Chevron Profits Gush Higher - TheStreet

Chevron Profits Gush Higher

The oil giant tops Wall Street's expectation.
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Updated from 10:06 a.m. EDT

Chevron's

(CVX) - Get Report

second-quarter profit climbed 24%, topping Wall Street expectations, as the oil and gas giant saw strength in both its upstream and downstream businesses.

Net income climbed to $5.38 billion, or $2.52 a share, from $4.35 billion, or $1.97 a share, a year earlier. Analysts polled by Thomson First Call expected earnings of $2.30 a share.

Revenue rose to $56.09 billion from $53.54 billion.

Chevron's upstream business, which relates to exploration and production, recorded income of $3.64 billion, up from $3.27 billion last year. Profit from the downstream operations -- tied to oil refining, marketing and transportation -- rose to $1.3 billion from $998 million a year earlier.

"Earnings and cash flows were strong in the second quarter," said Chairman and CEO Dave O'Reilly. "Upstream profits increased approximately $400 million, mainly reflecting the absence of charges recorded in the 2006 period for uninsured costs associated with hurricane damages. Downstream earnings improved $300 million on higher margins for refined products."

Income earned from the chemicals segment grew to $104 million from $94 million a year ago.

The report comes a day after the world's biggest oil company,

Exxon Mobil

(XOM) - Get Report

, posted a second-quarter profit that missed expectations, disappointing Wall Street.

Chevron's latest results include a $680 million gain from the sale of

Dynegy

(DYN)

stock and a $160 million loss from debt redemption.

Global production was 2.63 million barrels of oil equivalent per day, down roughly 1% from the second quarter last year. The conversion of operating agreements to joint-stock companies in Venezuela was the primary cause of the production decline.

During the quarter Chevron signed a memorandum of understanding with the Venezuelan government that cedes control of its assets in the oil-rich Orinoco River basin to Venezuela's national oil company. Final approval of the agreement by the government is expected later this year.

Chevron saw production increases in Bangladesh, Angola, Azerbaijan and the U.K. during the second quarter. The company divested some downstream assets in order to focus on key markets. Assets sold during the second quarter included its fuel marketing businesses in Belgium, the Netherlands, Luxembourg and Uruguay.

Chevron's capital spending totaled $4.5 billion during the second quarter, mostly on upgrades to existing refining assets.

Shares of Chevron were recently trading 1.8% lower at $85.87.