Oil Firms Report Slide in 3rd-Quarter Profits
Major oil companies reported steep declines in third-quarter earnings Wednesday, hurt by the drop in crude oil prices to the lowest level since 1986.
Exxon Corp., the largest U.S. oil company, said its net income fell 23%, and Texaco, the third-largest, said its earnings fell 58%.
Los Angeles-based Occidental Petroleum Inc. said its profit dropped 98%, while Amoco Inc. reported a 54% decline.
Exxon said its earnings fell to $1.4 billion, or 58 cents a share, with weaker chemical sales adding to the weakness from lower profit margins on gasoline. The results beat estimates by two cents. Revenue fell 12%, to $28.78 billion.
Profit from exploring for and producing oil and natural gas fell 46%. Exploration profit in the U.S. fell 35%, while it plunged 52% outside the United States.
Texaco’s operating profit fell to $208 million, or 37 cents a share, missing expectations of 41 cents, as revenue dropped 31% to $7.71 billion.
Operating profit from Texaco’s U.S. exploration and production fell 60%, while earnings from international exploration and production fell 61%.
Profit from U.S. refining and sales fell 25% as storms in the Gulf of Mexico and refinery outages cut into earnings. Oversupply in the U.S. also squeezed prices for gasoline and diesel.
The company helped stave off deeper profit declines by boosting the amount of oil and natural gas it extracted by 9% during the quarter, including new production from the Gulf of Mexico.
Occidental Petroleum said its operating profit fell to $3 million, or about a penny a share, excluding one-time gains and charges. Analysts were expecting a break-even quarter.
Occidental said sales fell 17%, to $1.66 billion, as the Asian economic crisis lowered demand for basic chemicals as well as crude oil.
Earnings from its oil and natural gas exploration and production division dropped 58%, to $61 million. Profit in the chemical division dropped 70% to $62 million, primarily from lower prices for chlorine, EDC, PVC and petrochemical products.
Prices for ethylene and propylene, two of the most widely used petrochemicals, fell by 30% to 35% on the U.S. Gulf Coast during the quarter, according to ICIS-LOR, a pricing agency.
Amoco, the fifth-largest U.S. oil company, said its net income fell to $295 million, or 31 cents, a penny higher than estimates, on higher exploration costs as well as lower prices for crude oil, natural gas and chemicals. Revenue fell 17% to $7.49 billion.
Profit at Amoco’s U.S. exploration and production operations fell 51%, while overseas exploration and production operations reported a loss of $30 million, contrasted with a $67-million profit a year ago. Profit in the chemical division dropped 42%.
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