SAN RAMON, Calif. – Chevron Corp., the nation’s second-largest oil company, joined in the industry’s third-quarter earnings boom, but didn’t capitalize on soaring fuel prices as much as some of its rivals because Hurricane Katrina and other storms crippled its Gulf of Mexico operations.
The San Ramon-based company said Friday it made $3.6 billion, or $1.64 a share, during the three months ended in September. That represented a 12 percent increase from net income of $3.2 billion, or $1.51 a share, in the same quarter of 2004.
Revenue for the period totaled $54.5 billion, a 34 percent increase from $40.7 billion last year.
The results were below the consensus earnings estimate of $1.91 a share among analysts surveyed by Thomson Financial. But that figure did not include the earnings that evaporated after Katrina and two other third-quarter hurricanes ,Rita and Dennis.
Chevron estimated its profit would have been at least $600 million higher if not for the hurricanes and several smaller storms. An additional profit of $600 million would have boosted Chevron’s earnings by about 27 cents a share, meaning the company might have matched the analysts’ estimate if not for the storms.
Chevron also warned that the financial fallout from the Gulf of Mexico storms will be even more severe in the fourth quarter.
The news didn’t come as a total shock to investors because Chevron warned in September that Katrina and other unexpected events would lower its third-quarter profit by at least $350 million. Chevron’s shares fell 61 cents, or 1.1 percent, to $55.89 in Friday trading on the New York Stock Exchange. The shares have dropped by 15 percent since hitting a 52-week high of $65.98 a month ago.
Like other major oil companies, Chevron benefited from substantially higher prices for crude oil and natural gas during the quarter. The prices for both fuels had been climbing through much of the year, then spiked to record levels after Katrina ravaged the Gulf of Mexico in late August and wiped out much of the energy industry’s domestic production capacity.
Chevron’s Pascagoula, Miss., refinery was among the major production facilities knocked out by Katrina, preventing the company from taking full advantage of the higher oil prices. Chevron shut down the Mississippi refinery, with a capacity to produce up to 325,000 barrels of oil per day, for a total of 40 days – nearly half of the third quarter.
All told, Katrina, Rita and the other storms curtailed Chevron’s third-quarter production by the equivalent of 90,000 barrels a day, said Chevron’s chairman, David O’Reilly.
The lost production prevented Chevron’s profit from hitting the stratospheric levels of other oil companies in the third quarter. ExxonMobil Corp., the only U.S. oil company larger than Chevron, earned a record $9.92 billion, a 75 percent increase over last year.
Meanwhile, Chevron earned slightly less than it in the second quarter, when oil prices weren’t as high.
So far, Chevron has restored about 45 percent of its production in the Gulf region. The Mississippi refinery, which reopened earlier this month, is expected to resume normal operations within the next few days, but it’s expected to take several more weeks to repair other damaged fuel production and distribution equipment.
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