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Higher oil prices help Chevron more than double 3Q net income, but production slips
Chevron Corp.'s quarterly profit more than doubled as a jump in petroleum prices made up for declining production.
Chevron, the second-largest U.S. oil company after Exxon Mobil, said Friday that it sold oil and natural gas at sharply higher prices in the third quarter. The price of gasoline, diesel, jet fuel and other fuels also increased from a year ago, boosting profits at its refineries.
The results mirror those of other oil giants that reported earlier this week. Despite lower oil production, Exxon Mobil Corp.'s net income rose 41 percent and profits doubled for BP and Royal Dutch Shell.
For Chevron, oil and natural gas production suffered from July to September because of pipeline troubles in Thailand, tropical storms in the Gulf of Mexico and equipment issues in the United Kingdom and Australia.
"Third quarter 2011 was an obvious lull in production for us," Chief Financial Officer Patricia Yarrington said in a conference call with investors. "We do expect to see notably increased production during the fourth quarter."
Chevron, based in San Ramon, Calif., reported net income of $7.83 billion, or $3.92 per share, for the quarter. That compared with $3.77 billion, or $1.87 per share, a year earlier. Revenue rose 26 percent to $61.3 billion.
Results beat expectations of $3.47 per share but fell short of revenue estimates of $70.4 billion, according to FactSet.
Shares rose 38 cents to close at $109.64.
Chevron operates a global network of oil and gas fields from Argentina to Azerbaijan. Those operations boosted profits 74 percent in the July-to-September quarter, even though production declined 5 percent overall. Income rose as refineries paid more for every barrel that Chevron pumped from the ground. The company sold oil for $97 per barrel in the U.S., up 41 percent from last year. Internationally, it was able to sell oil at $103 per barrel, up 47 percent.
Similarly, higher prices for gasoline, diesel, jet fuel and other petroleum products boosted profits at the company's refineries. Chevron's downstream business ' which includes refineries and thousands of gasoline stations with its striped red-and-blue logo ' used relatively cheap varieties of crude to make higher-priced fuel.
Higher fuel prices more than made up for lower production in the U.S. and overseas. Chevron's downstream business reported a more than threefold jump in profit for the quarter.