Chevron (CVX) said Friday its third-quarter net income fell 33 percent as production declined and it sold oil and gas at lower prices.
The nation's second-largest oil company earned $5.25 billion, or $2.69 per share, in the July-through-September quarter. That compared with net income of $7.83 billion, or $3.92 per share, in the year-ago quarter. Revenue fell to $55.66 billion from $61.26 billion.
The sluggish global economy has cut into worldwide demand for energy products, from gasoline and diesel to jet fuel. Concerns about economic growth have caused oil and natural gas prices to fall, hurting the bottom line for oil producers.
Exxon Mobil (XON), the nation's biggest oil company, on Thursday said net income fell 7 percent as production and prices fell. Improved refining results allowed it to beat Wall Street profit estimates, however. Chevron's refining business was hurt by the loss of a crude unit in an August refinery fire.
Chevron, which is based in San Ramon, Calif., said disruptions to its Gulf of Mexico operations from Hurricane Isaac and planned maintenance at some international facilities curtailed production. Also, its operations remain idle off the shore of Brazil pending investigations into two oil spills. Some of the loss was made up by increased production on other properties.
Chevron's net production totaled 2.52 million barrels per day worldwide, a decrease of 3 percent from a year ago. In the U.S., Chevron's production fell 4 percent to 637,000 barrels per day, partly because it sold Alaskan assets last year.
The company expects production to increase in the fourth quarter from the third quarter, reflecting completed maintenance and the restoration of Gulf operations.
Chevron sold oil and natural gas liquids for $91 per barrel in the U.S. during the quarter, compared with $97 per barrel a year ago. Natural gas prices averaged $2.63 per 1,000 cubic feet compared with $4.14 per 1,000 cubic feet a year ago.
Outside the U.S., the average price for oil and natural gas liquids was $98 per barrel, down from $103 per barrel a year ago. Natural gas sold for $6.03 per 1,000 cubic feet compared with $5.50 per 1,000 cubic feet.
Morningstar (MORN) analyst Allen Good noted that Chevron's production of gasoline, diesel and other refined products was "particularly weak" because the damaged Richmond, Calif., refinery crude unit was out of operation. That lowered overall production at the refinery by about 118,000 barrels per day. The unit is expected to be back in operation sometime in the first quarter.
Good described the results as "a bad quarter for Chevron."
Argus Research analyst Phil Weiss said Chevron is still in a good position with a slate of projects in development. "As long as they execute on those projects, they're going to benefit the production and leave the company well-positioned for the future," he said.
Chevron shares fell $2.81, or 2.5 percent, to $108.65 in afternoon trading. In the past 52 weeks, the price has ranged from $92.29 to all-time high of $118.53 per share. Exxon shares dropped $1.01, or 1.1 percent, to $90.59. Oil futures were down nearly 2 percent in trading in New York.