Chevron, Arco Report Sharp Profit Gains in 2nd Quarter
The top oil refiners in California on Monday reported dramatically higher marketing profits in the second quarter, a time when gasoline pump prices here rose to their highest levels since the Persian Gulf War.
The results from Chevron and Arco confirm that the refiners’ portion of the retail gasoline price--reflecting both their costs of making gasoline and their profits on its sale--were the principal factors in last spring’s rapid price run-up.
“We’re not surprised,” said Susan Brown, deputy chief for energy forecasting with the California Energy Commission. “We suspected that refinery margins were high, including costs plus profits.”
Oil companies have publicly attributed the price hikes to the higher costs of making reformulated gasoline, tighter inventories and supply constraints due to refinery accidents, and to the higher price of crude oil.
Monday’s results show that at least some of the increases redounded to the refiners’ bottom lines:
* San Francisco-based Chevron reported net earnings of $872 million, or $1.34 a share, up nearly 44% from $607 million, or 93 cents per share, due partly to a one-time gain from the sale of refinery interests in Japan.
Its profits from U.S. refining, marketing and transportation were $183 million in the second quarter, up 69% from $108 million the year before.
* Los Angeles-based Atlantic Richfield, or Arco, reported 1996 second-quarter net income of $434 million, or $2.66 per share, compared with 1995 second-quarter income of $391 million, or $2.39 per share.
Of that, the U.S. refining and marketing profit was $120 million, up 344% from just $27 million in the like quarter a year ago. Most of Arco’s gasoline business is in California.
Arco also announced that Marie L. Knowles has been elected executive vice president and chief financial officer, succeeding Ronald J. Arnault, who will retire.
* White Plains, N.Y.-based Texaco earned $689 million, or $2.59 a share, more than double the $271 million, or 99 cents a share, earned a year earlier. This year’s second-quarter results were inflated partly by a onetime $224-million gain from the April sale of an interest in Nippon Petroleum Refining Co. by Caltex, a joint venture of Texaco and Chevron.
Texaco’s U.S. refining and marketing profit was up 366% to $144 million in the second quarter due to “significant improvement in West Coast refining margins,” the company reported.
Other oil companies reported mostly improved second-quarter earnings Monday on the strength of higher petroleum prices. But weaker chemical prices contributed to an overall earnings decline at industry leader Exxon and trimmed the gains at Mobil, Amoco and Chevron.
* Exxon earned $1.57 billion, or $1.26 a share, down almost 4% from a record $1.63 billion, or $1.30 a share, earned a year earlier. Its results also were hurt by economic weakness in Britain and Japan.
* Occidental Petroleum of Los Angeles said second-quarter earnings fell 20% as lower chemical prices outweighed gains in crude oil and natural gas prices. Oxy does not make or sell gasoline.
Net income fell to $181 million, or 49 cents a share, compared with profit from operations of $227 million, or 63 cents in the year-earlier period. In last year’s quarter, a charge of $40 million, or 12 cents a share, resulted in net income of $187 million, or 51 cents a share.
Times wire services contributed to this report.
* MICROSOFT GAINS
The software giant reported a 50% jump in profit. D2
