6 Major Oil Companies Report Higher Profits
Several major oil companies reported third-quarter profit increases Monday due to higher crude prices, but the gains were limited by general weakness in refining and marketing operations.
Particularly hard hit was industry leader Exxon Corp., whose earnings rose only 1% to $1.07 billion. The gain, equal to an adjusted 75 cents a share, compares to $1.06 billion, or 73 cents a share, in the year-ago period.
Exxon said higher crude oil prices helped boost its earnings in exploration and production, but retail price increases lagged the boost in crude.
“Consequently, earnings from refining and marketing operations were far short of a year ago and were below acceptable levels,” Exxon Chairman Lawrence Rawl said in a statement.
Crude oil prices are sharply higher than their levels a year ago. West Texas Intermediate, the benchmark U.S. crude, is currently selling at about $20 a barrel, up about $6 from last year’s levels.
Exxon’s profits from refining and marketing slumped to $60 million from $463 million in the third quarter of 1986. Exploration and production profits totaled $933 million, up $391 million from last year.
Arco, Unocal Earnings Up
Among the other big oil companies to report third-quarter earnings Monday, Los Angeles-based Atlantic Richfield Co. said its earnings rose to $315 million from $102 million in the year-ago period due to higher crude oil prices.
“Crude oil prices were higher in the third quarter, compared to a year ago, leading to significantly improved results from our oil and gas operations,” Arco Chairman Lodwrick Cook said in a statement.
But the company said refining and marketing margins suffered as gains in oil product prices lagged those of crude oil.
Unocal Corp., which is also based in Los Angeles, reported third-quarter net earnings of $29 million, up 33% from the $22 million recorded for the year-ago period. For the first nine months of 1987, Unocal’s net earnings were $152 million, or $1.30 a share. This is a 20% increase from $127 million, or $1.09 a share, for the first nine months of 1986.
Fred L. Hartley, Unocal’s chairman and chief executive, said the improvement in the third quarter reflected higher crude oil prices, increased natural gas sales volumes and lower U.S. taxes on foreign operations.
Substantially offsetting these gains were sharply lower refining and marketing margins, lower prices for natural gas and geothermal energy, reduced oil production and lower chemicals earnings.
Houston-based Shell Oil Co. earned $420 million in the third quarter, a $287-million increase over the year-ago period--a 216% improvement, according to President John F. Bookout.
Stronger Crude Oil Prices
“Major factors in the improvement were a partial recovery of crude oil prices from a seven-year low and a record performance in our chemical business,” he said.
These same positive factors, coupled with lower dry hole and production costs in the first half of 1987, were largely responsible for a $167-million increase in nine-month earnings to $795 million. Negative factors in the nine months were substantially lower refined products margins and lower natural gas prices.
Mobil Corp. said profits rose a hefty 75% to $319 million, compared to last year’s third quarter. Its chemical operations earned a record $92 million, up from $38 million a year ago.
However, the New York-based company said earnings from its petroleum operations fell 12% with strong exploration and producing results offset by weakness in refining and marketing due to lower margins.
Occidental Petroleum Corp. reported its third-quarter earnings rose to $46 million from $39 million in the third quarter of 1986. The Los Angeles-based company said its oil and gas division earned $58 million, compared to a loss of $3 million in the same quarter last year.
