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Chevron expects earnings will drop in third quarter
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SAN RAMON (AP) — Oil giant Chevron Corp. said Tuesday that third-quarter earnings will be "substantially lower" than in the second quarter.

In its interim earnings update Tuesday, Chevron said oil production fell in the first two months of the quarter and it received a lower price for the oil it sold. In addition, results from refining and marketing dropped off as a fire damaged Chevron's refinery in Richmond, Calif., and Hurricane Isaac disrupted production at a refinery in Mississippi.

U.S. production fell by 19,000 barrels of oil equivalent per day in the first two months of the quarter, largely because of Hurricane Isaac, the company said. International production dropped as well. The average price Chevron realized for a barrel of oil in the U.S. dropped to $95.44 in July and August, compared with $103.91 in the April-June quarter. For international oil, the price dropped to $96.86 from $99.21.

Charges for the quarter are expected to be higher than expected as well, and foreign currency losses also hurt results.

In the second quarter the San Ramon, Calif., company earned $7.2 billion, or $3.66 per share. Analysts forecast net income of $6.2 billion, or $3.08 per share, for the third quarter, according to FactSet.

Chevron will report its third-quarter results Nov. 2.

Shares fell 1.3 percent to $115.85 in after-hours trading. But just last Wednesday Chevron shares reached an all-time closing high of $117.96. They're up about 10 percent so far this year compared with a gain of nearly 9 percent for larger rival Exxon Mobil Corp.

The shutdown of a crude unit at Chevron's Richmond refinery in early August has contributed to a shortage of gasoline in California. The price for a gallon of regular has spiked to a record $4.67 this week. Chevron said Tuesday that the crude unit is expected to remain offline through the end of the year.