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Chevron, Total post sharply higher profit


Rogelio V. Solis

Chevron Corp. and Total SA posted sharp gains in quarterly profit on Friday, the latest among the major oil companies to see their coffers swell on the strength in oil prices.

First-quarter crude prices were nearly double that of the quarter a year earlier, driving up profits for Exxon Mobil Corp., BP PLC, Royal Dutch Shell PLC and ConocoPhillips Co., which all reported earnings this week.

The huge growth in profits comes as scrutiny of the oil industry increases because of the disastrous oil spill in the Gulf of Mexico, which reached wildlife refuges on the Louisiana coast on Friday.

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Chevron's profit more than doubled from a year earlier, in estimate-beating debut results under chief executive officer John Watson. The 30-year Chevron veteran is plotting a familiar course for the company, saying he wants to revive the refining business and stick with its pipeline of oil and gas projects.

"They're in good shape," Edward Jones analyst Brian Youngberg said of Chevron under its new leadership. "There's really no need to make any significant change."

Total's net profit rose 23 per cent, matching estimates.

Oil price strength and increased output of oil and gas overshadowed weaker profit margins from refineries at Chevron.

Total, which also saw strong production growth, saw its refining profit hurt by strikes related to a plant closing.

Still, nearly all the majors capitalized on higher oil prices, with Exxon, Chevron and Total recording oil and gas production growth of 4.5 per cent against a year ago. Shell led with a 6 per cent gain, though BP's production was flat from a year earlier.

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Total produced 2.43 million barrels of oil equivalent per day in the quarter, while Chevron reached 2.78 million boe/d, far above the company's 2.73 million boe/d forecast for 2010.

Refining suffered as the slack global economy kept demand weak for products such as diesel, gasoline and fuel oil. Chevron's downstream profit fell, even if it was a dramatic recovery from a big loss the quarter before.

Total, Europe's biggest refiner, said operating income from refining fell 74 per cent, due to lower margins and outages due to strikes related to a plant closure.

Total said adjusted net income, excluding unrealized gains related to increases in the value of inventories, rose 9 per cent compared with the same period in 2009 to €2.3-billion ($3.1-billion U.S.), in line with analysts' forecasts.

Chevron's first-quarter net profit at the second-largest U.S. oil company more than doubled to $4.55-billion, or $2.27 per share. Excluding charges, earnings of $2.36 per share easily topped the $1.94 that analysts on average had forecast.

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