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UPDATE 1-Chevron profit drops on lower oil output, maintenance

Friday, 2 Nov 2012 | 1:17 PM ET

Nov 2 (Reuters) - Chevron Corp posted a 33 percent drop in quarterly earnings as maintenance exacerbated a steady decline in output from oil and natural gas wells over the past year and as a huge fire at one of the company's California plants hit the refining business.

The second-largest U.S. oil company said on Friday that third-quarter net income had fallen to $5.25 billion, or $2.69 per share, from $7.83 billion, or $3.92 per share, a year earlier.

Increasing output has been a struggle for many big oil companies, including Exxon Mobil Corp and Royal Dutch Shell Plc. With oil and gas assets tightly controlled by the countries where they are located, the majors are left to drill in pricier regions on land and offshore.

Chevron's third-quarter oil and gas production fell to 2.52 million barrels of oil equivalent per day from 2.60 million bpd a year earlier. On quarter-to-quarter basis, the production number fell for the third period in a row.

Earnings dropped 17 percent to $5.1 billion in the oil and gas production business and plunged 65 percent to $689 million in the refining, or downstream, operation.

``Crude oil prices were down, and we had a heavy period of planned oil field maintenance which temporarily reduced oil and gas production in several locations,'' Chief Executive Officer John Watson said in a statement.

A storm cut into Gulf of Mexico production, while planned maintenance in Kazakhstan and the United Kingdom caused the majority of the decline in production outside the United States, Chevron has said.

The company had already warned last month that the crude unit at its oldest refinery in Richmond, California, would remain offline through the fourth quarter after it was badly damaged in an Aug. 6 fire.

Shares of Chevron were down 0.6 percent at $110.75 in trading before the market opened.

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