Chevron reports record profit;

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$17.14 billion for the San Ramon oil giant in 2006 helped by lower commodity prices

The San Francisco Chronicle

Chevron Corp. on Friday reported net income of $17.14 billion for 2006 — its third consecutive year of record earnings — despite a fourth-quarter profit dip.

The San Ramon oil giant said its net income for the final three months of the year was $3.77 billion ($1.74 per share), compared with $4.14 billion ($1.86) in the same quarter in 2005, reflecting lower prices for energy commodities and narrower refining margins.

Revenue for the quarter was $47.7 billion, down 11 percent from $53.8 billion in the year-ago period. Revenue for the year was $210.1 billion, up from $198.2 billion in 2005.

The earnings “benefited from an improvement in the operating performance of our oil and gas fields and refineries, especially in the United States,” Chevron CEO Dave O’Reilly said in a statement. “However, this benefit to earnings was more than offset by the effect of a sharp decline in U.S. natural gas prices from a year earlier.”

On Thursday, Exxon Mobil Corp., the largest U.S. oil company, reported the biggest annual corporate profit ever in the United States — $39.5 billion.

Wall Street analysts praised Chevron‘s performance despite the fourth quarter drop-off and said Chevron should post another good year in 2007.

“There is a very strong balance sheet,” said Edward Jones analyst Lanny Pendill in St. Louis. “The return on capital is 23 percent — that is competitive with their peers. They continue to make a lot of discoveries, an indication of what is yet to come in future pipelines.”

Chevron said it plans to spend a record $19.6 billion on capital expenditures in 2007, compared with $11.1 billion in 2005 and $16.6 billion in 2006.

Consumer advocates said the company’s record year came at the expense of motorists in California, where Chevron is the state’s largest refiner.

Chevron “is not only forcing soccer moms and truckers to feel a lot of pain, but pinching the economy — from restaurant owners who are paying more for deliveries to diners who pay more for food,” said Jamie Court of the Foundation for Taxpayer and Consumer Rights in Santa Monica.

Chevron had previously warned that it expected profits to be restrained by lower commodity prices, lower refinery margins and lower utilization due to planned maintenance and construction activities worldwide. On Friday, Chevron said its refining and marketing division profit fell 11 percent, to $343 million.

Chevron‘s profit, which totaled $44 million in the past three years, as well as the outsized earnings of other major oil companies, have prompted the California attorney general’s office and Congress to investigate alleged anti-competitive practices. No major oil companies have been formally charged with gouging in recent years.

Chevron Corp. Earnings

Net income per quarter – In billions of dollars

2005 — Q1= 2.67 — Q2= 3.68 — Q3= 3.59 — Q4= 4.14

2006 — Q1= 3.99 — Q2= 4.35 — Q3= 5.01 — Q4= 3.77

Source: Chevron Corp. & The Chronicle


4th Quarter — 2006 — 2005

Revenue — $47,700,000,000 — $53,800,000,000

Net profit — $3,770,000,000 — $4,140,000,000

Share earnings — $1.74 — $1.86

Full Year — 2006 — 2005

Revenue — $210,100,000,000 — $198,200,000,000

Net profit — $17,140,000,000 — $14,100,000,000

Share earnings — $7.80 — $6.54

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