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SAN RAMON, Calif. -- The combination of higher prices for crude oil and gains from asset sales and improved margins have led to a third-quarter net income of $7.8 billion for Chevron Corp. That is more than twice the $3.8-million net income the company realized in the third quarter of 2010.
"We had another successful quarter with both strong earnings and cash flow," Chairman and CEO John Watson said in a release. "Current quarter earnings from our upstream benefited from higher crude oil prices on world markets. At the same time, gains on asset sales and improved margins in the refined petroleum products contributed to increased earnings for our downstream businesses."
The earnings were released just days after the company announced an increase in the quarterly dividend of 3.8 percent to 81 cents per share. This came on the heels of an 8.3-percent increase in the second quarter. The second increase this year reflects Chevron's strong performance and its confidence in the future, Pat Yarrington, vice president and CFO, explained in this morning's earnings conference call.
Additionally, Yarrington reported that the $11.5 billion in cash generated from operations in the third quarter this year is a new quarterly record for the company. Year-to-date, cash generated from operations has hit $32 billion, she added.
Chevron's U.S. upstream earnings of $1.15 billion in the third quarter 2011 were up $562 million from a year earlier, with the benefit of higher crude oil realizations partially offset by lower production, according to the company. The U.S. downstream operations earned $704 million in the quarter, compared to $349 million a year before. Those earnings mainly benefited from improved margins on refined product sales and lower operating expenses.
On the retail front, gasoline declined at the end of the peak driving season on the West Coast and the Gulf Coast, said Jeannette Ourada, general manager, investor relations. Specifically, according to the results, branded gasoline sales declined 8 percent to 529,000 barrels per day due to weaker demand and previously completed exits from selected retail markets in the eastern United States.
Chevron is also continuing to pare down its portfolio. To date, it has exited 21 countries, divested eight logistics assets and signed sales agreements in Spain and Africa. Negotiations are underway in the Caribbean, said Mike Worth, executive vice president, downstream and chemicals.
He added that the company will continue to evaluate its portfolio, but the big work will be completed in 2012. "We are winding it down to a portfolio that we believe is right for us," Worth said.