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Chevron Earnings Jump 11% on Higher Oil Prices
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Chevron, said on Friday that record oil prices drove second-quarter earnings up 11 percent to its highest-ever profit, but weak margins from gasoline production led to a big loss at its refining operations.
U.S. oil prices averaged slightly less than $125 a barrel in the quarter, nearly double prices from a year earlier. But gasoline prices only rose 25 percent during that same period, resulting in weak profit margins for the fuel.
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Laura Rauch / AP |
Chevron [CVX
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], the second largest U.S. oil company, said net income rose to $5.98 billion, or $2.60 a share, from $5.38 billion, or $2.52 a share, last year.
Analysts, on average, expected the company to earn around $3.02 a share, according to Reuters Estimates.
Sales in the quarter jumped 49 percent to $80.96 billion.
Income from the company's exploration and production business nearly doubled to $7.25 billion. But the company posted a $734 million loss at its downstream refining and marketing business, versus a profit of $1.3 billion a year earlier.
The company said weak profit margins as well as planned refinery maintenance in the United States hurt results at that unit.
"Clearly three percent lower [gasoline] demand is going to have an effect on downstream numbers at least until we see a real meaningful correction in the feedstock costs," said Lewis Ropp, who helps manage around $60 billion at Barrow, Hanley, Mewhinney & Strauss.
Still, Ropp said Chevron's profit was impressive due to the high oil and natural gas prices.
"The commodity price just overwhelms any weakness in any other areas," he said.
Chevron shares rose 73 cents at $85.29 in morning trading on the New York Stock Exchange on Friday. As of Thursday's close, the stock was down about 9.4 percent this year, underperforming the Chicago Board Options Exchange's oil index [OIX
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], off about 7.8 percent over the same period.
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Data is a real-time snapshot *Data is delayed at least 15 minutes
