NEW YORK (Reuters) – Chevron Corp, the second-largest U.S. oil company, reported a 43 percent jump in quarterly profit on Friday, beating Wall Street forecasts as strong oil prices and fatter refinery margins offset a drop in oil output.
Second-quarter profit rose to $7.7 billion, or $3.85 per share, from $5.4 billion, or $2.70 per share, a year earlier.
Analysts had expected the company to post earnings of $3.56 per share, according to Thomson Reuters I/B/E/S.
Chevron reported 2.69 million barrels per day (bpd) of oil-equivalent production, compared with 2.75 million in the year-ago.
Chevron had targeted average 2011 output of 2.79 million bpd, or 1 percent growth, but that plan assumed lower oil prices. Higher crude prices mean Chevron must leave more production in the hands of its state-owned partners.
European benchmark Brent oil prices averaged $117 per barrel in the second quarter, up from $79 in the same quarter in 2010 and $11 higher than the first quarter. Chevron said in April that it switched to Brent from the U.S. benchmark when calculating production-sharing changes.
Revenue rose 30 percent to $69 billion.
On Thursday, Exxon Mobil reported a 41 percent increase in quarterly profit, but fell short of analysts' forecasts.
Shares of Chevron slipped 0.8 percent in premarket trading.
(Reporting by Matt Daily, additional reporting by Braden Reddall in San Francisco, editing by Dave Zimmerman)
WASHINGTON (Reuters) – The economy grew less than expected in the second quarter as consumer spending barely rose amid higher gasoline prices, and growth braked sharply in the prior quarter, a government report showed on Friday.
Growth in gross domestic product -- a measure of all goods and services produced within U.S. borders - rose at a 1.3 percent annual rate, the Commerce Department said. First-quarter output was sharply revised down to a 0.4 percent pace from 1.9 percent.
Economists had expected the economy to expand at a 1.8 percent rate in the second quarter.
In addition, fourth-quarter growth was revised down to a 2.3 percent pace from 3.1 percent, indicating that the economy had already started slowing before the high gasoline prices and supply chain disruptions from Japan hit.
Economists had expected the economy would show signs of perking up by now with Japan supply constraints easing and gasoline prices off their high, but data has disappointed. This and the sharp downward revisions to the prior quarters suggest a more troubling and fundamental slowdown might be underway.
There is also heightened uncertainty over the outlook because of the impasse in talks to raise the nation's borrowing limit and avoid a damaging government debt default.
The Treasury says the government will soon run out of money to pay all its bills.
Economists have warned that a debt default could push the fragile economy over the edge.
"The implications of more rancorous foot dragging would be bad for an economy already in a precarious state," said Julia Coronado, chief North America economist at BNP Paribas in New York. "Uncertainty continues to tax an already fragile recovery."
Data released on Friday showed the 2007-2009 recession was much more severe than prior measures had found, with economic output declining a cumulative of 5.1 percent instead of 4.1 percent.
The annual revisions of U.S. GDP data from the Commerce Department showed the economy contracted at an annual average rate of 0.3 percent between 2007 and 2010. Output over that stretch had previously been estimated to have been flat.
The economy needs to grow at a rate of 2.5 percent or better on a sustained basis to chip away at the nation's 9.2 percent unemployment rate.
CONSUMER SPENDING BRAKE SHARPLY
The March earthquake in Japan severely disrupted U.S. auto production. The resulting shortage of motor vehicles weighed on retail sales as consumers were unable to find the models they wanted. That combined with high gasoline costs to curb spending.
Consumer spending, which accounts for about 70 percent of U.S. economic activity, decelerated sharply to a 0.1 percent rate -- the weakest since the recession ended two years ago.
Spending grew at a 2.1 percent pace in the first quarter.
Motor vehicle production subtracted 0.12 percentage point from gross domestic product growth in the second quarter, after adding 1.08 percentage points to first-quarter GDP growth.
The composition of growth in the April-June quarter was weak and could prompt economists to dial down their expectations for a quick and solid rebound in the third quarter.
A smaller trade deficit , as imports slowed, was one of the main contributors to the rise in second-quarter growth, with businesses spending and inventory investment also adding to output.
Government spending declined again in the second quarter as state and local authorities continued to pare their budgets, even though defense expenditures rebounded at 7.3 percent rate after contracting at a 12.6 percent rate in the first three months of the year.
Home building rose at a 3.8 percent pace, while investment in nonresidential structures increased at an 8.1 percent rate.
The easing of the auto parts disruptions and a drop in gasoline prices could be a tail wind to third-quarter growth, but economists are concerned that June data was rather weak.
"All the data we got for June thus far suggest that as we entered the third quarter, we did not gain any momentum setting up for a good third quarter," said Christopher Probyn, chief economist at State Street Global Advisors in Boston. "We are not starting the third quarter on a positive note," said Probyn, speaking before the GDP report was released.
The report also showed a moderation in inflation pressures, with the personal consumption expenditure price index rising at a 3.1 percent rate after rising 3.9 percent in the first quarter. Excluding food and energy, the core PCE index rose 2.1 percent, the fastest since the fourth quarter of 2009, after rising 1.6 percent in the first quarter. It overshot the Federal Reserve's preferred 2.0 percent level.
(Reporting by Lucia Mutikani; Editing by Neil Stempleman)
PARIS/MILAN (Reuters) – French and Italian oil majors Total SA (TOTF.PA) and Eni SpA (ENI.MI) reported lower second-quarter profits on Friday, reflecting dollar weakness and production outages partly due to fighting in Libya which shut some fields.
Total said second-quarter net income, excluding one-offs and non-cash gains due to changes in the value of fuel inventories, fell 6 percent from the same period last year to 2.79 billion euros ($4 billion), just below the 2.85 billion average forecast in a Reuters analysts poll.
Eni's underlying net profit fell 14 percent to 1.44 billion euros compared with an average forecast of 1.65 billion, as Libyan outages pushes its production down 12 percent to 1.49 million barrels of oil equivalent per day (boepd).
A 13 percent dip in the dollar hit both companies as the price of the crude they produce is denominated in the U.S. currency.
In dollar terms, Eni's net income fell only 2 percent and Total's underlying result was up 7 percent, performances that still paled in comparison to those of bigger rivals Royal Dutch Shell (RDSa.L) and Exxon Mobil (XOM.N), which posted profit rises of 56 percent and 41 percent respectively.
Even at Norway's Statoil, the rise was 39 percent.
Total shares traded down 1.8 percent at 37.65 euros by 1100 GMT (7 a.m. EDT) in Paris, wiping more than 1.5 billion euros of its market value, while Eni shed 1.1 percent to 15.21 euros in Milan.
The European oil and gas sector (.SXEP) fell 1.1 percent.
"The earnings miss against the consensus ... was notable because it is so rare at Total, which is so consistent," UBS analyst Jon Rigby said in a note, while CA Cheuvreux analyst Jean-Charles Lacoste called Eni's update disappointing.
Total lost around 2 percent of oil and gas output, despite the acquisition of a 12 percent stake in Russian gas company Novatek (NOTK.MM), as the Libyan conflict and maintenance downtime in North Sea fields pushed overall production to 2.31 million barrels of oil equivalent per day.
This highlighted the difficulty for Western oil companies to match natural field decline with new finds.
Total has spent billions of euros in recent months to build up its presence in energy-rich countries such as Russia, Canada, Brazil or Australia, but it has yet to fully benefit from this investment.
The start-up of the 220,000 barrel per day Pazflor field offshore Angola should contribute "substantially" to near-term output growth, while major gas projects in Australia and Russia will bolster production at a later stage, the French group said.
It targets 2 percent average annual output rise in 2010/15.
Meanwhile Eni predicted a 10 percent drop in hydrocarbon production from 1.82 million boepd in 2010, a fall stemming from the near complete shutdown of operations in Libya, where Eni is the biggest foreign operator.
Eni said it could quickly restart output at its Libyan fields when the fighting there ended, as no damage had been reported to its facilities -- echoing comments on Thursday from Spanish rival Repsol (REP.MC), which also has large operations in the North African country.
Total, Europe's largest refiner by capacity, also reported lower profits from its refining division due to weak crude processing margins. The so-called downstream business saw adjusted net operating income fall 59 percent year on year.
Total shut the Gonfreville refinery in France and sold its stake in Cepsa (CEP.MC) earlier this year as part of a move away from the low-margin European refining sector. It has also been in talks for at least 18 months to sell its Lindsey refinery in Britain.
(Writing by Tom Bergin; Editing by David Holmes)