Chevron Profit Down By 6 Percent

Chevron Corporation (NYSE: CVX) reported a 6 percent decrease in profit for the third quarter, claiming that weak refining results were to blame for the reduced production of more expensive oil and gas products.

The company reported total revenue of $56.6 billion, with a net income of $4.95 billion. Last year, the profit margins were higher, as the oil giant posted earnings of $5.25 billion on an overall revenue of $55.66 billion in the third quarter of 2012.

Earnings per share missed analysts’ estimates of $2.69 and only managed to crawl up to $2.57. This left many investors frustrated at the missed earnings estimates by the nation’s second largest oil company.

The company reported higher oil and gas prices, and also noted that production was up. However, expenses related to exploration and daily operations offset some of the gains made by higher production.

Refineries Turning Out Low Quality Product

The refining arm of Chevron Corporation (NYSE: CVX) reported that its refineries were turning out weak products. Because of this the refining arm alone dropped 45 percent of its profit this quarter. The company said this was mainly due to the high price of crude oil, while gasoline and other oil products shed price.

According to Thomson Reuters, the consensus among analysts for Chevron Corporation (NYSE: CVX) was to report earnings of $2.71 per share, which is slightly higher than the amount posted by Chevron analysts. The sentiment on the street also called for $58.41 billion in revenue, which was missed by a wide margin.

Shares are currently down $2.23 or 1.86 percent to $117.73.

Exxon Reports 18 Percent Decrease In Profit

Exxon Mobil Corporation (NYSE:XOM) reported a similar story on Thursday, stating that refining weakness cramped profit, even though production was up for the first time in two years.

Exploration Costs Weighing Heavy

Oil companies are struggling to boost their production and in recent years spending on exploration has increased exponentially. Exxon Mobil spent $33 billion in the first nine months of the year developing new projects in hopes of boosting production. This is the first time that the spending has actually led to a true increase in output, but the products are not top quality.

Earnings Stats

Exxon Mobil Corporation (NYSE:XOM) reported earnings of $1.79 per share on a profit that totaled $7.87 billion in the third quarter. This is a sharp decline from last year’s third quarter where the company reported $9.57 billion in profit and earnings of $2.09 per share.

Exxon Mobil Corporation did beat analysts’ expectations, as the consensus was for the company to report earnings of $1.77 per share.

Earnings Hurt By Weak Refining

According to a statement released by Exxon Mobil, “Weaker margins, mainly in refining, decreased earnings by $2.4 billion.”

Exxon is the largest publicly traded oil company in the world, and it joins its lesser partners, like Royal Dutch Shell, who have refining units. Each of these companies has seen profits drop as the demand for gasoline and diesel slumped and the global capacity for refining increased.

Exxon Mobil Corporation (NYSE:XOM) is currently down $0.15 or .17 percent $89.47.

Disclosure: Author does not maintain any position in the stocks mentioned, nor does he plan to initiate one in the next 48 hours.