SAN RAMON -- Chevron on Friday reported $5.37 billion in profit for its second quarter, down 26 percent from the same quarter a year ago and below Wall Street's expectations.
Weaker oil prices and refinery maintenance work were the primary reasons behind the weaker profits, Chevron said. Revenue also fell, down 8 percent from the year-ago quarter.
"Chevron was a little on the weak side," said Ben Tsocanos, an energy industry analyst with Standard & Poor's, an investment firm. "But they have some company. The other oil majors are having similar issues."
Analysts had predicted profit of $2.96 a share, but Chevron posted earnings of $2.77. However, its revenue of $57.37 billion was $1.25 billion above analysts' projections.
San Ramon-based Chevron's stock fell 1.2 percent, or $1.49 a share, to finish at $124.95 Friday.
"The decrease was largely due to softer market conditions for crude oil and refined products," CEO John Watson said in prepared release. "Earnings were also reduced as a result of repair and maintenance activities in our U.S. refineries."
San Ramon-based Chevron said it was pushing forward with its major capital projects, primarily large exploration, development and production efforts overseas and in the Gulf of Mexico. It also announced that its Richmond refinery was finally back to full production after the August 2012 fire that knocked out the crude distillation unit.
"The Richmond refinery successfully restarted," Chief Financial Officer Patricia Yarrington told analysts in a conference call. "By quarter end, the refinery was fully operational and running at planned utilization rate."
Chevron's focus in recent years has been energy projects overseas, a strategy that poses plenty of challenges, analysts say.
"It is getting more and more expensive to find oil," said Brian Youngberg, an analyst with investment firm Edward Jones. "Chevron and other companies are going to the farthest reaches of the earth and drilling farther down."
Still, Chevron remains poised to lead the pack of major oil companies, analysts said.
"Chevron is better positioned than its peers for production growth, it has a better track record for growth, and the company is well-positioned in general," Youngberg said.
Several major overseas projects are expected to come on line in the next year or two, including the Gorgon project to produce liquefied natural gas in Western Australia.
"This is a company that will be able to grow its production from organic sources, not acquisitions," said Pavel Molchanov, an analyst with Raymond James. "Chevron has just begun production in Angola and will start a big field in Brazil later this year. Production is rising in the Gulf of Mexico. And in 2015, Chevron will begin production from the largest liquefied natural gas project ever in Australia, the Gorgon development."
Contact George Avalos at 408-859-5167 or 408-373-3556. Follow him at Twitter.com/george_avalos.