Oil Prices Send Profit at Chevron Up 62%

ChevronTexaco Corp., riding the surge in oil prices and benefiting from asset sales, said Friday that its third-quarter profit jumped 62% from a year earlier.

But the San Ramon, Calif.-based energy giant said earnings fell at its West Coast gasoline business as pump prices declined in California, which helped leave ChevronTexaco’s overall earnings below some analysts’ forecasts.

Nonetheless, ChevronTexaco’s stock climbed 59 cents to $53.06 on the New York Stock Exchange after the results were announced.

ChevronTexaco, the nation’s second-largest oil company, behind Exxon Mobil Corp., said net income in the three months ended Sept. 30 soared to $3.2 billion, or $1.51 a share, from $1.98 billion, or $1.01, a year earlier. The latest results included a special gain of $486 million, or 23 cents a share, from the sale of certain gasoline stations and assets during the quarter.

Excluding that gain, ChevronTexaco earnings equaled $1.28 a share, well short of the $1.37 a share forecast by analysts surveyed by Thomson First Call. ChevronTexaco’s third-quarter revenue jumped 32% to $40.7 billion from $30.8 billion.

“Quarterly earnings were below expectations, due primarily to the weak U.S. refining and marketing results,” analyst Jacques Rousseau of the investment firm Friedman Billings Ramsey & Co. wrote in a note to clients.

The U.S. division that sells ChevronTexaco gasoline earned $96 million in the third quarter, down 35% from $148 million a year earlier, the company said. Hurricane Ivan, which forced ChevronTexaco to shut down its Pascagoula, Miss., refinery, also contributed to the decline.

The company said damage from the hurricane was expected to curb its production in the current quarter by 50,000 to 60,000 barrels a day. That equals 6% to 7.5% of ChevronTexaco’s third-quarter domestic output of the equivalent of 801,000 barrels of oil a day.

Crude-oil and gasoline prices often move in tandem, but pump prices in California -- a stronghold for ChevronTexaco -- steadily moved lower this summer even as oil prices were pushing into record territory.

As the summer began and pump prices set fresh records in California, ChevronTexaco and other refiners aggressively produced as much gasoline for the California market as they could. That swelled supplies and enabled prices to turn lower while crude prices kept climbing. ChevronTexaco has refineries in El Segundo and Richmond.

The average price of self-serve regular in California hit $2.327 a gallon in the week ended May 31, but fell to $2.094 a gallon by the week ended Sept. 27, just as ChevronTexaco’s third quarter was about to end, federal surveys showed.

The lofty crude-oil prices helped burnish results from ChevronTexaco’s “upstream” operations, that is, its oil exploration and production activities. But its “downstream” refining and gasoline marketing segments suffered as the price competition prevented ChevronTexaco from passing along those higher oil costs to motorists.

Gasoline profit margins “have been quite weak,” Chief Financial Officer John Watson told analysts in a conference call.

However, gasoline earnings have been improving in the last couple of weeks as pump prices have firmed again, Watson said. The average price for regular in California jumped back to $2.394 a gallon as of Monday.

Profit from ChevronTexaco’s exploration and production group -- which accounted for 79% of the company’s total earnings from continuing operations -- surged 44% from a year earlier to $2.3 billion from $1.6 billion.