* Q1 EPS $3.27 vs $3.26 expected
* Output down to 2.63 mln bpd from 2.76 mln yr ago
* Shares down slightly in early trading
By Braden Reddall
April 27 (Reuters) – Chevron Corp delivered a 4
percent rise in first-quarter profit on Friday, helped by an
asset sale and increases in both oil prices and refining margins
that made up for a decline in oil and gas production.
Shares of the second-largest U.S. oil company were down a
few pennies in midday trading at $106.19. That looked good
against the 1 percent decline for larger rival Exxon Mobil Corp
on Thursday after it produced weaker-than-expected
earnings due to a drop in oil and gas output.
Chevron’s first-quarter profit rose to $6.47 billion, or
$3.27 per share, from $6.21 billion, or $3.09 per share, a year
earlier. That was just ahead of the $3.26 per share analysts had
expected, according to the average on Thomson Reuters I/B/E/S.
Revenue rose nearly 1 percent to $60.7 billion.
The earnings included gains on asset sales of about $200
million, reflecting the sale of its fuels and finished
lubricants businesses in Spain. Barclays analysts noted the
earnings would have fallen short of expectations without that
sale.
The refining and marketing division has pulled out of more
than two dozen countries in the past few years, and is reviewing
options for Egypt, Pakistan and its Caltex refining unit in
Australia.
For the first quarter, Chevron highlighted the February
start-up of its Usan deepwater project off Nigeria, which
ultimately could produce up to 180,000 barrels per day (bpd) of
crude oil.
Also off Nigeria, Chevron suffered an accident at a well in
January when a natural gas explosion killed two contractors and
started a fire that burned for weeks.
“Our expectation at this point would be that, if we are
successful there, then we would have a permanently abandoned
well by the end of May,” Chief Financial Officer Pat Yarrington
said on a conference call.
In Brazil, Chevron and rig contractor Transocean
became embroiled in a huge lawsuit after an offshore leak at the
Frade field in November. The resulting shutdown
of production in the country has reduced Chevron’s ongoing
production by about 33,000 bpd.
Yarrington said Chevron is confident its employees there who
are facing legal action did not violate any laws or regulations.
BIG SPENDING, OUTPUT DOWN
Company-wide oil and gas production fell to 2.63 million bpd
on an oil-equivalent basis in the first quarter from 2.76
million bpd a year before. Average benchmark oil prices rose
about 12 percent over the same period.
Factors behind the decline in output included
maintenance-related downtime and sales of assets, including some
mostly natural gas producing interests in Alaska.
Chevron is spending heavily on production growth that will
not kick in until 2014, with its 2012 capital budget of $32.7
billion up from $29.1 billion last year.
“New production is coming on as planned, and we continue to
see strong customer interest in our Australia LNG projects that
underpin our future growth,” Chief Executive John Watson said in
a statement.
Last week, Chevron signed a preliminary deal with Japan’s
Chubu Electric Power Co to supply it with liquefied
natural gas from its Wheatstone plant in Australia, a $29
billion project due to start up in 2016.
Earnings from oil and gas production increased by 3 percent
to $6.17 billion, while profits from Chevron’s refining and
chemicals division rose by 29 percent to $804 million.
Simmons & Co analysts said the Chevron earnings fell short
of their expectations, mainly due to underperformance from the
San Ramon, California-based company’s international production,
which was down 86,000 bpd at 1.98 million bpd in the quarter.
