NEW YORK, N.Y. – Chevron Corp. said Friday that profit jumped 43 per cent in the second quarter as higher oil and gasoline prices made up for a decline in oil production.
The report continued the trend of soaring profits among the major oil companies.
The San Ramon, Calif. oil company reported earnings of $7.7 billion, or $3.85 per share, for the three months ended June 30. That compares with $5.4 billion, or $2.70 per share, in the year-ago period. Revenue increased 31 per cent to $66.7 billion.
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Analysts had expected earnings of $3.51 per share, according to FactSet.
Chevron’s quarterly profit was the largest since it set a company record of $7.9 billion in the third quarter of 2008. It mirrored similar big gains for other oil giants. Exxon Mobil Corp.’s earnings rose 41 per cent to $10.7 billion while Royal Dutch Shell’s profit nearly doubled to $8.7 billion.
Oil prices soared to the highest level in three years during the quarter as uprisings swept through North Africa and the Middle East, rattling oil markets and shutting down exports from Libya. The price of gasoline, diesel, jet fuel and other fuels also surged, boosting profit margins at refineries.
Chevron said U.S. oil prices increased 46 per cent in the U.S. and 51 per cent internationally from April to June. Natural gas prices increased 8 per cent in the U.S. and 25 per cent internationally.
The higher prices boosted revenue even as production declined. Chevron, like many of its oil industry peers, has struggled to extract more oil. The company produced 2.69 million barrels per day in the quarter, down from 2.75 million barrels per day in the same part of last year.
It wasn’t for a lack of trying. The company plowed a whopping $7.5 billion into oil exploration and production projects in the quarter, up 69 per cent increase from a year ago. It ramped up oil and natural gas production from new projects in Canada and the U.S., and it acquired Atlas Energy Inc.
Still, Chevron said, those increases didn’t make up for the decline in output from its mature fields and a slowdown in the company’s international production business.
The company expects production to grow roughly 1 per cent a year until 2014, and then 4 to 5 per cent a year from 2014 to 2017.
Meanwhile, Chevron’s refining business boosted profits 30 per cent in the U.S., but profits dropped 11 per cent internationally. Higher fuel prices lifted profit margins, but foreign currency effects cut earnings at Chevron’s international refineries.
Shares dropped 15 cents to $104.88 in morning trading.