Houston (Reuters) – American energy giant Chevron Corporation reported a surprise decline in quarterly profit on Friday, hurt by weakness in the oil refining business, while production from wells increased for the No. 2 U.S. oil company but remained below target.
Chief Executive John Watson said the profit decline mainly reflected lower margins for refined products.
Third-quarter net income fell to $4.95 billion, or $2.57 per share, from $5.25 billion, or $2.69 per share, a year earlier. Analysts, on average, had expected $2.71 per share, according to Thomson Reuters I/B/E/S.
The company produced 2.59 million barrels of oil equivalent per day in the quarter, up from 2.52 million bpd a year earlier. The company has been targeting 2.65 million bpd for this year, with output expected to grow by 25 percent by 2017.
A large part of the growth in coming years will be from Chevron’s Australian liquefied natural gas projects, Gorgon and Wheatstone. Because of the cost of those projects, annual capital spending has risen by $7 billion in two years to a planned $36.7 billion in 2013.
Chevron said third-quarter profit from well output was slightly lower than last year, while earnings from its downstream arm, which includes refineries and chemical production, fell 45 percent to $380 million.
The downstream difficulties were shared across the sector, with larger rival Exxon Mobil Corp posting a decline in earnings on Thursday despite an increase in oil and gas output.
Chevron shares fell 0.8 percent to $119.01 in premarket trading Friday morning.