Chevron's Q4 Downstream Division Profits Falter

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Chevron's Q4 Downstream Division Profits Falter


SAN RAMON, Calif. and BRENTWOOD, Tenn. -- Chevron Corp.'s U.S. downstream profits slumped during its 2011 fiscal fourth quarter. The energy giant's downstream division, home to its convenience store portfolio, lost $204 million during the quarter, compared to a $704-million profit in its 2010 fourth quarter.

Fuel margins were the biggest source of weakness in the downstream division, Pat Yarrington, Chevron's vice president and CFO, said during this morning's earnings conference call. Fuel margins declined by $390 million when comparing Q4 2011 to Q4 2010.

Chevron has set forth a $2.1-billion capital and exploratory budget for its downstream division in 2012, and the U.S.'s second-largest petroleum company said it spent $1.5 billion on such projects in 2011.

As a whole, Chevron earned $5.1 billion for its 2011 Q4, compared to $5.1 billion during its 2010 Q4. However, for the entire 2011 year, Chevron earned a record net profit of $27 billion and holds a net cash position of $10 billion.

"2011 was outstanding," Chevron CEO John Watson said during the conference call. "This reflects our exceptionally strong upstream portfolio, as well as higher 2011 crude prices."

In other earnings news, Delek US Holdings Inc., which operates gas stations and convenience stores under several banners including MAPCO Express, announced in a mid-quarter update that it expects to report a loss for its 2011fourth quarter.

In a Form 8-K that was filed with the U.S. Securities and Exchange Commission, Delek said it currently expects to lose more than $5 million for its 2011 fiscal Q4.

"The company's fourth-quarter results were impacted by higher crude oil costs, in addition to a sharp seasonal decline in regional asphalt prices, when compared to the third quarter of 2011," according to a company news release.

Despite the Q4 loss, Delek said it expects to earn at least $154 million for the full 2011 year. The company will release its official earnings on March 8.