Chevron expects to report strong profit
In a glimpse of the energy industry’s upcoming profit parade, oil giant Chevron Corp. said Thursday that it expected third-quarter earnings to top income from the previous period, as July’s record-high crude prices and a rebound in refining more than offset lower production rates and the oil market’s recent slide.
The nation’s second-largest oil company, which earned $5.98 billion for the second quarter, will announce its third-quarter results Oct. 31.
The interim report from Chevron covered operations in July and August and showed that its oil and natural gas production fell to the equivalent of 2.46 million barrels a day, down 3% compared with output in the second quarter.
The San Ramon, Calif.-based company said September hurricanes Gustav and Ike caused production from the Gulf of Mexico to fall by 150,000 barrels a day that month, which will further depress quarterly output.
The drop in production, along with lower oil prices in September, should push earnings from Chevron’s exploration and production segment lower compared with the second quarter.
Chevron estimated that about 5,000 barrels a day in Gulf of Mexico production would be lost for good.
The company said it would take a $400-million charge against earnings to cover hurricane-related repairs and the cost of abandoning toppled platforms too damaged for restoration. A gain of $350 million from the sale of certain assets and ownership stakes would partially offset the hurricane charge.
Chevron’s report offers a peek at what’s to come from oil companies this month as they announce financial results for the three months ended Sept. 30.
Industry analysts anticipate that hurricane ripple effects and other factors will be enough of an earnings drag to prevent BP and a few others from setting quarterly profit records.
But industry analyst Fadel Gheit of Oppenheimer & Co. expects each of the so-called Big Five -- Exxon Mobil Corp., Royal Dutch Shell, BP, Chevron Corp. and ConocoPhillips -- to easily surpass their results from the third quarter of 2007.
The quarterly results will mostly reflect oil prices that were up 56% from last year’s third quarter, and natural gas prices that were 65% higher, Gheit said. Fourth-quarter earnings will trend lower, reflecting oil’s recent decline to near $85 a barrel -- a drop of more than 40% from the July record that topped $147 a barrel.
Even so, Gheit said all of the major oil companies would finish the year with profit records.
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