Chevron profit up despite output drop

Profit up: At Chevron, led by CEO John Watson

Chevron posted a rise in second-quarter profit despite a drop in production and racking up some foreign exchange losses.

The US supermajor saw net profit increase from $5.4 billion in the three months to the end of June last year to $5.69 billion this time around.

Revenues rose from $57.37 billion to $57.94 billion due to "stronger market conditions for crude oil", said chief executive John Watson.

However, this was partially offset by lower production, primarily due to planned maintenance in Kazakhstan.

Average output was at 2.55 million barrels of oil equivalent per day, down from 2.58 million boepd in last year's second quarter.

"Production increases from project ramp-ups in the US, Nigeria, Brazil and Argentina were more than offset by price and other production entitlement effects in several locations, normal field declines, and maintenance-related downtime at Tengizchevroil in Kazakhstan," the California-based player said on Friday.

US production was up 8000 boepd, or 1%, from a year ago to 667,000 boepd, due to increases in the Permian basin in Texas and New Mexico, as well as in the Marcellus in Pennsylvania.

Upstream earnings from US operations were, however, down $29 million to $1.05 billion "as gains on asset sales and stronger crude oil and natural gas realisations were more than offset by additional depreciation, exploration and operating expenses", Chevron said.

International upstream earnings increased, however, $344 million to $4.21 billion due in large part to the sale of assets in Chad and Cameroon.

Chevron sold its 25% non-operated stake in a producing oil concession and related export pipeline interests in southern Chad to the local government in June for $1.3 billion.

Exploration and depreciation expenses were higher, however, while foreign currency effects decreased earnings by $147 million, compared to an increase of $275 million a year earlier.

In fact, foreign currency effects in total decreased earnings by $232 million, compared with an increase of $302 million last time around.

Watson commented: "We continue to make significant progress on our major capital projects which are expected to underpin a 20% increase in production by 2017 and enable significant growth in our cash flows.

"In the deep-water Gulf of Mexico, our production is expected to benefit in the near-term from start-up of the Jack/St Malo Project later this year and the Big Foot project in 2015.

"In Australia, our Gorgon and Wheatstone liquefied natural gas projects continue to reach important interim milestones. Gorgon remains on track for expected start-up in mid-2015.

"We are also advancing the development of our liquids-rich, unconventional properties in the US, Canada and Argentina."

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