Chevron profits rise 150% in quarter

Chevron profits rise 150% in quarter
By Telis Demos in New York
Copyright The Financial Times Limited 2010
Published: April 30 2010 15:33 | Last updated: April 30 2010 22:15
http://www.ft.com/cms/s/0/35fd31fc-545a-11df-b75d-00144feab49a.html


An upswing in crude oil prices, combined with rising production, resulted in Chevron, the US’s second-biggest petroleum producer, reporting a nearly $3bn increase in net income for the first quarter, its most profitable since 2008.

Though Chevron is a major extractor of oil and gas in the US Gulf of Mexico, with a new deepwater rig coming online in March, and also newly commissioning a Gulf exploration vessel, it said its operations would be unaffected by BP’s spill.

“This is not our incident, and we are not in any way touched by this from an operating standpoint,” said Pat Yarrington, chief financial officer, in an earnings call.

Ms Yarrington said Chevron was assisting BP and the US government in the clean-up effort. “Equipment, people, processes, anything they feel we can offer, we’re happy to do it,” she said.

Net income was $4.6bn, versus $1.8bn in the same quarter a year ago. That resulted in earnings per share of $2.36 per diluted share, adjusting for one-time items, easily topping Wall Street’s forecast of $2.01 per share.

Total revenues were $47bn, against $35bn in the first quarter of 2009. Chevron sold liquid crude for an average of $70.18 for the quarter, versus $38.59 a year ago.

Production of oil and natural gas, in oil-equivalent terms, was 2.78m barrels per day, up from 2.66m the same quarter last year. Though only 734,000 of those barrels came from the US, the country was responsible for slight more than half of its 120,000 barrel increase over last year.

About 10 per cent of Chevron’s output comes from the Gulf, with three new rigs beginning production in the past year. One major project – a deepwater operation called Jack/St. Malo – is expected to come online in 2014, according to Faisel Khan, an analyst at Citigroup.

“It’s extremely hard to figure out the risks right now,” said Mr Khan. “And I don’t know how important the Gulf is to their performance. Bigger factors in beating the forecasts were lower costs, lower corporate taxes in Canada and growing volumes in Kazahkstan, a highly profitable venture.”

Chevron’s outperformance followed similar results from other oil majors. ExxonMobil, the world’s largest petroleum producer, reported a 38 per cent rise to $6.2bn in net income for the quarter. Royal Dutch Shell profits rose 60 per cent, and earnings for BP also more than doubled, to $5.6bn.

“Our first quarter performance was very strong, and our strategy to invest in high-quality, upstream growth assets is paying off,” said John Watson, chief executive and chairman.

This was the first quarter of results for Mr Watson, the newly appointed chief.

Earnings from Chevron’s much smaller downstream business, the sale of refined products, were down from $753m in the first quarter last year to $196m as the price of petrol failed to keep up with the rising price of crude.

That matches the results of refineries businesses around the world, which have suffered as capacity has expanded in Asia.