Chevron posts lower than expected earnings; shares slip 2.5 per cent

Chevron Corp posted lower than expected earnings for the third quarter as maintenance worsened a decline this year in oil and natural gas production, and shares of the second-largest US oil company slipped 2.5 per cent.

Third-quarter production was down to 2.52 million barrels of oil equivalent per day from 2.60 million bpd a year earlier. With an expected fourth-quarter bounce, Chevron projected 2012 production to average about 2.6 million bpd, or 97 per cent of the original 2.68 million bpd target.

Smaller US oil company Hess Corp, however, delivered a strong increase in profits and production due to its interest in the Bakken oil basin in North Dakota, and a rejuvenated Libya operation.

Chevron's third quarter results were marred by a huge fire at its Richmond refinery in California that damaged the crude unit there. The unit is expected to be repaired in the first quarter, but according to the company, it had a limited impact on third-quarter earnings, which were hit hard by weak marketing margins.

Overall, third-quarter net income was down to $2.69 per share, as against $7.83 billion, or $3.92 per share, a year earlier. Earnings fell 17 per cent to $5.1 billion in the oil and gas production business and plunged 65 per cent to $689 million in the refining, or downstream, operation.

Chevron's reported profit included about $600 million from an asset sale gain, offset by a negative foreign exchange impact, according to analysts and omitting certain items, Chevron earned $2.55 per share, compared with the analysts' average estimate of $2.83, according to Thomson Reuters.