Chevron's 2Q profit falls on lower oil prices
Friday, August 2, 2013
Chevron's latest quarterly profit was huge — $5.37 billion — but down 26 percent from last year due to lower oil prices, less production, and maintenance work at some refineries.
The results mirrored lower profit at Exxon Mobil and Shell, and they also lagged Wall Street expectations. Chevron shares fell $1.49, or 1.2 percent, to $124.95 Friday.
Consumers aren't likely to feel sorry for Chevron — not after they fill their tanks at the national average of $3.63 for a gallon of gas. And Chevron's quarterly profit was much fatter than those at Google, General Electric and Johnson & Johnson — like Chevron, they all rank among the 10 biggest companies by stock market value.
But for the second-biggest U.S. oil company, Chevron Corp.'s haul was considered disappointing because a year ago it earned $7.21 billion.
Chevron's profit worked out to $2.77 per share, down from $3.66 per share a year ago. Analysts were expecting $2.97 per share, according to FactSet.
Revenue fell 8 percent to $57.37 billion but came in higher than the $56.01 billion that analysts expected.
Chairman and CEO John Watson said earnings fell "largely due to softer market conditions for crude oil and refined products." He said repair and maintenance work on U.S. refineries was also a factor.
In percentage terms, Chevron's profit decline was only half as steep as those reported Thursday by Exxon Mobil Corp., which earned $6.86 billion on revenue of $106.47 billion, and Royal Dutch Shell. But the causes were similar — lower oil prices and declining production.
The average price that Chevron got for a barrel of oil or natural gas liquids was $92 in the United States and $94 overseas; both were down $5 a barrel from last year's second quarter. Natural gas prices in the U.S. jumped 74 percent, but that was up from 10-year lows in 2012.
Chevron sold more natural gas in the U.S., but sales of refined products such as gasoline dipped both at home and overseas.
Production of oil and gas fell 1.6 percent, midway between Shell's 1.3 percent decline and Exxon's 1.9 percent decrease.
Chevron boosted production in the Marcellus shale of Pennsylvania, a deep-water development in the Gulf of Mexico and a new project in Angola, but that wasn't enough to offset declines in maturing fields elsewhere.
This week's numbers underscored the challenge that the major oil companies face to tap new sources. They must drill in remote areas or blast through tight rock formations. The costs are high, and it can take years for a project to begin producing crude.
Big Oil may be reining in any ambitions of boosting production. Exxon has posted nine straight quarters in which output sank from 12 months earlier. Shell announced it was dropping plans to raise production to 4 million barrels per day by 2018 from the current 3 million per day.
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