* Richmond fire largely responsible for drop in U.S.
refining
* Hurricane Isaac curbs U.S. oil and gas output from wells
* Shares down 1.2 pct after hours
By Braden Reddall
Oct 9 (Reuters) – Chevron Corp warned that
third-quarter profits would be “substantially lower” than the
previous quarter as a hurricane and maintenance curbed its oil
and gas output and a fire hit its refining arm.
Chevron’s shares fell 1.2 percent in after-hours trading.
The second-largest U.S. oil company said on Tuesday that the
key crude unit at its oldest refinery in Richmond, California,
would remain offline through the fourth quarter after it was
badly damaged in an Aug. 6 fire.
The impact was apparent as its average U.S. refinery input
fell 92,000 barrels per day (bpd) to 836,000 bpd in July and
August, when compared with the second quarter average. This
largely reflected the Richmond unit shutdown, it said, and was
only partially offset by higher international refinery output.
On the upstream side, Chevron’s average U.S. production of
oil and gas from wells fell to 640,000 bpd in July and August,
compared with an average of 659,000 bpd for all of the second
quarter. This stemmed largely from shutting down in the Gulf of
Mexico for Hurricane Isaac in August.
Worldwide, Chevron produced the oil equivalent of 2.52
million bpd in the first two months of the quarter, down from an
average 2.62 million in the second quarter. Planned maintenance
in the UK and Kazakhstan caused most of the international
decline, Chevron said in the quarterly interim update.
“The company expects increased production in the fourth
quarter 2012 compared to the third quarter 2012, reflecting the
completion of planned turnarounds and restoration of shut in
production in the Gulf of Mexico,” Chevron said in a statement.
The company warned in July that it would fall short of its
original full-year 2012 forecast of 2.68 million bpd.
Prices for what Chevron extracted offered no relief, since
the third-quarter average Brent oil price of $110 per
barrel is down $2 on a year ago, and up only $1 on last quarter.
Before the interim update, analysts had expected a net
profit of $3.06 per share for the third quarter, according to
Thomson Reuters I/B/E/S, down from $3.56 in the second quarter
and $3.67 in the same quarter a year before.
But William Rutherford, president of Portland, Oregon-based
Rutherford Investment Management and a long-term Chevron
shareholder, saw the stock as a proxy for the energy sector and
had no doubt the management would turn things around.
“They’ve had a good record. I’m not concerned,” he said.
Shares of Chevron, which closed at $117.36 prior to the
warning, were down to $115.91 in after-hours trading on Tuesday.
The stock had posted a gain of 12 percent in the past three
months, while larger rival Exxon Mobil Corp was up 10
percent in that time. San Ramon, California-based Chevron is due
to report earnings on Nov. 2.
