Chevron profit up 49 percent as oil industry draws more ire

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Agence France Presse

NEW YORK, NY — Chevron said Friday its first-quarter profit surged 49 percent from a year ago to four billion dollars, the latest of the big oil companies to show strong gains from surging energy prices.

The number-two US oil firm said the profit amounted to 1.80 dollars a share, beating the Wall Street estimate of 1.78 dollars.

Revenues leapt 32 percent from a year ago to 54.6 billion dollars, the company said, “mainly as a result of higher prices for crude oil, natural gas and refined products and the inclusion of revenues related to the former Unocal operations acquired in August 2005.”

This week the top-three US oil producers, ExxonMobil, Chevron and ConocoPhillips, reported more than 15 billion dollars of profit in the first quarter of 2006, adding fuel to a debate over skyrocketing energy costs.

Some lawmakers have been pushing for a windfall profits tax, and on Thursday a group of Democratic senators urged an end to certain tax breaks for oil companies estimated at 5.4 billion dollars over 10 years.

“At the same time that American consumers are suffering under these high gasoline prices, oil companies are reporting record-breaking profits and their executives are receiving multi-million dollar retirement packages,” the senators said in a statement.

“There is no reason to continue tax policies that provide further tax windfalls to these companies.”

The Foundation for Taxpayer and Consumer Rights, a consumer advocacy group, said Chevron‘s report showed a 260 percent increase in its US refining and sales profits, “further proof that retail gasoline prices are rising far faster than the cost of production, despite oil company excuses about the price of crude oil.”

Chevron, in its statement, indicated that profits were driven by higher energy prices.

“Higher earnings in the first quarter were primarily driven by the performance of our upstream business,” said chairman and chief executive Dave O’Reilly.

“Prices for crude oil and natural gas were strong during the period, and oil-equivalent production increased nearly 10 percent from a year ago as a result of the Unocal acquisition last August.”

Upstream profits, which are related to its exploration and production operations, reached 3.46 billion dollars in the period, up from 2.38 billion a year ago.

Global downstream earnings, covering refining, marketing and transportation activities, reached 580 million dollars, up from 409 million last year.

O’Reilly added that the results were helped by the acquisition of Unocal, an exploration firm also sought by a Chinese state-owned firm.

“The former Unocal businesses have been efficiently integrated,” he said. “We are on target to capture the savings we anticipated from operational synergies, and the economics of the acquisition as currently assessed are even more favorable than initially estimated.”

On Thursday, market leader ExxonMobil announced a first-quarter profit of 8.4 billion dollars, up seven percent from last year but below the fourth quarter’s record of 10.7 billion. ConocoPhillips reported Wednesday first-quarter profit rose 13 percent from a year ago to 3.29 billion dollars with revenues surging on high oil prices.

Analyst Kimberly DuBord at said the industry remains attractive to investors.

“It has been a big week for big oil,” she said. “There have been some disappointments and some surprises, but for our part, we continue to recommend investors stay long on energy as the upside potential continues to outweigh the downside risk.”

Chevron shares rose 1.7 percent Friday to close at 61.02 dollars.

Consumer Watchdog
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