Chevron Has Most Profitable First Quarter In Its History

SAN RAMON, Calif. — Astounding profits in the oil industry are becoming as routine as the anguished looks of motorists filling up their gas tanks.

Chevron Corp. put yet another exclamation point on the oil patch's long run of prosperity Friday with a first-quarter profit of $5.17 billion, or $2.48 per share. That was up 10 percent from net income of $4.72 billion, or $2.18 per share, last year.

The performance exceeded the lofty expectations of analysts, helping lift Chevron shares 38 cents to $95.32.

It was the second-highest quarterly profit in the company's 129-year history and marked the most money that it has ever made during the January-March period. That puts the No. 2 U.S. oil company on track for its fifth straight year of record earnings.

About the only downside to the quarter was that Chevron earned relatively little from gasoline sales because it couldn't raise its prices fast enough to recover its own rising costs for oil. Like its peers, Chevron doesn't produce enough oil on its own to feed its refineries, forcing it to buy some on the open market.

The company's division that refines and sells gasoline earned $252 million during the first quarter, plunging 84 percent from $1.6 billion at the same time last year.

But Chevron still pumped out plenty of oil to cash in on prices that recently approached $120 per barrel before retreating slightly. In the United States, the San Ramon-based company pocketed an average of nearly $90 per barrel for crude oil sold in the first quarter, more than doubling the $38.03 per barrel at the same time last year.

Soaring oil prices provided a similar first-quarter lift to four of Chevron's biggest rivals _ Exxon Mobil Corp., ConocoPhillips, BP PLC and Royal Dutch Shell PLC.

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Collectively, Chevron and those four companies earned $36.9 billion in the first quarter, a 25 percent increase from last year.

By comparison, five of the world's most influential technology companies _ Microsoft Corp., IBM Corp., Intel Corp., Google Inc. and Apple Inc. _ earned $10.5 billion in the same period, up just 3 percent from last year.

While good news for the oil companies' shareholders, the industry's latest earnings gusher may provide more fodder for U.S. lawmakers who have been threatening to impose a windfall tax on the sector or adopt other measures aimed at increasing energy supplies. The political backlash could become even more acute as the price of gasoline rises above $4 per gallon in many parts of the country.

"President Bush and Congress must act immediately and take the obvious steps to end the crisis that threatens not only every consumer but our entire economy," said John Simpson, an advocate for Consumer Watchdog, a frequent industry critic.

Oil industry executives insist they have little control over prices that have been driven up amid concerns about diminishing supplies and the weakening dollar.

If the sentiments of speculative investors who have helped increase oil prices suddenly swing in the other direction, Chevron and other big oil companies will suffer _ particularly if the feeble U.S. economy weakens any further, Oppenheimer & Co. analyst Fadel Gheit wrote in a note Friday.

Chevron's first-quarter earnings improvement was even more impressive than the reported number indicated because last year's results were boosted $700 million by a one time-gain.

If not for last year's windfall and foreign exchange losses that shaved $45 million from this year's bottom line, Chevron's first-quarter profit would have been up by 31 percent, Citigroup analyst Doug Leggate estimated in a Friday research note.

As it was, the company's earnings were 7 cents above the average estimate among analysts surveyed by Thomson Financial.

But revenue of $65.95 billion fell well below analysts' forecast of $75.64 billion. Nevertheless, it still surged 37 percent from last year's $48.23 billion.

Chevron's revenue would have been higher if its oil production hadn't slipped by about 44,000 barrels per day from last year. The company's production averaged 2.6 million barrels of oil per day in the first quarter.

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AP Business Writer Adam Schreck in New York contributed to this report.

Comments

[Schnitzel]

The oil companies are doing well. It's supply and demand economics....not in the traditional free market sense, but the corporate socialist monopoly sense:
Those who control and manipulate the suppy can demand whatever price they want.

[MissingAmerica]

Another sign of the Bushonomics. This is absolutely obscene!

[samandally]

Does this really surprise anyone?

[josephjsalas]

I meant to say Feb '08. Oops.

[josephjsalas]

Murdoch tabloid tactics on the Dow seem to be paying off. Yet we keep thinking the presence
of this particular commodity worming it's way onto the DJI list in Feb '07 was some sort of
accident. Then again, maybe Chevron has bin drilling "Industrial Oil"!!!

[Sumocat]

Anyone else notice the analysts have been consistently overestimating oil company revenues this quarter, yet the oil companies have been showing incredible levels of growth? What the hell are these analysts smoking that record-breaking profits are falling short of their expectations?

[elderly]

They are not smoking anything. They are merely blowing smoke in all of our faces. By overestimating oil company revenue they give the talking heads the opportunity to frame their stories as oil companies not doing as well as expected.

Its sort of like going to Lord & Taylor when it is advertising a 50% sale 1 day after raising prices by 100% without advertising that fact (for those people who actually voted for george shithead, that means the price was higher after the sale was announced than 2 days before-I hope that the 3 of you can understand now).

[TheJibreelaMonsters]

Its Cali, if they did not have the "special blends" the gas would be cheaper.

[CheshireCat2]

After living there for the last couple of years, you don't even know the half of it. I can't wait to leave this God forsaken land of fruits and nuts. Anyone like to by a beach house in North County?

[Nommo]

I get by there as often as I can.

[vippy]

Why on earth would we need 14 different types of special blend gasoline. Also the the upgrades
like super and plus don't need to be on the market since the computer chips regulate it in the
vehicle. But no one is listening. If everyone would just drive the speed limit we would have so
much gas on the market they would have to bring it down some. But the drivers with the least
money drive the fastest. I always do my 60 and that is that, saving 20%.

[Reio2288]

Its not the government, its BIG BUSINESS CORPORATE GREED that is destroying our country. These elite few CEOs and their friends could not care less about their effect on america, the working class or anything or anyone else. Its time to STOP big business and return to them what they give us. Worthless jobs, no future and no return. The oil companys, like the banks are just organized crime and their executives nothing more than low life petty mobsters. Oil prices like illegal drugs are set by a cartel. I wonder if these guys would be a rich and cocky after 20 years in prison, I think the RICO statute fits this situation.

[hypnotoad72]

If we started drilling more fields here within our borders, would prices really come down?

[CheshireCat2]

That is a really good questions and one that could involve a dissertation.Let me also say that I own at least a few hundred shares of oils including services which was my way around tha pain at the pump. Now, it doesn't bother me since those shares have ranged in grow from 32% to over 100% profit on the refinery side. Bitching about it and wishing isn't going to help. But let me attempt to build on that. It would be the same people drawing out of the ground.Go figure! Then, you have to consider that they may be a deeper reason that we are "saving" the oil in our own backyard, sort of like the dog burrying his bone. Also, we killed refining here in the US with no knew refiners since 1979, due to all the clean air acts and taxes. It jusr made it cheaper to do business elsewhere.

[rikkirighteous]

If we grew twice as many potatos as we do, would the price come down?

I think people have a mental block about the word "oil." Demand will increase with people (and be cyclical, with markets and recessions) but diluting the production of any product forces prices lower.