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SAN RAMON, Calif. -- Oil prices that were significantly higher in the third quarter of 2008 than the year ago period helped launch Chevron Corp.’s net income to $7.9 billion during the quarter from the $3.7 billion a year prior.
The average sales price per barrel of crude oil and natural gas liquids in the U.S. was $107 in the third quarter 2008, up from $67 in the corresponding 2007 period, the company stated.
Upstream earnings for the company increased from $2.8 billion in the third quarter 2007 to $6.2 billion in the third quarter this year, of which $2.2 billion was attributed to U.S. upstream operations. Downstream profits totaled $1.8 billion thanks in part to improved refining margins, the company stated. Sales and other operating revenues during the third quarter 2008 were $76 billion, compared to $54 billion a year ago.
"Earnings for our upstream operations benefited from prices for crude oil that were significantly higher than in last year’s third quarter," Chairman and CEO Dave O’Reilly said in a statement. "This improvement in earnings was tempered, however, by effects of the September hurricanes in the Gulf of Mexico."
Facilities that were closed due to Hurricanes Gustav and Ike caused a production decline of approximately 150,000 barrels of oil-equivalent per day in September, O’Reilly said. The company estimated 90 percent of the pre-hurricane production will be restored by the fourth quarter of 2009. In addition, hurricane-related expenses, including damages to facilities, reduced upstream income by about $400 million, but were nearly offset by $350 million in gains on upstream asset sales in the period, the company stated.
The company’s U.S. downstream business earned $1 billion in the third quarter 2008, compared with a loss of $110 million a year earlier, primarily from significantly higher margins on the sale of refined products and improved refinery operations, the company stated.
"Earnings for our downstream operations also increased from a year ago, due mainly to improved margins on the sale of refined products," O’Reilly said. "Margins were weak in last year’s third quarter, and our downstream business in the United States operated at a loss for that period."
Refined-product sales volumes declined 2 percent year-over-year, to 1.4 million barrels per day in the third quarter 2008 on lower gasoline and fuel-oil sales. Meanwhile, branded gasoline sales volumes were down 7 percent to 601,000 barrels per day during the 2008 third quarter, according to the company.
Looking ahead, O’Reilly said, "Our disciplined capital spending and tight control over costs remain extremely important in today’s uncertain economic climate. Our strong balance sheet enables Chevron to continue investing in attractive projects that increase the production of oil and gas and improve the efficiency of our refinery network."