Downstream improvements and high commodity prices propelled ChevronTexaco Corp. to a 33% gain in profits during the first quarter compared with a year ago, but domestically and worldwide, oil and gas production declined.

Net income was $2.6 billion ($2.40/share diluted), compared with net income of $1.9 billion ($1.81) a year earlier. Wall Street analysts had forecast earnings of $2.02/share. Revenue was up 9.1% to $33.57 billion, from $30.76 billion.

First quarter income included litigation expenses and income from discontinued operations, which netted out to a charge of $21 million. Last year’s first quarter included a net charge of $198 million from discontinued operations, new accounting standards and losses by its former marketing partner Dynegy Inc.

“All of our major businesses contributed to an excellent first quarter, with profits that helped us achieve a 17% return on capital employed for the past 12 months,” said Chairman Dave O’Reilly. “Our upstream operations continued to benefit from strong prices for both crude oil and natural gas,” and he said that higher utilization rates in its worldwide refinery network also contributed to the improvement in downstream earnings.

Quarterly U.S. exploration and production income was $860 million, down $156 million from 1Q2003. U.S. net oil-equivalent production declined 10%, or 96,000 bbl/d, from the 2003 quarter. The decline was blamed on normal field declines and asset sales, which were only partially offset by increased and first-time production from various fields. The liquids component of net production was down 8% to 531,000 bbl/d.

Worldwide oil-equivalent production, including volumes produced from oil sands and production under an operating service agreement, declined about 2% from the 2003 first quarter. Most of the decline was associated with properties sold after last year’s first quarter.

U.S. net natural gas production averaged 2.1 Bcf/d, down 13% from 1Q2003’s 2.4 Bcf/d. Chevron’s worldwide production also fell to 4.2 Bcf/d from 4.5 Bcf/d a year ago. U.S. natural gas sales were nearly flat; the company reported 4.018 Bcf/d in sales in the first quarter compared with 4.013 in 1Q2003.

Average prices for U.S. crude oil and natural gas liquids in the quarter rose about a dollar a barrel to more than $30. Internationally, the average liquids price was slightly lower at about $29. The average U.S. natural gas sales price decreased 11% to $5.23/Mcf, while internationally the average natural gas price of $2.67 was marginally higher than the year-ago quarter.

Sales and other operating revenues in the first quarter 2004 were $33 billion, up 8% from the 2003 period. Capital and exploratory expenditures in the quarter totaled $1.7 billion, up slightly from last year’s $1.5 billion.

©Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.