Mobil, Chevron Also Beat Income Expectations
Mobil Corp. and Chevron Corp. on Thursday joined the list of big oil companies reporting higher-than-expected third-quarter earnings because of improved returns from the refining and sale of gasoline and other fuels.
Conoco Inc., Phillips Petroleum Co. and USX-Marathon Group also reported higher profits. Only Shell Oil Co., the U.S. arm of the European Royal Dutch/Shell Group, reported lower earnings, as better refining returns failed to offset lower oil prices, analysts said. Exxon Corp., Texaco Inc. and Amoco Corp. reported higher earnings earlier this week.
Refining profits strengthened in the third quarter because falling prices for crude oil, the raw material for gasoline, improved profit margins, and a strong U.S. economy led to a surge in summer driving, analysts said.
“Refined product margins led the charge, specifically in the U.S. and Europe,” said James Falvey, an analyst with Smith Barney Inc.
Mobil’s profit rose 36%, Chevron’s climbed 13% and Phillips’ rose 19%. Marathon, the Houston-based oil and gas arm of USX Corp., saw profit jump 60%, and Conoco, a unit of DuPont Co., said its earnings rose 10%.
Earnings for Shell fell 6.9%.
Shares of the oil companies fell despite the good earnings reports, because investors focused on a drop in fiscal fourth-quarter refining margins rather than third-quarter results, analysts said.
Shares of San Francisco-based Chevron fell $1.19 to close at $86.44, Mobil shares fell 6 cents to close at $73.50, Royal Dutch’s New York-traded shares fell $1.44 to close at $54.88, Phillips shares fell 69 cents to close at $49.06, and USX-Marathon shares fell 94 cents to close at $36.56. All trade on the New York Stock Exchange.
At a Glance:
Fairfax, Va.-based Mobil, the second-largest U.S. oil company behind Exxon, said profit before gains and charges rose to a quarterly record of $907 million, or $1.14 a share, from $668 million, or 83 cents, in the year-ago quarter. Per-share results exceeded the $1.03 average estimate.
Net income of $892 million, or $1.12 a share, included charges of $15 million, as gains on asset sales were more than offset by charges for job cuts and other restructuring costs, litigation and a one-time cash bonus for employees.
Chevron, the third-largest U.S. oil company, said profit from operations climbed to $732 million, or $1.12 a share, from $650 million, or $1, in the year-ago quarter. The company had been expected to earn $1.04 a share.
In the latest quarter, Chevron took a $72- million charge on the sale of its British refinery and a $17-million charge from the write-off of telecommunications equipment, which were partially offset by an $84-million gain on reduced tax liabilities. Together, the special items brought net income to $727 million, or $1.11 a share.
Houston-based Shell posted profit before gains and charges of $459 million in the third quarter, compared with $493 million in the year-earlier period. Because it is a subsidiary of Royal Dutch, Shell does not report per-share earnings figures.
Conoco, also based in Houston, said net income increased to $282 million from $256 million a year ago. As a wholly owned subsidiary of DuPont, Conoco does not report per-share earnings.
Phillips, based in Bartlesville, Okla., said profit before gains and charges rose to $247 million, or 94 cents a share, from $208 million, or 79 cents. It had been expected to earn 91 cents.
