Chevron's
profit beats as chemical sales offset cheap oil
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[January 31, 2015]
By Ernest Scheyder
WILLISTON, N.D. (Reuters) - Chevron Corp
<CVX.N>, the second-largest U.S. oil producer, reported a
higher-than-expected quarterly profit on Friday as sales of chemicals,
lubricants and other refined products helped offset plunging crude
prices <CLc1>.
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That drop in crude prices, about 60 percent since June, has eroded
margins across the oil industry and forced scores of companies to
slash spending budgets. Royal Dutch Shell <RDSa.L>, a so-called
international oil company like Chevron, said on Thursday it would
cut its spending over the next three years by $15 billion.
Taking similar steps, Chevron executives slashed the company's 2015
capital budget by 13 percent to $35 billion.
"We enter 2015 with the financial strength to meet the challenges of
a volatile crude price environment and with significant efforts
under way to manage to a lower cost structure," Chief Executive
Officer John Watson said in a statement.
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Indeed, the strength of the company's downstream operation, which
sells those refined products, proved to be the main bright spot for
Chevron this quarter, with profit in the division spiking nearly
fourfold.
Earnings in Chevron's upstream unit, which finds and produces oil
and gas, dropped 45 percent.
In total, Chevron posted fourth-quarter net income of $3.47 billion,
or $1.85 per share, compared with $4.93 billion, or $2.57 per share,
a year earlier.
Analysts on average had expected earnings of $1.63 per share,
according to Thomson Reuters I/B/E/S.
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Foreign currency conversion charges dented earnings by $432 million,
Chevron said.
Production between the quarters held steady at 2.58 million barrels
of oil equivalent per day.
Shares of the San Ramon, California-based company fell about 1
percent to $102 in premarket trading on Friday.
(Reporting by Ernest Scheyder; Editing by Franklin Paul and Lisa Von
Ahn)
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