Chevron Corp. reported lower quarterly earnings on Friday, missing Wall Street forecasts, as rising spending on oil and gas projects and losses at its U.S. refinery business offset gains from higher crude oil prices.
Oil and gas output at the No. 2 U.S. oil company also declined to 2.64 million barrels per day (BPD) from 2.79 million BPD a year-ago, although benchmark oil prices rose about 25 per cent during the quarter.
Chevron had said earlier this month its refinery margins were suffering and would be near breakeven for the quarter, but the U.S. losses pulled the entire segment into the red, and the company's profits from oil and gas sales also appeared weaker than expected.
"It was a miss on some non-controllable factors," said Pavel Molchanov, analyst with Raymond James in Houston, citing the timings of sales and global pricing differences as the likely reason oil and gas profits fell about $500 million (U.S.) below his forecast.
Still, Chevron added 1.67 billion barrels of oil equivalent to its reserves last year, 171 per cent of its 2011 output, a very strong performance, Mr. Molchanov said.
Chevron is embroiled in two major legal battles in South America, where a Brazilian prosecutor plans to file criminal charges against it and some of its local managers.
The company is facing an $11-billion lawsuit there related to an offshore oil spill in November, and it also remains locked in a legal war against plaintiffs in Ecuador, who won an $18-billion judgment against it in a court there.
Fourth-quarter profit slipped to $5.1-billion, or $2.58 per share, from $5.3-billion, or $2.64 per share, a year earlier.
That fell short of the $2.84 per share that analysts had forecast, according to Thomson Reuters I/B/E/S.
Chevron's warning of weaker earnings on Jan. 11 knocked 17 cents per share off the average analyst estimate.
Among other U.S. oil companies, the quarterly profits from ConocoPhillips and Occidental Petroleum Corp. earlier this week topped Wall Street estimates, though Hess Corp. fell short.
Exxon Mobil is due to report earnings on Tuesday, Jan 31.
Chevron is spending piles of money on production growth that will not really kick in until 2014. Its 2012 capital budget of $32.7-billion is nearly $5-billion higher than last year.
In the fourth quarter, Chevron's spending on oil and gas projects in the United States nearly doubled from a year ago to $2.0-billion, while outside the U.S. it grew by more than a quarter to $5.1-billion.