ChevronTexaco Profit More Than Doubles on High Oil Prices

SAN RAMON, Calif. – ChevronTexaco Corp.'s (CVX) second-quarter profit more than doubled as high energy prices extended a recent roll that is shaping into the most prosperous stretch in the oil giant's 125-year history.

The San Ramon-based company said Friday that it earned $4.13 billion, or $3.88 per share, for the three months ended in June. That compared with net income of $1.6 billion, or $1.50 per share, at the same time past year.

The results included a $585 million gain from the company's sale of some Canadian assets and a $255 million benefit from changes in income tax laws governing some of ChevronTexaco's international operations.

Even after subtracting those special items, ChevronTexaco's earnings would have been $3.09 per share — beating the consensus estimate of $2.72 among analysts polled by Thomson First Call.

Revenue for the period totaled $38.3 billion, a 31 percent increase from $29.3 billion last year.

"I am very pleased with our performance," ChevronTexaco Chairman Dave O'Reilly said.

The company's shares rose 22 cents to $95.70 on the New York Stock Exchange (search).

The second quarter continued the momentum ChevronTexaco enjoyed during the first three months of the year when oil prices began an ascent that has required motorists across the country to pay more than $2 per gallon for gasoline. The highest gas prices have been in California, where ChevronTexaco is a market leader.

Through the first half of the year, ChevronTexaco earned $6.69 billion, or $6.28 per share, a 90 percent improvement from $3.52 billion, or $3.31 a share, the same time in 2003. Revenue rose to $71.97 billion from $60.15 billion in the first half of 2003.

The industry's soaring profits are being driven by oil prices (search) that have soared above $40 per barrel. Even if the prices decline slightly, the oil industry is likely to remain flush through at least the remainder of this year, predicted industry analyst Fadel Gheit of Oppenheimer & Co.

"As long as the price of crude oil remains above $30 per barrel, these companies will be printing money," he said.

ChevronTexaco is particularly well positioned to capitalize on high oil prices, Gheit said, because of the company's prominence in the California market and the organizational fine tuning that has occurred since Chevron took over Texaco in a $39 billion merger completed in 2001.

The huge profits being raked in by ChevronTexaco and other major oil companies have fueled consumer complaints about price gouging — charges that industry executives have vehemently denied.