Chevron earnings hurt by refining; output below target
(Reuters) - Refining weakness led to a surprise decline in Chevron Corp's (CVX.N: Quote) quarterly profit, and oil and gas well output increased but remained below target, sending the company's shares down 2 percent.
Capital spending is running ahead of budget, while production is short of expectations due to a slow ramp-up of gas exports from Angola and damage to a customer's gas facility in Thailand from a lightning strike, the No. 2 U.S. oil company said on Friday.
But a bounceback in fourth-quarter oil and gas output would lead to Chevron producing between 98 percent and 99 percent of its 2013 forecast of 2.65 million barrels of oil equivalent per day (bpd), a company spokesman told analysts on a conference call.
U.S. refineries have been squeezed in the past year by a sharp reduction of the feedstock discount they had enjoyed from relatively cheaper U.S. crude oil, although that spread has started widening again over the past month.
Downstream difficulties were shared widely, with Chevron's larger rival Exxon Mobil Corp (XOM.N: Quote) reporting lower earnings on Thursday despite increased oil and gas output.
Some investors have been clamoring for more returns of capital from the world's biggest oil companies.
Chevron Chief Financial Officer Pat Yarrington reiterated that capital spending would flatten out once the company's huge Australian liquefied natural gas projects are out of the way, giving management more flexibility with cash.
"At the same time though, we do fundamentally believe our greatest value proposition for shareholders is finding and investing in the right resources and developing the right projects, so we will continue to invest in the business," she said.
Chevron's third-quarter net income fell to $4.95 billion, or $2.57 per share, from $5.25 billion, or $2.69 per share, a year earlier. Analysts, on average, had expected $2.71 per share, according to Thomson Reuters I/B/E/S. Continued...