Chevron’s First-Quarter Profit Climbs 36% as Crude Oil Prices Increase
Chevron Corp. (CVX), the second-largest U.S. oil company, said first-quarter profit rose 36 percent as economic growth and supply disruptions drove crude prices above $100 a barrel.
Net income rose to $6.21 billion, or $3.09 a share, from $4.55 billion, or $2.27, a year earlier, San Ramon, California- based Chevron said in a statement today. The company was expected to report per-share profit of $2.99, based on the average of two analysts’ estimates compiled by Bloomberg. Sales rose 25 percent to $60.3 billion.
Global demand for petroleum-derived fuels rose 2.9 percent during the first quarter, led by growth in China, Brazil and India, according to the International Energy Agency. Oil futures traded in New York climbed 20 percent to average $94.60 a barrel amid civil unrest in North Africa and the Middle East that imperiled crude supplies.
The company beat analysts’ estimates “because of pricing, so from the standpoint of earnings quality that’s not really a great reason to beat,” said Pavel Molchanov, an analyst at Raymond James & Associates Inc. in Houston who owns Chevron shares and has an “outperform” rating on the company.
Chevron rose 63 cents to $109.44 at 4:15 p.m. in New York Stock Exchange composite trading. The stock, which has gained 20 percent this year, has 19 buy ratings from analysts and six holds.
Refinery Profit
Profit from the company’s oil and natural-gas business increased 27 percent to $5.98 billion as higher commodity prices offset a less than 1 percent decline in output. Chevron pumped the equivalent of 2.76 million barrels of crude during the period, down from 2.78 million a year earlier, according to the statement.
Chevron’s refineries earned $622 million, more than three times the profit of the first quarter of 2010.
Chevron plans to spend $26 billion in 2011 to explore for crude, construct gas-export plants and repair oil refineries. Chief Executive Officer John Watson has been reducing refining and retail operations to concentrate on higher-profit ventures such as deep-water exploration in places such as the U.S. Gulf of Mexico and Australia.
Chevron announced two U.S. Gulf projects last year with a combined value of $11.5 billion that will tap deep-water oil fields, part of Watson’s plan to boost output by 20 percent by the end of 2017.
Last month, the company received one of the first permits to resume exploratory drilling in the Gulf since the U.S. suspended such work in response to the Deepwater Horizon tragedy that killed 11 rig workers and led to the biggest U.S. offshore oil spill.
Exxon Mobil Corp. (XOM), based in Irving, Texas, is the largest U.S. oil company. Exxon yesterday reported a 69 percent rise in net income for the first quarter, to $10.7 billion.
To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net
To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net
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