|Chevron More Than Doubles Las Years' 3rd
November 1, 2008
In case you missed it---
As the primary funder of Richmond’s election campaigns this year, Chevron can well afford it. The company, which is fighting Measure T with hundreds of thousands of dollars and defending its surrogates, Bates, Marquez and Sandhu, with even more money, is making this the most expensive campaign in Richmond history.
Chevron 3Q profit soars, yet caution prevails
By JOHN PORRETTO AP Energy Writer
Article Launched: 10/31/2008 05:52:58 AM PDT
HOUSTON—Chevron on Friday reported the largest quarterly profit in its 129-year corporate history, joining other oil companies reporting stunning third-quarter earnings gains.
Yet like its peers, Chevron also disclosed its crude production waned and said it will keep a close eye on capital spending. The entire industry is now bracing for the fallout of a global economic recession that has already sent oil prices sharply lower.
How times have changed in just a few months.
San Ramon, Calif.-based Chevron Corp. on Friday capped off a string of astounding quarterly profit reports from the world's major oil companies, including another U.S. corporate profit record for No. 1 Exxon Mobil Corp.
Chevron, Exxon Mobil and rivals BP PLC, Royal Dutch Shell PLC and ConocoPhillips posted combined earnings of $44.4 billion from July 1 to Sept. 30, up 58 percent from the same quarter a year earlier. That's thanks in large part to oil prices soaring to a record above $147 per barrel in July and remaining above $100 when the third quarter ended.
But now, oil futures are trading around $67 per barrel and may be heading lower. Chevron Chairman and Chief Executive Dave O'Reilly responded by saying Friday that "disciplined capital spending and tight control over costs remain extremely important in today's uncertain economic climate."
That hardly sounds like the head of a company that earned $7.89 billion in the third quarter, more than double the $3.72 billion profit of a year earlier. Revenue shot up 43 percent to $78.87 billion from $55.2 billion.
The profit result topped analysts' forecasts and Chevron shares rose 42 cents to end at $74.60.
Given the sharp downturn in crude prices, analysts are keeping close tabs on oil companies' plans for capital spending. That's how companies grow and find new sources of oil and natural gas.
Chevron late last year announced a capital budget of almost $23 billion for 2008, roughly 15 percent higher than 2007.
"Any project that has already moved into construction ... those projects will move very much through their cycle," Chevron Executive Vice President George Kirkland said on a call with analysts Friday. "We'd never slow those down."
Chevron executives said they're leaning toward keeping 2009 spending in line with 2008 levels.
Several smaller exploration and production companies already have announced plans to eliminate or delay projects. The majors' balance sheets are as strong as ever—Exxon said Thursday it has $37 billion in cash—but even they could cancel or shelve some projects, analysts say.
"Big Oil has a lot of incremental debt capacity available ... but some companies face more immediate choices than others," Credit Suisse analyst Mark Flannery said in a research note Friday.
Economic reports continue to suggest demand for energy will continue to erode.
Consumer spending dropped 0.3 percent in September, the largest decline in four years, while incomes suffered because of Hurricane Ike, the Commerce Department reported Friday. And Americans drove billions fewer miles in August than they did the previous year, the Department of Transportation reported recently.
Shell said Thursday it was pushing back a decision on expanding an oil sands project in Canada, and Marathon Oil Corp. said it has delayed the expansion of a gasoline refinery in Detroit "due to current market conditions."
Marathon, the fourth-largest U.S. integrated oil company, also said it expects its 2009 capital spending budget to be about 15 percent lower than 2008.
In its earnings report, Chevron said income from its exploration and production operations rose about 80 percent in the quarter to $6.18 billion, buoyed by crude prices.
However, global production fell nearly 6 percent to an average of 2.44 million barrels of oil equivalent a day, in part from late-summer hurricanes that shut down output in the Gulf of Mexico.
Chevron said it swung to a profit of $1 billion at its U.S. refining and marketing arm after posting a loss of $110 million a year ago, when ample gasoline supplies made it difficult for Chevron and other refiners to recover higher oil costs at the gasoline pump.
During this year's third quarter, Chevron said it benefited from significantly higher margins on the sale or refined products—largely because of the dramatic drop in crude prices.
The company made the turnaround even though branded gasoline sales volumes fell 7 percent from a year ago.