Earnings at Major Oil Companies Fall Sharply

Led by ChevronTexaco Corp., several major U.S. oil companies said Thursday that their first-quarter earnings were battered by lower oil and gas prices and the worst refining and marketing business climate since the mid-1980s.

Unocal Corp. and Occidental Petroleum Corp. also posted sharp earnings declines.

The industry should see a better second quarter, when companies expect to benefit from a spike in energy commodity prices and higher retail gasoline prices during the summer driving season.

“We have seen the bottom and are likely to improve significantly,” said oil company analyst Fadel Gheit of Fahnestock & Co. in New York.

San Francisco-based ChevronTexaco, the nation’s second-largest oil company, posted first-quarter net income of $725 million, or 68 cents a share, down 70% from net income of $2.43 billion, or $2.29, a year earlier.

The company said it would have made $931 million, or 88 cents a share, if not for $132 million in expenses stemming from Chevron’s takeover of Texaco six months ago and a $74-million charge to account for a setback on its investment in Houston power wholesaler Dynegy Inc.

Excluding those items, earnings were 88 cents a share, beating the consensus analyst estimate of 70cents a share, according to Thomson Financial/First Call.

Houston-based Conoco Inc., which is awaiting U.S. government approval of its merger with Phillips Petroleum Co., said first-quarter earnings fell 84% from a year earlier, and Phillips posted a $25-million loss.

Conoco had net income of $104million, or 16 cents a share, down from $653 million, or $1.03, a year earlier. Excluding one-time gains and losses, the company earned 9 cents a share, falling 11 cents short of the expectations of analysts surveyed by First Call.

“This was the most difficult quarter we’ve experienced in four years,” Conoco Chairman and Chief Executive Archie Dunham said.

At Bartlesville, Okla.-based Phillips, the per-share loss was 7 cents, contrasted with a profit of $516million, or $2.01 a share, a year earlier. Revenue rose 77% to $9.4billion from $5.3 billion.

El Segundo-based Unocal said first-quarter earnings plunged 93% after energy prices fell. Net income dropped to $22 million, or 9 cents a share, from $295 million, or $1.18, a year earlier. Revenue fell 53% to $1.04 billion from $2.21 billion as mild weather and the slumping economy cut fuel demand.

Los Angeles-based Occidental said first-quarter earnings fell 95% to $25 million, or 7 cents a share, from $484 million, or $1.30, a year earlier. Revenue fell 44% to $2.53billion from $4.48 billion.

A rise Thursday in oil prices and the stronger outlook for the second quarter helped lift shares of oil companies on the New York Stock Exchange even after the dismal quarterly results. ChevronTexaco rose to $85.90, up 90 cents; Conoco rose to $28.22, up 42 cents; Phillips traded 60 cents higher to $60.67; and ExxonMobil Corp. gained 24 cents to $40.54. Unocal gained 5cents to $37.47, and Occidental fell 3 cents to $28.52.

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Bloomberg News was used in compiling this report.

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First-Quarter Earnings Reports

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