Chevron expects third- quarter earnings to be similar to the second quarter, with weaker oil prices and output offset by a $500 million gain from the sale of its Welsh refinery and other British marketing assets.
The second-largest U.S. oil company reported a
$7.7 billion net profit in the second quarter, and analysts had
previously been looking for $6.5 billion on average in the third
quarter, according to Thomson Reuters.
But
any improvement in near-term profit estimates could be offset by
lingering concerns about efforts by leading private-sector oil companies
to increase their oil and gas production.
Chevron's
international oil-equivalent production fell to 1.93 million barrels
per day (bpd) in the first two months of the quarter from 2 million in
all of the second quarter, the company said in its quarterly interim
update Tuesday.
Chevron
said this drop largely reflected a now-remediated third-party pipeline
incident in Thailand and planned work in Kazakhstan and Britain,
predicting better production this quarter as these effects disappear and
new output is added.
Average
U.S. production in July and August fell to 676,000 bpd from 694,000 in
the second quarter, it said, blaming that on maintenance work in the
Gulf of Mexico.
In
total, Chevron reported 2.60 million bpd of oil-equivalent production
for the first two months of the quarter, down from 2.69 million in the
second quarter.
In
July, Chevron trimmed its average 2011 output estimate by 30,000 bpd to
2.76 million, assuming oil at $79 per barrel, or 2.73 million bpd with
Brent crude prices assumed at $111. Under production-sharing contracts,
pricier oil means Chevron must leave more output in the hands of
state-owned partners around the world.
Brent crude averaged $112 per barrel in the quarter, down from $117 in the second quarter but up from $77 a year before.
Chevron
switched to using Brent from the U.S. benchmark of West Texas
Intermediate earlier this year when calculating production-sharing
contract changes.
Chevron,
offering the quarter's first big oil company view of last quarter,
cited data showing refining margins were mixed overall. They edged
higher in Singapore and Europe, while U.S. refining margins came off
their second-quarter peaks, which was anticipated by a Chevron executive
in May.
As for
the one-off $500 million gain for the downstream division, Valero
Energy, the largest U.S. company focused solely on refining, closed its
$730 million purchase of Chevron's Pembroke refinery in August.
Chevron shares [CVX
97.78
0.18
(+0.18%)
] slipped immediately after the interim update.
The San Ramon, California-based company reports its third-quarter results on Oct. 28.