Bloomberg News

Chevron Profit More Than Doubles on Refinery Sale, Oil Price

October 28, 2011

(Updates with closing share price in 10th paragraph.)

Oct. 28 (Bloomberg) -- Chevron Corp. reported its biggest quarterly profit in three years, outperforming other major oil companies, as rising crude prices and proceeds from the sale of a refinery made up for a slump in production.

Third-quarter net income more than doubled to $7.83 billion, or $3.92 a share, from $3.77 billion, or $1.87, a year earlier, the San Ramon, California-based company said in a statement today. Excluding a gain from the sale of a Welsh refinery, the per-share result was 22 cents more than the average of 19 analysts’ estimates compiled by Bloomberg.

Chevron quit the European oil-refining market in August when it sold the U.K. refinery and related assets to Valero Energy Corp., a transaction that accounted for $500 million of third-quarter results. Production fell to the equivalent of 2.6 million barrels of oil a day, from 2.74 million for the same period last year. Sales rose 30 percent to $64.4 billion.

“They are benefiting from higher crude prices and strategic asset sales,” Gianna Bern, president of Brookshire Advisory & Research Inc., a Chicago-based risk-management consultant to the energy industry. “I’d expect production to bounce back in the near future.”

Oil and natural-gas production was less than the 2.63 million barrels a day forecast by Paul Cheng, a New York-based analyst at Barclays Plc. Two hurricanes in the Gulf of Mexico, maintenance work at oil installations and less production from some overseas joint ventures hurt output, the company said.

Chevron posted the largest year-on-year third-quarter profit increase among major international oil producers that have announced results.

Other Results

Royal Dutch Shell Plc’s 100 percent gain was the second- largest, followed by Exxon Mobil Corp., which reported a 41 percent increase, and Total SA, which boosted profit by 13 percent. PetroChina Co. said net income rose 7.8 percent, while BP Plc and ConocoPhillips saw profit decline.

“Chevron is the strongest of the majors right now,” said Brian Youngberg, an analyst at Edward Jones & Co. in St. Louis who rates the shares a “buy.” “Even with production coming in a little lower than my expectations, they offset that with pretty strong refining results.”

Chevron was paid an average of $103 for each barrel of crude produced outside the U.S. during the quarter, up 47 percent from $70 a year earlier, the company said. International oil prices soared as growing demand bumped up against supply constraints in Libya. Chevron gets 74 percent of its crude outside the U.S., according to an Aug. 4 regulatory filing.

Chevron rose less than 1 percent to close at $109.64 in New York. The shares have gained 20 percent this year.

Profit from oil and gas sales climbed 74 percent to $6.2 billion, the company said. Refining profits more than tripled to $1.99 billion from $565 million.

The proceeds from the sale of the Pembroke refinery in Wales accounted for 22 cents a share in profit, Youngberg said.

--Editors: Jasmina Kelemen, Tina Davis

To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net


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