Chevron Corp., the second-largest U.S. energy producer by market value, said shrinking refining profit eroded gains from higher oil prices and the company’s biggest production increase since 2010.
Profit from processing crude oil into fuels tumbled 45% during the third quarter to $380 million amid rising feedstock costs and repairs at a California plant that crimped gasoline and diesel output. The refining slowdown overshadowed a 2.7% rise in oil and natural gas production led by fields from Kazakhstan to Pennsylvania, San Ramon, California-based Chevron said in a statement today.
Chevron posted net income of $4.95 billion, or $2.57 a share, compared with $5.25 billion, or $2.69, a year earlier, according to the statement. The per-share result was 13 cents lower than the $2.70 average of 21 analysts’ estimates compiled by Bloomberg.
Chairman and Chief Executive Officer John S. Watson is spending $36.7 billion this year in a push to raise oil and natural gas production that for the first nine months of this year has lagged his full-year goal of pumping the equivalent of 2.65 million barrels of oil a day. The third-quarter output boost was the largest since mid 2010.
“Production volume growth was very good,” said Brian Youngberg, an analyst at Edward Jones & Co. in St. Louis, who rates Chevron shares a “buy.” Lifting output “is a key thing going forward for Chevron because it’s a way to differentiate themselves” from the other major international oil companies.
Chevron’s stock has increased 9.1% this year, outperforming the company’s bigger U.S. rival, Exxon Mobil Corp., which has gained less than 4%. Chevron fell 1.7% to $117.96 at 9:52 a.m. in New York.