NEW YORK: Chevron Corp, the world’s second-largest energy company by market value, posted its biggest second-quarter profit decline in four years on Friday and missed analysts’ estimates as crude oil prices and production fell.
Net income dropped by 26 percent to $5.37bn, or $2.77 a share, from $7.21bn, or $3.66, a year earlier, San Ramon, California-based Chevron said in a statement. The per-share result was 19 cents below the average of 21 estimates, excluding one-time gains and losses, compiled by Bloomberg.
Chevron’s oil and natural gas output fell 1.6 percent to the lowest second-quarter average in half a decade as new wells in Angola, the Gulf of Mexico and Pennsylvania failed to make up for declining production from older fields, according to the statement. The price the company fetched for crude sold overseas dropped 5 percent, while profit from refining crude into fuels tumbled 59 percent.
“Chevron is looking at a natural decline in its resource base of 6 to 10 percent a year before they even do anything, so it’s kind of like running up a down escalator,” Edmund Cowart, who helps manage $22 billion, including Chevron shares, at Eagle Asset Management Inc in St Petersburg, Florida, said. “Refining’s been tough for everybody.”
Sales dropped by 8.4 percent to $57.4bn. Chevron received an average of $94 a barrel for non-US crude during the quarter, compared with $99 a year earlier, according to the statement. The company’s so-called upstream earnings fell 12 percent during the April-to-June period as worldwide demand for petroleum-based fuels failed to keep pace with production growth.
Chevron’s refineries posted a $766m profit compared with $1.88bn a year earlier as prices for transportation fuels fell faster than crude, and the lingering effects of a California refinery fire hindered production.
Refining margins in the United States, the world’s largest motor- fuels market, narrowed as lower gasoline use reduced retail prices by 3.6 percent to a quarterly average of $3.601 a gallon, based on Energy Department figures.
Chevron Chairman and Chief Executive Officer John S Watson pledged in March to raise oil and gas output by one-fifth to the equivalent of 3.3 million barrels a day by the end of 2017 through mega-projects such as the $47bn Gorgon gas-export development in Australia. Last month, Watson signed a $1.24bn agreement with Argentina’s state-controlled YPF SA to explore a shale formation in the Latin American nation for oil and gas. Chevron estimated in March that its global output this year will rise 1.5 percent to an average of 2.65 million barrels a day.
WP-Bloomberg
