Oil Giants Post Reduced Profits Amid Price Slump
Chevron Corp., Atlantic Richfield Co. and Texaco Inc. reported sharply lower earnings for the first quarter, as a drop in oil prices to the lowest levels in 10 years continued to pull industry profits down from the record levels of last year.
Earnings at San Francisco-based Chevron, the third-largest U.S. oil company, fell 46% to $436 million, or 67 cents a diluted share, from $804 million, or $1.23, a year ago. Analysts expected 72 cents a share. Revenue fell 31% to $7.7 billion.
Profit for L.A.-based Arco fell 56% to $202 million, or 62 cents a diluted share, 1 cent above estimates, from $460 million, or $1.41, a year earlier. Revenue fell 29% to $3.6 billion.
Profit for White Plains, N.Y.-based Texaco dropped 47% to $259 million, or 46 cents a diluted share, from $492 million, or 90 cents, a year ago; analysts had expected 51 cents. Revenue fell 32% to $8.1 billion.
Among major U.S. oil companies, Texaco gets the biggest share of profits from finding and producing oil, making it one of those hit hardest by falling prices.
Exxon Corp. and Mobil Corp. earlier in the week posted smaller earnings declines, 13% and 15% respectively, because their European sales of gasoline and other fuels cushioned them from the effects of falling oil prices.
Oil companies are reporting earnings against strong results in the first quarter of 1997, when crude prices were nearly $23 a barrel. Oil prices have sunk to below $16 a barrel this year.
In its report, Arco said special items and earnings from discontinued coal operations brought net income to $220 million, or 67 cents a diluted share, compared with $483 million, or $1.48, a year earlier.
On March 23, Arco said it would sell its coal operations for $1.14 billion. Though the sale is expected to close in the second quarter, Arco stated its first-quarter earnings as if the sale had been completed.
Arco said the coal operations added $10 million to earnings in the quarter. It posted a charge of $6 million for environmental cleanup costs and gains of $14 million for tax benefits and other items.
On the New York Stock Exchange, Texaco shares rose 6 cents to close at $62.06, Chevron rose 19 cents to close at $84.25 and Arco rose 13 cents to close at $77.44.
At a Glance
* USX-Marathon Group, the independently traded unit of USX Corp., said profit fell 56% to $76 million, or 26 cents a diluted share, from $180 million, or 62 cents, a year earlier, beating estimates by 1 cent, as revenue jumped 34% to $5.50 billion.
* Phillips Petroleum Co.’s profit fell 31% to $171 million, or 65 cents a diluted share, from a year ago, exceeding analyst estimates of 55 cents. Revenue fell 18% to $3.3 billion.
Gains of $72 million, or 27 cents a share, produced net income of $243 million, or 92 cents a diluted share. In the year-ago quarter, a foreign currency loss of $20 million produced net income of $227 million, or 86 cents.
* Sun Co., a refiner that buys all its oil and benefited from the drop in oil prices, said its earnings rose 8% to $42 million, or 44 cents a share, from a year earlier, exceeding estimates of 32 cents a share. Revenue fell 23% to $2.1 billion. The company sells gasoline under the Sunoco brand name.
