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Chevron warns of sharp drop in profits

CHEVRON Corp warned that first-quarter earnings would be sharply lower than the previous quarter, as lower oil and gas prices took a toll and refined-product margins shrank significantly.

The second-largest United States oil company said on Thursday that the earnings would include US$100 million in write-offs associated with exploration, adding that the fourth quarter included a US$650-million foreign-exchange benefit as the dollar weakened as well as US$600 million from an asset--exchange transaction.

Chevron shares fell 2 percent to US$67.78 after-hours, while shares of larger rival Exxon Mobil Corp handed back some of their 1.3 percent regular-trade gain.

Chevron said US oil-equivalent production in January and February was 660,000 barrels per day - up from 619,000 in the fourth quarter - and international output was 1.985 million bpd, higher than both the previous quarter and a year before.

But refining margins were down nearly across the board from a year ago, hit particularly hard last month by a recovery in crude oil prices, which increases input costs. Margins had improved in northwest Europe from near break-even a year before, but were down from the fourth quarter.

Benchmark West Texas Intermediate crude prices averaged about US$43 a barrel in the first quarter, 56 percent lower than in the same quarter last year.

Chevron said downstream earnings would include about US$350 million from sales of its fuel marketing businesses in Brazil and Nigeria. Earnings from its chemicals business were expected to fall on lower margins and volumes.

The California-based company is due to report first-quarter results on May 1.


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