Measure T changes Richmond’s Business License Ordinance in a way that would result in approximately $8 million in annual revenue for the City of Richmond from Chevron.

In what proved to Posted on Sat, Oct. 28, 2006be a sunny quarter for oil producers, San Ramon-based Chevron Corp. made a lot of hay - $5 billion worth.

Yet in a conference call with analysts, Chevron executives seemed as much inclined to talk about future growth prospects as they were to bask in current results boosted by soaring oil prices and roaring refinery operations.

Total sales shrank slightly, to $54.21 billion in the quarter that ended Sept. 30 from $54.46 billion a year ago, mostly due to an accounting change. More worrisome, only last year's pricey acquisition of former rival Unocal enabled Chevron to increase its worldwide flow of oil and natural gas.

Despite that, times were good, thanks to high prices for oil and gas and for the fuels that Chevron produces in its global network of refineries including giant facilities in Richmond and Southern California.

A year ago, hurricanes in the Gulf of Mexico drove prices higher but shut down many oil and gas wells and refineries, including Chevron's big facility at Pascagoula, Miss.

This year, prices rose higher still, even as predicted storms failed to materialize and Chevron's operations continued without significant disruptions. That was a winning combination. The $5.02 billion of net income posted by Chevron was up 39 percent from last year's $3.60 billion. That translated to $2.29 a share, far ahead of the $2.02 consensus estimate of 21 analysts surveyed by Thomson Financial's First Call service.

The biggest gains came from the business of refining and marketing fuel, where quarterly net income soared 150 percent to $1.44 billion from $573 million a year ago. And while declining output in aging fields offset gains from the restoration of storm-damaged wells, properties acquired from Unocal accounted for most of a 6 percent gain in oil and gas production. Profits from that business rose a more modest 5 percent but still constituted the bulk of Chevron's bottom line: $3.50 billion.

Chevron executives spoke glowingly of the prospects for future production increases in the Gulf of Mexico and at other key properties in Central Asia and West Africa. "Each of these large projects (is) progressing as expected and coming on-stream," said Steve Crowe, the company's chief financial officer. Last year's acquisition of Unocal had "proved to be a resounding success," he added.

Investors liked what they heard. On a day when key stock market indices trended downward, the price of Chevron's stock rose 18 cents to trade at $67.68 Friday.

Chevron's successes haven't produced smiles in all quarters. In California, where the company is the largest producer of crude oil and a leading refiner and marketer of fuel, Proposition 87 on the November ballot would impose a new tax on output from the state's aging but still lucrative oil fields. That measure, which would fund alternative energy projects, has the backing of environmentalists, influential Democrats and venture capitalists.

Last year, Chevron's California oil and gas wells generated $3.83 billion in revenue and, even after the company paid $913 million in income taxes, yielded $1.67 billion in operating profit, according to the company's annual report.

Crowe told analysts that the proposed tax would cost Chevron an additional $200 million a year although that would likely be offset by reduced liabilities for some other taxes. Crowe declined to say how the new tax would affect Chevron's future investments and production in California.

The Prop. 87 race "essentially is a dead heat" at this point, Crowe told analysts. However, opponents seemed geared for a strong finish. In their report to state election officials on activities through Oct. 21, opponents had $9.2 million on hand and they have since collected another $8 million including half from Chevron, which has now kicked in a total of $34.3 million.

By comparison, supporters had $1 million on Oct. 21 and have since collected $3.9 million, mostly from real estate heir Stephen Bing, who has now kicked in a total of $43.6 million.