Financial Times: Chevron feels the force of hurricanes: “…storm brewing in Washington over profiting by the major oil and gas companies at the expense of consumers. This marked a week of record profits by Exxon, Royal Dutch Shell and others at a time when lawmakers are floating punitive measures, such as a windfall-profit tax for the companies.”: Saturday 29 October 2005
By Sheila Mcnultyin Houston
Published: October 29 2005
Chevron's expected windfall from high energy prices was dented by hurricane damage in the third quarter, leaving the US oil and gas company with a 12.5 per cent rise in net income, versus 75 per cent at larger rival ExxonMobil.
The company said the storms reduced quarterly earnings of $3.6bn by more than $600m, cutting oil and natural gas production by about 90,000 oil-equivalent barrels per day, and forcing a key refinery to shut for 40 days.
Dave O'Reilly, chairman and chief executive of the US's second-biggest energy group by market value, said the effects on fourth-quarter results were expected to be even more significant.
Chevron is incurring repair and maintenance costs for offshore and onshore facilities, asset write-offs and expenses for other uninsured storm-related items.
Hurricanes Katrina and Rita offset earnings contributions from newly acquired Unocal, which it included for two months of the quarter. Analysts had expected Chevron to report earnings per share of $1.91, but at $1.64 it was the smallest gain of the US companies.
However, that is unlikely to shield Chevron from the storm brewing in Washington over profiting by the major oil and gas companies at the expense of consumers. This marked a week of record profits by Exxon, Royal Dutch Shell and others at a time when lawmakers are floating punitive measures, such as a windfall-profit tax for the companies.
"None of these items is unique to Chevron this quarter, but the bottom line result will still be seen as disappointing, and the company is guiding to more substantial hurricane impacts in the fourth quarter," said Mark Flannery of CSFB.
While Chevron may have fared worse than its peers, it still pulled in $54.5bn in revenue, up 34 per cent from the year-earlier quarter, on higher prices for crude oil, natural gas and refined products, as well as including Unocal revenues, which it acquired in August.
Chevron's oil-equivalent production increased 105,000 barrels per day to 2.6m, including 425,000 barrels per day for two months from Unocal.
Total refined produced sales were 8 per cent lower than last year's third quarter, mostly because of lower gasoline and fuel oil trading activity.
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