Chevron’s Fourth-Quarter Net Income Rises on One-Time Gain

By Joe Carroll

Jan. 30 (Bloomberg) -- Chevron Corp., the second-biggest U.S. oil company, said fourth-quarter profit rose less than 1 percent as one-time gains made up for the largest plunge in crude prices on record.

Net income climbed to $4.9 billion, or $2.44 a share, from $4.88 billion, or $2.32, a year earlier, San Ramon, California- based Chevron said today in a Business Wire statement. The results included a $600 million gain on an asset exchange.

Stung by a $100 drop in oil prices, producers are cutting budgets and reassessing projects conceived when U.S. crude futures were heading toward an all-time high above $147 a barrel reached in July. For Chevron, the collapse in prices coincided with a ninth straight quarter of declining output.

“Chevron’s production volumes have been disappointing,” said Brian Youngberg, an analyst at Edward Jones & Co. in Des Peres, Missouri, who rates the company’s shares “buy” and doesn’t own any. “They’re growth- and reserves-challenged.”

The statement was released before the opening of regular U.S. stock trading. Chevron fell $3.17 to $70.62 yesterday in New York Stock Exchange composite trading. The stock dropped 21 percent last year, Chevron’s biggest decline since 2002.

Worldwide oil demand will increase 0.5 percent this year after shrinking in 2008 for the first time since 1983, the International Energy Agency said last month. The 2009 forecast is less than one-fourth the average rate of growth in 2004-2007.

Prices Decline

Oil futures on the New York Mercantile Exchange fell 56 percent in the fourth quarter, and natural-gas futures slid 24 percent. Gas has continued to tumble since the end of 2008, falling 20 percent as new wells in Louisiana, Texas and Arkansas create a surfeit.

Chevron may sell some refineries because of shrinking profit margins on gasoline and diesel, John Watson, executive vice president for strategy and development, said last month at an energy conference in New York. The company’s refining profit slumped 59 percent in the first three quarters of 2008 as fuel prices failed to keep pace with oil costs.

Chevron, which triggered the Saudi energy boom with the 1938 discovery of oil in the kingdom, wants to focus on higher- profit ventures such as gas production off the coast of Australia and oil projects in West Africa and the Gulf of Mexico, Watson told investors and analysts at the conference.

Irving, Texas-based Exxon Mobil Corp., the world’s largest oil company, said today that its fourth-quarter net income fell the most in six years, sliding 33 percent to $7.82 billion, or $1.55 a share.

Royal Dutch Shell Plc, Europe’s largest oil company, yesterday reported its first loss in a decade, at $2.81 billion. Houston-based ConocoPhillips, the third-biggest U.S. oil company, this week posted the largest loss in its history, at $31.8 billion, on costs recorded to reflect a plunge in the value of acquired assets.

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