Chevron's profit tops $5 billion

Times Staff Writer

Record energy prices gave Chevron Corp., the nation's second-largest oil company, a bigger-than-expected profit gain during the first quarter despite weak income from making and selling gasoline, the company said Friday.

In the January-March quarter, San Ramon, Calif.-based Chevron posted net income of $5.2 billion, or $2.48 a share, up from $4.7 billion, or $2.18, in the year-earlier quarter. Revenue increased 40% to $64.7 billion.

With earnings coming in 7 cents a share higher than analysts had forecast in a survey by Thomson Financial, Chevron turned in the kind of performance analysts had been anticipating -- and didn't get -- from Chevron's bigger rival, Exxon Mobil Corp., a day earlier.

Like Exxon, Chevron reported output declines in oil production and refined products, but they were smaller by comparison. Analysts said Chevron was able to allay concerns about setbacks in new oil production projects.

"Chevron has the best-placed projects and the best chance for decent growth in production, but they had been experiencing lots of delays, and that makes you worry about execution risks. It's reassuring to see that they are getting projects underway," said analyst Phil Weiss of Argus Research.

Arjun Murti and three colleagues at Goldman Sachs said in a note Friday to investors that they expected Chevron's production volume to increase in the second half of the year and to rise by as much as 6% in 2009.

During the quarter, Chevron boosted its cash to $8.2 billion, up from $7.4 billion in the year-earlier period; increased capital spending on exploration, production and refinery projects by $1 billion, to $5.1 billion; and still had enough change left over to buy back $2 billion worth of its stock.

The only negative news was an 84% decline in earnings from the division that operates refineries and service stations, falling to $252 million from $1.6 billion in the first quarter of 2007. Like many fuel sellers, Chevron was unable to raise pump prices fast enough to keep up with booming oil prices.

Shares of Chevron rose 38 cents Friday to $95.32.

The stock buyback earned the ire of consumer groups, which said that the money could have been better spent to help motorists hit by record fuel prices.

"This is money that could have been invested in alternative energy research or capital expansion. It's wrong to use their excessive profits to buy shares and drive up the stock price," said John Simpson of Consumer Watchdog, formerly known as the Foundation for Taxpayer and Consumer Rights. "That only benefits executives whose excessive bonuses are tied to stock performance."


Copyright © 2019, Los Angeles Times
EDITION: California | U.S. & World