs associated
with exploration, adding that the fourth quarter included a
$650 million foreign-exchange benefit as the dollar weakened as
well as $600 million from an asset-exchange transaction.
 Chevron shares fell 2 percent to $67.78 after-hours, while
shares of larger rival Exxon Mobil Corp XOM.N handed back
some of their 1.3 percent regular-trade gain.
 Chevron said U.S. oil-equivalent production in January and
February was 660,000 barrels per day (bpd), up from 619,000 in
the fourth quarter, and international output was 1.985 million
bpd, higher than both the previous quarter and a year before.
 But refining margins were down nearly across the board from
a year ago, hit particularly hard last month by a recovery in
crude oil prices, which increases input costs. Margins had
improved in Northwest Europe from near break-even a year
before, but were down from the fourth quarter.
 Benchmark West Texas Intermediate crude prices CLc1
averaged about $43 a barrel in the first quarter, 56 percent
lower than in the same quarter last year. The quarter's average
price of natural gas for delivery at Henry Hub was $4.73 per
million British thermal units, down 44 percent from last year.
 Chevron said downstream earnings would include about $350
million from sales of its fuel marketing businesses in Brazil
and Nigeria. Earnings from its chemicals business were expected
to fall on lower margins and volumes.
 Chevron also said after-tax charges for corporate and other
activities might significantly differ from its normal guidance
of $250 million to $350 million due to foreign currency effects
and potential accruals from pension settlements and taxes.
 The San Ramon, California-based company is due to report
first-quarter results on May 1. Analysts had been expecting a
net profit before items of $2.03 billion, or 94 cents a share,
on revenue of $23.11 billion. In the same quarter last year, it
made $2.48 per share on revenue of nearly $66 billion.
 A week ago, rival ConocoPhillips COP.N said earnings
would be hurt by weakness in North American natural gas prices
and that its worldwide margins would be significantly lower.
[ID:nN02547075]
 Marathon Oil Corp MRO.N is expected to give its quarterly
update next week.
 Chevron's stock closed on Thursday at $69.23, up $13 from
its low in early March when it was within sight of its lowest
levels for nearly three years. A rally in energy prices and the
stock market lifted the entire industry in the past month.
 Chevron shares are down 6 percent so far in 2009, broadly
in line with peers tracked by the Chicago Board Options
Exchange oil index .OIX.
 (Reporting by Braden Reddall; Editing by Bernard Orr and
Matthew Lewis)


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