Chevron warns 4Q earnings below 3Q results
Thursday, January 12, 2012
SAN RAMON, Calif. (AP) — Chevron Corp. said Wednesday that its fourth-quarter profit will be “significantly” below third-quarter results, partly because of weaker profit margins on refining and selling fuels.
The oil giant said Wednesday that its usually profitable refining and marketing business will roughly break even. Refinery volumes in the U.S. and overseas dropped from the third quarter, and refining margins fell sharply on the U.S. Gulf Coast.
Chevron expects its exploration and production unit to post a profit similar to the third quarter. In the U.S., higher prices for crude oil and liquids offset continuing low prices for natural gas.
The company also figures to suffer from the absence of currency-exchange benefits that boosted third-quarter results by nearly $450 million. Instead, it expects a loss there.
The shares fell $1.29 to close at $107.77 before the company released the fourth-quarter update. In after-hours trading, they fell another $2.11, or 2 percent, to $105.63.
In the third quarter, Chevron’s profit more than doubled from a year earlier despite declining production, thanks to rising prices for oil, gasoline and other fuels. The company earned net income of $7.83 billion, or $3.92 per share, on revenue of $61.3 billion.
Analysts were expecting more strong results in the fourth quarter — profit of $3.27 per share on revenue of $79.76 billion, according to FactSet.
Chevron’s update could be an early peek at what is expected to be a difficult quarter for oil refiners. In the U.S., drivers cut back on gasoline, as demand fell 4 percent compared with the fourth quarter of 2010.
Gasoline prices rose, but not as sharply as oil, meaning that refineries couldn’t pass along all of their increase in oil costs.
Refinery owners Marathon Petroleum Corp. and Tesoro Corp. both said this month that they expect to report fourth-quarter losses.
Chevron is scheduled to report financial results on Jan. 27.
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