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Chevron’s Net Rises 11%, But Refining Takes a Hit

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Chevron’s Net Rises 11%, But Refining Takes a Hit

August 2, 2008; Page B8

Chevron Corp. posted an 11% rise in second-quarter profit thanks to high oil prices, extending a string of big profitable quarters for oil companies.

[Record oil prices are boosting the bottom lines of big oil companies like Chevron.]
Associated Press
Record oil prices are boosting the bottom lines of big oil companies like Chevron.

But the second-largest U.S. oil company by market value also echoed the themes of weak refining performance and production declines that tarnished quarterly results of peers Exxon Mobil Corp. and Royal Dutch Shell PLC this week.

Chevron posted net income of $5.98 billion, or $2.90 a share, compared with $5.38 billion, or $2.52 a share, a year earlier, which included a gain of 32 cents a share from asset sales. Revenue rose 48% to $82.99 billion.

Chevron’s shares fell 25 cents, or 0.3%, to $84.31, in 4 p.m. New York Stock Exchange composite trading Friday.

The San Ramon, Calif., company’s refining operations posted a loss of $734 million, compared with earnings of $1.3 billion last year. The decline was primarily due to the effects of a planned crude-unit shutdown for maintenance at the company’s refinery in Pascagoula, Miss. Exxon Mobil, which posted a 14% rise in quarterly earnings Thursday, also had a weak refining performance.

Chevron’s total oil and natural-gas production was down 3.4% to 2.54 million barrels of oil equivalent a day, from an average of 2.63 million barrels a year earlier.

Chevron’s output, like that of its peers, felt the effects of international production-sharing contracts that reduce the amount of output attributed to companies as oil prices rise.

Chevron Chief Financial Officer Steve Crowe said the company could meet its target of 2.65 million barrels of oil equivalent a day only if the price of oil averaged $70 a barrel for the year. Crude oil for September delivery rose $1.02, or 0.8%, to $125.10 a barrel on the New York Mercantile Exchange Friday.

Chevron’s charges in the second quarter were $580 million, which included corporate-tax items and increased charges for environmental remediation costs associated with sites that previously had been closed or sold.

–David Benoit contributed to this article.

Write to Isabel Ordonez at [email protected]

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