Price Hikes Push Up Profits at Oil Firms
ConocoPhillips, Amerada Hess Corp., Valero Energy Corp. and other oil producers and refiners said Wednesday that first-quarter profits surged as oil and natural gas prices climbed and gasoline prices touched a record high.
Profit rose by a third at ConocoPhillips, the third-biggest U.S. oil company and largest refiner. Earnings jumped 60% at Amerada Hess. Valero, the third-biggest U.S. refiner, forecast that second-quarter profit would almost triple on better margins for making fuel and higher output.
An index of shares of the biggest U.S. oil companies has returned 34% in the last year, compared with a 25% return for the Standard & Poor’s 500 index.
ConocoPhillips shares were little changed Wednesday, falling to $73.75 after Tuesday’s record of $73.86. Valero gained $1.88 to a record $64.45 and Amerada Hess rose $1.43 to $71.04. All three trade on the New York Stock Exchange.
Valero, based in San Antonio, said first-quarter net income rose 46% to $248 million. Refining profit rose 27% from the same period a year ago. Fuel production increased after the acquisition of an El Paso Corp. refinery on Aruba. Valero doesn’t explore for, or produce, oil or natural gas.
ConocoPhillips benefited from higher refining margins, rising energy prices and a gain from an asset sale.
First-quarter net income rose 33% to $1.62 billion, the Houston-based company said. Sales rose to $30.2 billion from $27.1 billion.
ConocoPhillips boosted output from U.S. refineries to 97% of capacity from 93% a year earlier to capitalize on record gasoline prices. First-quarter refining income climbed 19%.
“Over the next year or two, it looks pretty bullish” for refining profit, ConocoPhillips Chief Executive James Mulva said during a conference call with investors.
ConocoPhillips has been using increased cash flow generated by higher gasoline prices to pay off debt, and the company may buy back shares or increase dividends next year, Mulva said.
Amerada Hess, which has been selling assets to reduce debt, said first-quarter profit rose to $281 million from $176 million a year ago, boosted by higher energy prices and lower operating costs.
