Chevron Corp.'s third-quarter earnings fell 33%, missing expectations as its oil and gas production was disrupted by maintenance, legal issues and storms, and a refinery fire in California caused a sharp drop in fuel sales.
The second-largest U.S. oil company after Exxon Mobil Corp. reported a profit of $5.25 billion, or $2.69 a share, down from $7.83 billion, or $3.92 a share, a year earlier. Revenue fell 9.9% to $58 billion.
Analysts polled by Thomson Reuters had most recently forecast earnings of $2.83 a share on revenue of $63.9 billion.
"This quarter's earnings were solid, but off from their near record level of a year ago," said Chevron Chairman and Chief Executive John Watson.
Chevron and other large oil and gas producers have been suffering the impact of a still-shaky global economy on oil and gas prices. But the most recent quarter's results highlighted the daunting challenge of maintaining their massive levels of production. On Thursday, larger rival Exxon Mobil posted a 7.4% drop in third-quarter earnings as its production fell to the lowest level in three years.
Chevron said overall production fell 3% year-over-year, to 2.52 million barrels of oil equivalent a day, because maintenance work performed at some of its wells. Meanwhile, Hurricane Isaac forced Chevron and other producers to suspend operations in the Gulf of Mexico during part of August. Legal tumult in Brazil, where the company is fighting an oil spill lawsuit, caused Chevron to shut in production at the Frade field off the country's shoreline.
Chevron said production would increase in the fourth quarter as its maintenance schedule eased and Gulf of Mexico production ramped up. The company expects overall 2012 production to reach about 2.6 million barrels of oil equivalent a day, about 97% of the target it set for the year.
Chevron's average sales price in the third quarter was $91 a barrel of crude oil and natural gas liquids, down from $97 a year ago. The average sales price of natural gas was $2.63 per thousand cubic feet, down 36% from a year ago.
Exploration-and-production earnings fell 17% to $5.14 billion.
Meanwhile results from its refining, marketing and chemical operations declined significantly, due in part to the early August shutdown of its Richmond, Calif., refinery after a fire. The main production unit damaged by the fire would be restarted sometime in the first quarter, a Chevron executive said during a conference call with investors.
Chevron said its U.S. fuel sales fell 5.5% to 1.2 million barrels a day, mainly on lower gasoline sales.
Chevron was not interested in buying more refineries in California because of a state law that would force refiners to deeply cut air emissions by 2020. Most refineries in the state would have to drastically decrease production rates to meet the emission targets, said Mike Wirth, Chevron's executive vice president for downstream and chemicals.
"We've been in California for more than 100 years," Mr. Wirth said during a conference call with investors. "We understand these markets and are positioned to compete well through a period of change and uncertainty."
The global refining, marketing and chemical operations, known as the downstream segment, posted a profit drop of 65% to $689 million.
Chevron said it was seeking to expand its petrochemical business in the Middle East and Asia, possibly by investing in businesses that produce base oils, lubricants increasingly necessary for fuel efficient automobiles, Mr. Wirth said. Meanwhile, Chevron was reviewing bids on refineries it has for sale in Pakistan and Egypt.
Shares were recently $108.64, down 2.5% for the day. The stock has risen 2% so far this year.
Copyright (c) 2012 Dow Jones & Company, Inc.
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