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Chevron profit drops 52% in the third quarter

Net income declines to $3.8 billion from $7.9 billion a year earlier, when oil prices were at record highs.

October 31, 2009|Ronald D. White

Chevron Corp. saw a third-quarter earnings decline of 51% compared with the previous year, the San Ramon, Calif., company said Friday.

In a clear sign that oil's fortunes have been quite different from last year, when crude peaked at more than $147 a barrel, Chevron said it earned less in the first nine months of this year at $7.4 billion than it did during the third quarter of 2008 alone, when it netted just under $7.9 billion.

Given oil's recent breakout from a summertime range of $65 to $75 a barrel, Chevron chose to emphasize production gains that helped bolster its net income in the three months ended Sept. 30.

Crude oil for December delivery fell $2.87 on Friday to $77 a barrel on the New York Mercantile Exchange.

"Our net oil-equivalent production this quarter was nearly 11% higher than the same quarter a year ago," said David O'Reilly, Chevron's chairman and chief executive. "This operational success helped mitigate a decline in earnings that was driven by sharply lower prices for crude oil and natural gas."

Chevron earned $3.8 billion in the third quarter, or $1.92 a share, compared with $7.9 billion, or $3.83, a year earlier. Revenue fell to $45 billion, a decline of nearly 41% compared with $76 billion in the year-earlier quarter.

Chevron beat Wall Street expectations for earnings but not for revenue. Analysts polled by Thomson Reuters had predicted earnings of $1.47 a share on revenue above $47 billion.

Chevron said its third-quarter earnings included about $400 million in asset sales and tax items. Foreign currency fluctuations reduced earnings by $170 million compared with a year earlier, when favorable currency conditions provided a boost of $303 million.

Chevron's shares fell $1.41 to $76.54.

In a week during which all of the players in the big oil club reported substantial drops in third-quarter earnings, Chevron had one of the smallest percentage declines in profit and was second only to Occidental Petroleum Corp. of Westwood in what it was able to earn per barrel of oil, said Fadel Gheit, senior energy analyst for Oppenheimer & Co.

"California does oil better than anyone, apparently," he said.

Exxon-Mobil Corp. this week said its third quarter profit fell 68% to $4.73 billion. Royal Dutch Shell's bottom line dropped 62% to $3.25 billion. ConocoPhillips said its third-quarter earnings declined 71% to $1.5 billion.

"Right now, you would have to consider Chevron to be the best in its class" among the world's biggest oil companies, Gheit said. "They had the biggest jump in production growth. They have a very strong balance sheet. It was a very impressive performance."


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