Chevron’s quarterly profits plunge 51% - Oil company hit by falling commodity prices

Chevron’s production grows as profits fall - Oil company hit by falling commodity prices
By Sheila McNulty in Houston
Copyright The Financial Times Limited 2009
Published: October 30 2009 13:35 | Last updated: October 30 2009 16:38
http://www.ft.com/cms/s/0/db1a3266-c558-11de-8193-00144feab49a.html?catid=7&SID=google


Chevron, the second-biggest US oil company, on Friday reported nearly 11 per cent growth in net oil-equivalent production – a rise far above that of its peers.

After years of criticism by analysts for poor execution even after exploration successes, analysts say Chevron has become an industry leader in production growth.

“Chevron is currently by far the strongest volume growth story in the integrateds,” said Mark Flannery, oil analyst at Credit Suisse. ”This is the best set of results from Chevron for a long time.”

The production success came despite a 51 per cent fall in net income from the year-earlier period to $3.83bn, on plunging commodity prices that have been a drag on the entire sector’s results. Chevron’s revenue was $46.6bn, down from $78.9bn.

“This operational success helped mitigate a decline in earnings that was driven by sharply lower prices for crude oil and natural gas,’’ said Dave O’Reilly, Chevron’s chief executive.

The growth was driven primarily by the startup of new Gulf of Mexico production and was also boosted by a particularly mild hurricane season in the area.

The companies production volumes exceeded even those of BP, whose output grew 7 per cent from the third quarter of 2008 as fields such as Thunderhorse in the Gulf of Mexico came online after after severe delays.

Chevron is set to continue its production growth developing the Gorgon liquefied natural gas project in Australia.

In depth: Oil

Crude oil prices have doubled since February’s low of $32 a barrel, raising concerns that global economic recovery could be jeopardised

Mr O’Reilly said the Gorgon project represents a “major milestone in the company’s strategy to commercialize its significant natural gas resource base in Australia.’’

The production gains helped Chevron’s results beat most of its peers. Only BP matched it, with just a 50 per cent drop in profits in the third quarter.

The world’s biggest publicly listed oil company, ExxonMobil, reported a 65 per cent drop in profits, Shell revealed a 73 per cent drop, while ConocoPhillips posted a 71 per cent drop.

Chevron’s share price dropped 2.18 per cent to $76.42 at midday as the overall market fell.