Unocal, Oxy and Arco Net Drops; Price Dive Cited

The major Los Angeles-based oil companies--Unocal, Occidental Petroleum and Atlantic Richfield--Monday, reported sharply lower earnings for the third quarter because of the drop in prices for crude oil.

The oil-price collapse since last winter, to the current range of about $15 a barrel from about $31, has slashed earnings for nearly all oil producers and forced major retrenchments and cutbacks in drilling and exploration for new reserves.

Those depressed industry results have been partly offset by higher profits in refining and marketing, a trend that continued in the latest quarter at Arco and Unocal.

Profit plunged 86% to $21.8 million at Unocal, but the drop looked more severe than it was because the comparison period of 1985 was inflated by $91 million in extraordinary gains. Sales fell by one-third to $1.9 billion.

Chairman Fred L. Hartley reported “significantly higher earnings” in refining and marketing, but said they were more than offset by the low crude prices, reduced natural gas production and a decline in earnings from the chemical division.

Arco said earnings dropped 75% to $102 million on a 6% decline in sales to $3.5 billion. Refining and marketing alone earned $94 million in the quarter because of higher profit margins, said Chairman Lodwrick M. Cook. The third-quarter profit included about $25 million in one-time gains. On oil and gas operations alone, Arco said after-tax profit slumped to $41 million from $304 million.

Mainly because of increased output from its Alaskan fields, Arco said it produced about 8,000 more barrels of oil per day than it did a year earlier. But it only realized $7.04 per barrel, compared to more than $15 in the year-earlier period.

Occidental, the only one of the trio to report a loss on oil and gas operations, said net income plummeted 90% to $39.1 million from $381.7 million. Both net income figures were significantly inflated by one-time gains. Occidental said it lost $2.8 million on oil and gas operations in the July-September quarter, compared to $328.2 million a year earlier.

The bottom line was shored up by $68.3 million in divisional earnings from MidCon Corp., a large gas pipeline company acquired last spring. Overall chemical earnings edged up 19.7% to $25.5 million, while agribusiness earnings slipped 28% to 20.1 million and coal division profits fell to $1 million from $15.6 million.

All three said the oil-price damage was contained by cutbacks in capital and exploration spending.