Chevron Third-Quarter Profit Rises After Oil Tops $147 a Barrel

By Joe Carroll

Oct. 31 (Bloomberg) -- Chevron Corp., the second-largest U.S. oil company, said third-quarter profit doubled after crude topped $147 a barrel for the first time.

Net income climbed to $7.89 billion, or $3.85 a share, from $3.72 billion, or $1.75, a year earlier, San Ramon, California- based Chevron said today in a Business Wire statement. Per-share profit excluding such items as divestiture gains and damage from hurricanes in the Gulf of Mexico was $3.94, 67 cents higher than the average of 12 analyst estimates compiled by Bloomberg.

Oil futures in New York averaged more than $118 a barrel, up 57 percent from a year earlier, the biggest third-quarter increase since the contracts began trading in 1983. The price surge outweighed Chevron's eighth straight quarter of declining production. With crude down more than $70 a barrel from the record set in July, producers may have to trim drilling budgets or delay some wells, said John Escario of Rydex Investments.

``Oil's been on a tremendous run, but it's given up more than 50 percent of its value since the summer,'' said Escario, who helps manage $13 billion at Rockville, Maryland-based Rydex. ``In the next year it's hard to see demand picking up because we'll still be trying to put the economy back together.''

Worldwide demand for petroleum-based fuels such as gasoline and jet fuel will grow this year at the slowest pace since 1993, the International Energy Agency said in an Oct. 10 report. The Paris-based group pegged 2008 demand growth at 0.5 percent, one- fourth the average annual rate of the past five years.

Irving, Texas-based Exxon Mobil Corp., the world's largest oil company, reported yesterday that its third-quarter profit rose 58 percent to $14.8 billion. Europe's Royal Dutch Shell Plc posted a 22 percent gain to $8.45 billion.

BP, ConocoPhillips

Both companies exceeded analyst earnings estimates, as did London-based BP Plc and U.S. producers Marathon Oil Corp. and Occidental Petroleum Corp. when they reported profit increases this week. ConocoPhillips, the No. 3 U.S. oil company, posted a 41 percent gain in net income to $5.19 billion last week.

The Chevron earnings statement was released before the opening of regular U.S. stock trading. Chevron rose $3.18 to $74.18 yesterday in New York Stock Exchange composite trading. The shares have fallen 21 percent this year.

Chevron's petroleum production dropped about 8 percent, the biggest quarterly decline since at least 2001, according to Tina Vital, an analyst at Standard & Poor's in New York.

Output fell partly because of contracts with oil-rich nations that inversely link the company's share of output to energy prices, Vital said. Hurricanes Gustav and Ike, which struck the U.S. in September, idled wells and toppled platforms in the Gulf of Mexico.

To contact the reporter on this story: Joe Carroll in Houston at jcarroll8@bloomberg.net.