EARNINGS : Phillips’ Net Dives; Oxy’s Income Slips
Phillips Petroleum reported a sharp decline in 1989 earnings Thursday while Los Angeles-based Occidental Petroleum posted a moderate 6% drop for the year.
Occidental attributed its earnings decline, in part, to restructuring of its domestic oil and gas operations and lower sales of crude oil and natural gas.
But Phillips, based in Bartlesville, Okla., took a big hit from the idle Point Arguello oil project off the Santa Barbara coast and the explosion and fire that destroyed its Houston chemical complex last October. It also said its refining operations were hurt by higher oil prices not matched by similar increases in retail gasoline prices.
The company earned $219 million in 1989, down from $650 million the year before, while revenue rose nearly 9% to $12.49 billion.
The earnings plunge primarily reflected a previously announced $280-million writedown of Phillips’ investments off the California coast, mostly at Point Arguello, which Phillips has been developing with a group of oil companies led by Chevron. Although the project has been ready to go for two years, a dispute over how to transport the oil has stalled production. Chevron earlier said it took a $445-million writedown on its Point Arguello investment.
For the fourth quarter, Phillips had a net loss of $255 million, contrasted with earnings of $135 million a year earlier, while revenue climbed to $3.03 billion from $2.86 billion. Excluding the writedown, net income would have been $25 million for the quarter and $499 million for the year, the company said.
At Occidental, 1989 net income fell nearly 6% to $285 million while revenue rose 3.4% to $20.1 billion. Fourth-quarter net income jumped to $30 million on sales of $5 billion, compared to net income of $7 million on sales of $5.3 billion in the same period of 1988. Earnings from operations for the year edged up to $1.39 billion from $1.38 billion.
Last year’s results included a $49-million extraordinary gain from selling off assets, and a $29-million gain from tax benefits derived from carrying forward a capital loss. The year before, the company had $190 million in gains from asset sales and issuing stock, as well as an $11-million extraordinary loss from retiring debt ahead of schedule.
Occidental said $209 million in corporate administration and other expenses included an unspecified amount for a charitable contribution to the Armand Hammer Museum of Art & Cultural Center. The center, which will house the collection of the company’s chairman and chief executive, is under construction next to Occidental’s Westwood headquarters. It is the subject of shareholder lawsuits.
