Chevron Corp. delivered a 4 per cent rise in first-quarter profit on Friday, helped by an asset sale and increases in both oil prices and refining margins that made up for a decline in oil and gas production.
Shares of the second-largest U.S. oil company were down a few pennies in midday trading at $106.19. That looked good against the 1 per cent decline for larger rival Exxon Mobil Corp. on Thursday after it produced weaker-than-expected earnings due to a drop in oil and gas output.
Chevron’s first-quarter profit rose to $6.47-billion (U.S.), or $3.27 per share, from $6.21-billion, or $3.09 per share, a year earlier. That was just ahead of the $3.26 per share analysts had expected, according to the average on Thomson Reuters I/B/E/S. Revenue rose nearly 1 per cent to $60.7-billion.
The earnings included gains on asset sales of about $200-million, reflecting the sale of its fuels and finished lubricants businesses in Spain. Barclays analysts noted the earnings would have fallen short of expectations without that sale.
The refining and marketing division has pulled out of more than two dozen countries in the past few years, and is reviewing options for Egypt, Pakistan and its Caltex refining unit in Australia.
For the first quarter, Chevron highlighted the February start-up of its Usan deepwater project off Nigeria, which ultimately could produce up to 180,000 barrels per day (bpd) of crude oil.
Also off Nigeria, Chevron suffered an accident at a well in January when a natural gas explosion killed two contractors and started a fire that burned for weeks.
“Our expectation at this point would be that, if we are successful there, then we would have a permanently abandoned well by the end of May,” chief financial officer Pat Yarrington said on a conference call.
In Brazil, Chevron and rig contractor Transocean Ltd. became embroiled in a huge lawsuit after an offshore leak at the Frade field in November. The resulting shutdown of production in the country has reduced Chevron’s ongoing production by about 33,000 bpd.
Mr. Yarrington said Chevron is confident its employees there who are facing legal action did not violate any laws or regulations.
Company-wide oil and gas production fell to 2.63 million bpd on an oil-equivalent basis in the first quarter from 2.76 million bpd a year before. Average benchmark oil prices rose about 12 per cent over the same period.
Factors behind the decline in output included maintenance-related downtime and sales of assets, including some mostly natural gas producing interests in Alaska.
Chevron is spending heavily on production growth that will not kick in until 2014, with its 2012 capital budget of $32.7-billion up from $29.1-billion last year.
“New production is coming on as planned, and we continue to see strong customer interest in our Australia LNG projects that underpin our future growth,” chief executive officer John Watson said in a statement.
Last week, Chevron signed a preliminary deal with Japan’s Chubu Electric Power Co. to supply it with liquefied natural gas from its Wheatstone plant in Australia, a $29-billion project due to start up in 2016.
Earnings from oil and gas production increased by 3 per cent to $6.17-billion, while profits from Chevron’s refining and chemicals division rose by 29 per cent to $804-million.
Simmons & Co. analysts said the Chevron earnings fell short of their expectations, mainly due to underperformance from the San Ramon, Calif.-based company’s international production, which was down 86,000 bpd at 1.98 million bpd in the quarter.Report Typo/Error
Follow us on Twitter: