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Chevron says net income suffered as energy output declined

BY JOE CARROLL

SAN RAMON, California (Bloomberg) -- Chevron, the world’s second- largest energy company by market value, will report a drop in fourth-quarter profit after oil and natural gas production declined amid slumping prices. Net income during the period was “comparable” to the $5 billion earned during the third quarter, the company said in a statement. That compares with a $7.25 billion profit for the final three months of 2012.

Chevron joins U.S. competitors such as ConocoPhillips hurt by slumping oil and gas output as weakening demand growth in the world’s largest economies pressures prices. Chevron underperformed its biggest U.S. rivals -- Exxon Mobil Corp. and ConocoPhillips -- last year in stock performance and lagged the industry average by almost half.

“Chevron really struggled on production last year but it looks like they’re going to turn that around in 2014,” Brian Youngberg, an analyst at Edward Jones & Co. in St. Louis who rates Chevron shares a buy, said in a telephone interview.

Boosting Output

Chairman and Chief Executive Officer John S. Watson plans to spend almost $40 billion on floating platforms, gas-export terminals and exploratory wells this year as part of a plan to boost worldwide output 20 percent by the end of 2017.

Chevron pumped the equivalent of 2.564 MMbopd during October and November, according to the statement. That’s almost 4% lower than the full-quarter average of 2.668 MMbopd from the year-earlier period.

Given the decline in output, the company has no chance of meeting its full-year output target announced in March of 2.65 MMbopd, Youngberg said.

ConocoPhillips warned investors this week that fourth- quarter production slipped to a nine-year low because of bad weather in the U.S. and the North Sea that interfered with operations. The Houston-based company said Jan. 7 that output dropped to a daily average equivalent of 1.475 MMbopd.

ConocoPhillips is scheduled to release full quarterly results on Jan. 30, as is Exxon, the world’s biggest energy company by market value. Chevron will report results the next day.

01/10/2014

 

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