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Chevron Corp, the second-largest U.S. oil company, said second-quarter profit would be higher than the previous quarter as improved refining margins offset lower oil prices. Analysts had been expecting a net profit of $3.20 per share, according to Thomson Reuters I/B/E/S, down from $3.27 in the first quarter and $3.85 in the same quarter a year before.
But "significantly higher" earnings from its refining operation would drive the improvement, Chevron said, as its U.S. refining margins came in higher than in the three months before. It cited industry figures showing Gulf Coast margins up more than $4 per barrel to $24.89, while West Coast margins improved to $21.32 per barrel, their highest three-month average in four years. While Chevron's largest refinery is in Mississippi, with 330,000 bpd of capacity, its two California plants can together refine 518,000 bpd.
On the upstream side of the business, Chevron said average U.S. production of oil and gas from wells rose to 665,000 barrels per day in April and May, from a daily average of 651,000 bpd for all of the first quarter. This reflected increased Gulf of Mexico output, it said.
Worldwide, Chevron produced the oil equivalent of nearly 2.62 million bpd in the first two months of the quarter, down from an average of 2.63 million in the first quarter and below its 2012 forecast of 2.68 million bpd.
"Continued shut-in of production at the Frade field in Brazil and planned maintenance in Kazakhstan contributed to the majority of the decline," Chevron said. "Production ramp-up at Usan in Nigeria partially offset these effects."
Frade has been shut since March, due to a spill there and a huge legal dispute, leading to a reduction of 30,000 bpd. Brazil's oil regulator said it expects to release a report next week on the causes of the November spill.
The company was not helped in the quarter by oil prices, with Brent crude averaging about $109 per barrel, down $9 from the first quarter and $8 below the average in the second quarter of 2011. Chevron's shares are up 4 percent in the past three months, while larger rival Exxon Mobil Corp is up 2 percent in that time. San Ramon, California-based Chevron is due to report second-quarter earnings on July 27. Shares of Chevron, which had closed 0.9 percent higher prior to the announcement, were little changed in after-hours trading at $104.90.
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