Chevron 1st-Quarter Profit Tumbles 36%
Chevron Corp., the fourth-largest U.S. oil company, said Thursday that its first-quarter profit fell 36%, while USX Marathon Group, the sixth-largest, had a loss as a March rally in energy prices came too late to lift earnings.
San Francisco-based Chevron’s profit from operations fell to $281 million, or 43 cents a share, its lowest quarterly figure since 1995 and below the 50-cent average estimate of analysts surveyed by First Call Corp. The company earned $436 million, or 67 cents, a year earlier. Sales fell 12% to $6.7 billion from $7.6 billion.
Oil prices remained at historic lows in January and February, lowering returns for oil companies and providers of oil-field services such as Schlumberger Ltd., whose profit fell 53%. Exxon Corp., the largest U.S. oil company, said Wednesday that it had its worst quarter since 1994.
“The pricing improvement we’ve seen won’t be evident in earnings numbers until the coming quarter,” said Brian Eisenbarth, an analyst at Collins & Co.
Crude oil on the New York Mercantile Exchange averaged $13.17 a barrel in the quarter, the lowest first-quarter average since the futures contract began trading in 1983. It began rising in early March and topped $18 this week on confidence that oil-producing nations will cut output.
Chevron shares rose $2.13 to close at $98.50 on the New York Stock Exchange. Marathon fell 63 cents to close at $27.75, also on the NYSE.
Chevron’s profit from selling oil and natural gas fell 32% to $163 million, even as the company boosted international production of oil by 8% and gas by 29%. The company sold its oil for an average price of $9.97 a barrel in the U.S., down 20%, while the price it got for gas fell 22%, to $1.63 per thousand cubic feet.
Chevron said it spent less at its refineries on scheduled maintenance. Also, profit margins on California fuel sales widened late in the quarter after fires and mechanical problems at some refineries limited supplies.
After charges and gains, Chevron had net income of $329 million, or 50 cents a share, down from the year-earlier quarter’s $507 million, or 77 cents.
Houston-based Marathon made less on every gallon of gasoline and other refined products that it sold. The unit of Pittsburgh-based USX Corp. still beat estimates with a loss from operations of $11 million, or 4 cents a share, compared with profit from operations of $76 million, or 26 cents a share, in the 1998 first quarter.
Analysts had expected the company to lose 6 cents, with forecasts ranging from a loss of 12 cents to break-even. Marathon’s sales fell back 11% to $4.9 billion from $5.5 billion.
