Chevron Corp. (CVX) expects to report third-quarter earnings that exceeded the previous quarter's on significantly better results in its downstream refining and marketing operations.
Earnings from its upstream business, which includes exploration and production, are expected to fall because of lower oil prices and the impact of two recent hurricanes on its Gulf of Mexico production.
In its interim earnings statement issued after the closing bell Thursday, the second-largest U.S. oil company by market value said third-quarter results will include production curtailments related to the hurricanes and $400 million in charges for costs to abandon toppled platforms, asset write-offs, and initial expenses to repair facilities.
Chevron said preliminary projections estimate 5 million barrels per day of oil-equivalent production will be permanently cut because of facilities damaged by the hurricanes.
The company also expects to post between $250 million and $300 million in charges related to corporate and other activities and $350 million in gains on the sale of its 9.2% interest in the K2 development and other asset sales in the Gulf of Mexico.
During the first two months of the third quarter, Chevron, a component of the Dow Jones Industrial Average since February, fetched on average $119.20 a barrel for crude oil from its U.S. fields, up from $113.97 for the full second quarter and $68.70 a year earlier. Internationally, Chevron's realized crude prices fell about $6.17 a barrel from the second quarter to $116.65 a barrel.
In the first two months of the third quarter, oil production fell 1% in the U.S. and 6% internationally mostly because facilities being closed for work on an expansion project in Kazakhstan, Chevron said. In September, U.S. production is expected to be down 150,000 barrels per day because of the hurricanes.
U.S. natural-gas prices averaged $9.53 per thousand cubic feet, down from $9.84 in the second quarter but up from $5.43 a year ago. Overseas, the average natural-gas price rose 40% to $5.29 from a year earlier.
Chevron's shares were at $63.70, down 0.5%, in after-hours trading.