4 Major U.S. Oil Firms Report Higher Profits; Rise in Gas Prices Cited
Four large oil companies Monday reported higher quarterly net income, mostly because of rising gasoline prices this spring.
Analysts have said that oil companies kept better control over gasoline supplies this year, helping support prices, after suffering big losses last year because of a glut on the market.
In reports Monday, Mobil, the nation’s second-largest oil company, said profit rose 12.3%; Amoco, ranked fifth, reported a 14.5% increase; No. 9 Occidental Petroleum said its profit was up 16.7%, and No. 15 Ashland Oil reported a gain of 66.6%. The results were for the second quarter except in the case of Ashland, which just ended the third quarter of its fiscal year.
New York-based Mobil said its earnings in the three months ended June 30 rose to $411 million from $366 million a year earlier. Revenue slipped 3.3% to $14.5 billion from $15 billion.
Rawleigh Warner Jr., Mobil chairman, said profit margins from refining and marketing petroleum products widened because prices paid by refiners for crude oil were lower than a year ago while prices paid to refiners for gasoline rose throughout the second quarter.
Operating earnings from U.S. refining and marketing operations shot up to $53 million from $1 million a year earlier, Mobil said. Foreign refining and marketing profit increased to $40 million from $36 million.
Occidental Surges
Occidental Petroleum, based in Los Angeles, reported that earnings in the second quarter climbed to $145.9 million from $125 million a year earlier. Revenue slipped to $3.68 billion from $3.79 billion.
The company attributed the higher profits to increased earnings in its agriculture and chemical businesses, an overall earnings increase in the oil and gas business and a significant reduction in losses in its coal business.
Oil and gas earnings from both domestic and foreign sources in the second quarter of 1985 totaled $210.6 million, compared to $186.7 million in 1984. Lower prices for crude oil, natural gas and liquefied natural gas in Occidental’s domestic and foreign markets significantly reduced earnings.
However, the decline was more than offset by a benefit from the application of a reduced 1985 estimated tax rate, which takes into account the sale of the stock of one of Occidental’s Colombian oil and gas subsidiaries in the third quarter of 1985.
In addition, included in 1985 earnings were $51 million of net gains from the sale of certain oil and gas interests, including a 25% interest in its Libyan holdings. Included in the oil and gas divisional earnings in 1984 was a net gain of $47 million from the sale of part of Occidental’s interest in the Claymore field in the North Sea.
Will Repurchase Shares
Separately, Occidental said Monday that it will spend $253 million to repurchase 2.3 million shares of $15.50 cumulative preferred stock from Drexel Burnham Lambert, a New York investment house. The repurchase price was $109.875 a share. The stock buy-back is being financed from the $1 billion in cash that Occidental received when it sold half of its Colombian oil field to Royal Dutch Shell. Armand Hammer, chief executive of Occidental, said that, with the repurchase, the company will have retired 46% of the preferred stock that it issued to finance the purchase of Cities Service in 1982.
Amoco, based in Chicago, said profit in the quarter rose to $600 million from $524 million in 1984. A stock repurchase program led to faster growth in earnings per share than in net income.
Revenue dipped to $7.3 billion from $7.4 billion a year earlier.
Richard M. Morrow, chairman and chief executive, said the second-quarter earnings improvement over last year was due largely to higher gasoline price margins in the United States and increased earnings from foreign exploration and production operations.
He also noted that the high level of earnings achieved in the second quarter is unlikely to continue for the rest of the year because of increasing downward pressure on prices of crude oil and petroleum products as global refining and production capacity continues to exceed projected demand.
Ashland, with headquarters in Ashland, Ky., and the nation’s leading independent refiner, said third-quarter earnings rose to $60.3 million from $36.2 million a year earlier. Revenue held steady at $2.1 billion.
