SAN RAMON, Calif. - ChevronTexaco Corp.'s third-quarter profit improved by 62 percent as the oil giant continued to cash in the oil-price spikes that are squeezing household and business budgets.
The San Ramon-based company said Friday that it earned $3.2 billion, or $1.51 per share, during the three months ended in September. That compared with net income of $1.98 billion, or $1.01 per share, at the same time last year.
If not for profits generated by since-discontinued operations, ChevronTexaco said it would have earned $1.38 per share. That was a penny above the mean estimate among analysts surveyed by Thomson First Call.
ChevronTexaco's shares rose 18 cents to $52.65 during Friday's trading on the New York Stock Exchange. The company's stock has climbed by 22 percent so far this year.
The quarter included a $486 million windfall from the sale of gas stations and other properties that ChevronTexaco had put on the auction block earlier in the year. The one-time gain boosted earnings by 23 cents per share.
Revenue for the period totaled $40.72 billion, a 32 percent increase from $30.84 billion at the same time last year.
The performance continued a recent roll for ChevronTexaco, which is well on its way to the most prosperous year since the company's inception in 1879.
Through the first nine months of the year, ChevronTexaco earned $9.89 billion, or $4.65 per share, nearly doubling its profit of $5.5 billion, or $2.66 per share, at the same juncture last year. Revenue through the first nine months totaled $112.57 billion, up from $90.88 billion last year.
Like the rest of its industry, ChevronTexaco's profits are soaring along with oil prices. Driven by worries about the turmoil in Iraq and rising worldwide demand, the cost of crude oil periodically has held above $50 per barrel in recent weeks.
"As long as the prices stay up, the earnings (of big oil companies) are going to stay up, but I expect things to start coming down soon," said industry analyst Fadel Gheit of Oppenheimer & Co.
The recent market conditions helped ChevronTexaco boost its average price for crude U.S. crude oil and natural gas liquids to $36.26 per barrel, a 40 percent increase from last year.
The run-up has forced many households and businesses to cut corners as gasoline prices have climbed above $2 per gallon. In California — typically the nation's most expensive gasoline market — prices at the pump have gushed above $2.50 per gallon in some cities.
The rise in oil prices has been so rapid that ChevronTexaco hasn't been able to pass on the costs quickly enough to U.S. motorists, management told analysts during a Friday conference call.
The unusual situation turned U.S. gasoline sales into a financial drag on ChevronTexaco during the third quarter, even as other parts of its business benefited from higher oil prices.
The U.S division that markets ChevronTexaco gasoline earned $96 million, a 35 percent drop from $148 million at the same time last year. If not for several one-time items, ChevronTexaco said the division would have lost $50 million.
The California gasoline market — traditionally a company stronghold — represented a major drain on the division's performance, management said Friday. ChevronTexaco continued to lose money on gasoline sold in California during early October, but more recently has been breaking even, said John Watson, the company's chief financial officer.
Other factors contributing to the company's lower profit margins in U.S. refining included environmental compliance costs and the recent hurricanes that devastated Florida and other parts of the Southest.
Hurricane Ivan forced ChevronTexaco to shut down a Mississippi refinery, further eroding profits. The company expects the damages from Hurricane Ivan to lower fourth-quarter production by 50,000 to 60,000 barrels per day.
ChevronTexaco's gasoline profit margins were much better outside the United States. The company's international refining and gasoline marketing division earned $394 million, representing a nearly 12-fold improvement from $33 million last year.
The company makes the bulk of its money from the production of crude oil.