Oil Profits Surge as Prices Climb
Exxon Mobil Corp., Chevron Corp. and Occidental Petroleum Corp. said Tuesday that fourth-quarter earnings surged as oil prices rose to the highest levels in nearly nine years.
Exxon Mobil, the largest publicly traded oil company, said earnings rose 34% as higher profit from oil sales more than offset a drop in refining results. It was Exxon Mobil’s first earnings report since the company was created Nov. 30 by the largest oil merger in history.
Chevron earnings rose 63% as oil-rich nations cut back on production. The average price of oil was almost double that of the year-earlier period, reaching the highest levels since the Gulf War. On Tuesday, March crude settled up 45 cents at $28.28 per barrel on the New York Mercantile Exchange.
Both Exxon Mobil and Chevron said their earnings benefited from continued cost cutting, including firing workers. Exxon Mobil said it eliminated 1,750 jobs during the quarter, part of a plan to cut 16,000 jobs by 2002.
San Francisco-based Chevron said it will have cut 3,500 workers by midyear, 400 more than the company estimated in October, as part of its plan to slash costs by $500 million a year.
Los Angeles-based Occidental, which lost $35 million last year, had profit from operations of $192 million. The ninth-biggest U.S. oil company credited a rise in chemical sales as well as higher oil and natural-gas prices for the profit increase.
Occidental said profit from operations was $192 million, or 52 cents a share, in the fourth quarter, reversing a year-earlier loss. Earnings topped the 42-cent average analysts’ estimate, according to First Call. Sales rose 48% to $2.51 billion from $1.69 billion.
Profit from operations at Exxon Mobil rose to $2.71 billion, or 77 cents a share, from $2.03 billion, or 58 cents, a year earlier. Revenue rose 30% to $56 billion from $43 billion.
Exxon Mobil was created when Exxon Corp. bought Mobil Corp. for $85.2 billion in stock and debt on Nov. 30. The profit statement combines the two companies’ results.
Earnings matched the average estimate of analysts surveyed by First Call/Thomson Financial. Individual forecasts ranged from 70 cents to 85 cents.
Though it matched expectations, Exxon Mobil didn’t see earnings gains as big as those of smaller rivals such as Chevron and Atlantic Richfield Co., which said last week that its profit increased eightfold.
Chevron said its profit from operations rose to $819 million, or $1.24 a share, from $503 million, or 76 cents. Revenue rose 51% to $11 billion from $7.28 billion. Profit was in line with the $1.23 expected by analysts.
Chevron said profit from oil exploration more than doubled to $840 million. The increase in oil prices, though, helped drive up raw material costs for its six U.S. refineries by 85%. Fuel prices rose just 47%, squeezing profit margins.
The higher costs, and shutdowns at a West Coast refinery, led Chevron’s U.S. refining earnings to fall 55% to $73 million. It lost $79 million on international refining.
In New York Stock Exchange trading, Exxon Mobil shares fell 19 cents to close at $84.06; Chevron fell 25 cents to close at $88.56; and Oxy fell $1.06 to close at $19.81.
