NEW YORK (AP) — Chevron Corp. said Friday that profit jumped 43 percent in the second quarter as higher oil and gasoline prices made up for a decline in oil production.
The report continued the trend of soaring profits among the major oil companies.
The San Ramon, Calif. oil company reported earnings of $7.7 billion, or $3.85 per share, for the three months ended June 30. That compares with $5.4 billion, or $2.70 per share, in the year-ago period. Revenue increased 31 percent to $66.7 billion.
Analysts had expected earnings of $3.51 per share, according to FactSet.
Chevron's quarterly profit was the largest since it set a company record of $7.9 billion in the third quarter of 2008. It followed similar big gains for other oil giants. Exxon Mobil Corp.'s earnings rose 41 percent to $10.7 billion while Royal Dutch Shell's profit nearly doubled to $8.7 billion. BP made more than $5 billion in the period following a loss of $17.2 billion last year.
Oil prices soared to the highest level in three years during the quarter as uprisings swept through North Africa and the Middle East, rattling oil markets and shutting down exports from Libya. The price of gasoline, diesel, jet fuel and other fuels also surged, boosting profit margins at refineries.
Chevron said U.S. oil prices increased 46 percent in the U.S. and 51 percent internationally from April to June. Natural gas prices increased 8 percent in the U.S. and 25 percent internationally.
The higher prices grew company revenue even as production declined. Chevron, like many of its oil industry peers, has struggled to extract more oil. The company produced 2.69 million barrels per day in the quarter, down from 2.75 million barrels per day in the same part of last year.
It wasn't for a lack of trying. The company plowed $7.5 billion into oil exploration and production projects in the quarter, up 69 percent increase from a year ago. It ramped up oil and natural gas production from new projects in Canada and the U.S., and earlier in the year it acquired Atlas Energy Inc.
Still, Chevron said, those increases didn't make up for the decline in output from its mature fields. The company's international production also slowed in the quarter by more than 8,000 barrels per day because of contracts that require Chevron to take less oil as prices rise. For every dollar that Brent crude rose, Chevron said it cut production by 700 barrels per day.
Brent, which is used to price many international crude varieties, rose by an average of $12 per barrel from the first three months of the year, Chevron officials said.
The company still expects production to grow roughly 1 percent a year until 2014, and then 4 to 5 percent a year from 2014 to 2017.
George Kirkland, Chevron's executive vice president in charge of exploration and production, said the ramp up of natural gas operations in Australia and a return to drilling in the Gulf of Mexico will keep production increasing.
"Our growth projects are on track," Kirkland told investors in a conference call.
Despite the drop in production, Argus Research analyst Phil Weiss said Chevron has been able to earn more per barrel than its peers by selling more natural gas in overseas markets, where prices are higher. The variety of crude oil that Chevron produces also is priced at a premium to others.
"And even though their production is flat right now, in a few years it's going to be much better," he said. "I like that clear path to long-term growth."
Meanwhile, Chevron's refining business boosted profits 30 percent in the U.S., but profits dropped 11 percent internationally. Higher fuel prices lifted profit margins, but foreign currency effects cut earnings at Chevron's international refineries.
Shares dropped 37 cents to $104.66 in afternoon trading.
Chris Kahn can be reached at www.twitter.com/ChrisKahnAP.