Mixed Profit Picture for Top Three Oil Companies

To no one’s surprise, the three largest U.S. oil companies reported poor fourth quarters and mixed 1991 profit pictures Friday.

Exxon Corp.--which had the highest 1990 revenue--reported 1991 net income of $5.6 billion, the largest earnings in the company’s history. Mobil Corp., ranked second in 1990, estimated its 1991 earnings at $1.92 billion, down only a fraction from last year’s $1.93 billion. Chevron Corp. reported unaudited 1991 earnings that dropped 40% from the previous year, to $1.29 billion.

“I don’t see any surprises,” said Thomas P. Blakeslee, energy analyst for Hoboken, N.J.-based Pegasus Econometric Group. “It was also to be expected that we would see decreases in earnings by all the majors, compared with the 1991 fourth quarter, which had historically the highest crude oil prices ever.”

All three reported a drop in earnings in the fourth quarter of 1991, as the industry was hard-hit by low prices for crude oil and natural gas as well as a drop in demand that the companies blame on the limp U.S. economy.

Exxon’s fourth-quarter earnings were down 28%, the company reported. Mobil fell further, by 38%. But Chevron--which took a one-time charge of $244 million, most of which funded a program to trim the company’s work force--plummeted 94% in earnings for the quarter.

For the year, Exxon Chairman L. G. Rawl credited growth and high earnings in foreign operations for the good year. Rawl said “essentially all of this year’s increase in earnings was achieved” in the first quarter.

Foreign operations described as performing at “near record levels” were also cited by Chevron Chairman and CEO Kenneth T. Derr.

Analysts also found the best prospects for many U.S. oil companies, both last year and in the near future, outside the country.

“If you’re seeking to maximize profits and you’re in the business of crude oil exploration, you want to find the lowest-cost deposits--and right now they’re overseas,” said Al Roark, an energy economist with the WEFA Group in Bala-Cynwyd, Penn.

Fully 75% of Exxon’s earnings--and all of its growth in earnings--came from its foreign operations. While 1991 earnings from foreign exploration and production fell by $279 million to $2.5 billion, earnings from foreign refining and marketing operations grew $805 million, to a total of $2.04 billion.

Exxon’s U.S. exploration and production earnings dropped from $1.26 billion in 1990 to $627 million. But domestic refining and marketing operations were up in 1991 by $436 million, to $514 million.

Exxon’s chemical-division earnings remained essentially stable, dropping slightly from 1990’s $522 million to $514 million in 1991.

San Francisco-based Chevron, which had the poorest showing of the three, announced broad cost-cutting changes Jan. 15 that could trim as many as 3,600 jobs from a total work force of 26,000.

Chevron’s 1991 overseas exploration and production earnings fell from $771 million in 1990 to $717 million. At the same time, overseas refining, marketing and transportation rose $99 million, to $486 million.

Earnings from all Chevron’s U.S. operations fell by more than $1 billion from a 1990 total of $1.15 billion. Exploration and production dropped to $285 million in earnings, from $772 million in 1990. But U.S. refining, marketing and transportation operations--which posted $335 million in special charges for environmental cleanup, litigation and a major refinery reconfiguration--slipped from earnings of $376 million in 1990 to a loss of $153 million in 1991.

Mobil reported that its international exploration and production operations slipped from $1.40 billion in earnings in 1990, to $1.11 billion last year. Foreign manufacturing and refining rose, however, to $813 million in 1991 from $542 million the previous year.

Domestically, Mobil exploration and production efforts earned $192 million, up slightly from $189 million in 1990. U.S. marketing and refining earnings were also up, from $91 million in 1990 to $118 million in 1991.