Chevron's Profit Rises Sharply, Beats Forecasts

Chevron's third-quarter profit more than doubled, easily beating Wall Street forecasts as high oil prices and healthy margins at its refineries boosted its bottom line, the oil major said on Friday.

Net profit was $7.9 billion, or $3.85 per share, compared with $3.7 billion, or $1.75 per share, in the same period a year before. Revenues rose 43 percent to $78.9 billion.

Analysts had expected the second-largest U.S. oil company to report a net profit of $6.55 billion, or $3.27 per share, on revenue of $89.4 billion, according to averages on Reuters Estimates.

The results come one day after larger rival Exxon Mobil also beat estimates with another record quarterly profit on Thursday, due to higher exploration and production profits and improved refining margins.

Exxon also said output should increase in 2009, and plans to stick with its current capital expenditure plans.

Chevron's third-quarter capital expenditures rose to $5.5 billion from $5.2 billion a year earlier. Common stock buybacks in the quarter totaled $2 billion.

Laura Rauch

"Our disciplined capital spending and tight control over costs remain extremely important in today's uncertain economic climate," Chairman and Chief Executive Officer Dave O'Reilly said in a statement.

Investors are concerned that the credit crisis will trigger a global recession and cut energy demand, so the oil majors' spending plans are being carefully scrutinized.

Chevron said the hurricanes that hit the Gulf of Mexico during the quarter cut its upstream earnings by about $400 million and cut its September production by about 150,000 barrels oil equivalent per day.

Production of oil and gas fell by 5.8 percent during the quarter to 2.44 million BOE per day, hurt by the Gulf storms and the reductions built into production sharing agreements outside the United States that reduce its stake as prices rise.

Since peaking in July above $147 per barrel, crude oil futures have tumbled more than 50 percent, but prices were still well above the year-ago level for the quarter.

The company's refinery operations in the U.S. posted a profit of $1 billion in the quarter after suffering a loss of $110 million a year ago, while its international operations saw profits rise 68 percent to $817 million.

Chevron shares, which opened slightly lower with the market, have lost a fifth of their value in 2008, compared with a 34 percent drop in the Chicago Board Options Exchange index of oil companies.