Chevron Corp. said Friday that third-quarter earnings slipped despite more production and higher oil prices, attributing much of the decline to costs from a deepwater drilling moratorium declared in the wake of BP's massive Gulf of Mexico oil spill.
The San Ramon, Calif., company also blamed currency fluctuations for helping shrink profit, which fell short of Wall Street's expectations and the performance of rival energy companies. Chevron shares fell $1.84, or 2.2%, to $82.60.
Chevron Chief Executive John S. Watson said in a statement that he hoped the drain caused by the temporary moratorium would be reversed quickly. Watson said the company should gain from exploration projects in China, Liberia and Turkey, adding that Chevron was committed to its deepwater gulf projects.
"We have submitted one deepwater drilling permit application and plan to submit several additional applications over the next few months," he said. "We look forward to the timely approval of our drilling permits and to getting back to work as soon as possible."
Fadel Gheit, senior energy analyst for Oppenheimer & Co., said Chevron's profit of $1.87 a share fell 28 cents a share below analysts' consensus expectations. Gheit warned investors not to expect a big portfolio boost from Chevron.
"The upside potential in the stock is not sufficiently greater than the downside risk from continued weakness in the global economy," Gheit said.
Phil Weiss, an energy analyst for Argus Research, said that "this was certainly not a good outcome. I was surprised because everyone else — Occidental, Exxon, ConocoPhillips, Shell — has been reporting such good results."
Weiss, who had predicted profit of $2.25 a share, said that as a result of the earnings announcement he wanted to take a closer look at Chevron's exploration expenses.
"Their expenses came in higher than I thought. It is good to be a low-cost producer because then you are less sensitive to oil price changes," Weiss said.
Chevron had net income of $3.77 billion in the third quarter, or $1.87 a share, down nearly 2% compared with $3.83 billion, or $1.92, in the year-earlier period. The company noted that its third-quarter 2009 results were boosted by $400 million from asset sales. Foreign currency effects decreased 2010 earnings by $367 million compared with a decline of $170 million in 2009.
Chevron's revenue rose nearly 7% to $49.7 billion, up from $46.6 billion in the third quarter of 2009.
The company's global output of oil and natural gas reached the equivalent of 2.7 million barrels a day, up 1% from a year earlier. Chevron said it got an average of $69 a barrel in the third quarter compared with $60 a barrel in last year's third quarter.
On Thursday, Exxon Mobil Corp. of Irving, Texas, posted third-quarter profit of nearly $7.4 billion, up 55%. Royal Dutch Shell said net income increased 7% to nearly $3.5 billion.
On Wednesday, ConocoPhillips of Houston said its third-quarter earnings more than doubled to $3.06 billion. Last week, Occidental Petroleum Corp. of Westwood reported a third-quarter profit increase of 28% to $1.2 billion.