Chevron Profits Fall Despite Higher Oil Prices

Jan. 27, 2012
Margin pressure in refining and currency cited as factors.

Chevron Corp. reported Jan. 27 weaker fourth-quarter profits as higher oil prices were offset by rising tax and operating costs and lower sales.

The No. 2 U.S. energy company said net income was $5.1 billion in the final three months of 2011, down 3.5% from a year earlier.

Earnings were $2.58 per share, widely missing analysts' average forecast of $2.84.

Sales and other operating revenues rose 11 percent to $60.0 billion, mainly due to higher prices for crude oil and refined products, the California-based Chevron said in a statement.

That was sharply lower than the $71 billion revenue expected by Wall Street.

"Unfortunately, higher prices have not translated to higher profits and margin pressure in refining may be partly to blame... currency could have been a factor as well," said Jon Ogg, an analyst 24/

The results disappointed investors. Shares in Chevron, a member of the blue-chip Dow Jones Industrial Average, tumbled 2.9% to $103.51 in morning trade on the New York Stock Exchange.

Despite the weaker fourth quarter, Chevron reported full-year 2011 earnings leaped 41% to $26.9 billion, and earnings per share of $13.44 were in line with expectations.

"Chevron had an outstanding year financially," said chairman and chief executive John Watson "with record earnings and cash flow.

"This reflects our exceptionally strong upstream portfolio, as well as higher 2011 crude prices."

Watson said the company added approximately 1.67 billion barrels of net oil-equivalent reserves in 2011, equaling 171 percent of net production for the year.

Watson said that in the fourth quarter the company began construction at its Wheatstone liquefied natural gas project in Australia, exploiting its natural gas holdings in the area.

"We also recently announced two additional natural gas discoveries in the Carnarvon Basin that will help underpin future LNG expansion opportunities," he said.

At the same time, he said, Chevron ramped up production to over 330 million cubic feet per day at the Platong II natural gas project in the Gulf of Thailand.

Copyright Agence France-Presse, 2012

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