CANADIAN OILPATCH / US MAJOR'S LEAD THE WAY
US major oil companies are reporting third quarter earnings. What is
happening to them is a strong indicator of where companies in Canada
are also headed. What is equally important to financial numbers are the
conditions the industry are experiencing.
Profit Surge
U.S. oilpatch giants savor rising revenues as oil prices climb.
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Several big oil companies Monday reported higher third-quarter
earnings as surging prices for crude oil and natural gas more than offset
rising refining costs.
Texaco Inc. said net earnings jumped 50 per cent, Chevron Corp.
reported a 29 per cent increase excluding special items and Exxon
Corp., the largest oil company in the U.S., said profits rose four per cent.
The results were in line or slightly better than had been expected on
Wall Street.
But Mobil Corp. and Amoco Corp. reported lower earnings, hurt by
weakness in their refining operations. Ashland Inc. had a profit versus
a loss in the year-ago period.
Strong Demand
Crude oil prices have been rising since July on strong demand,
especially in the United States, and delays in new world supplies,
including postponement of a UN plan for Iraq to export oil to buy food
and medicine.
That brought average crude prices about $4 US a barrel higher than
in the 1995 quarter, boosting exploration and production profits but
also raising costs of downstream, or refining and marketing, operations.
Natural gas prices have also risen.
"It's just a very positive environment right now for integrated oil and
gas companies," said Oppenheimer & Co. analyst Bruce Lanni. "We
believe the growth trend you've seen for earnings will continue into
1997."
Irving, Tex.-based Exxon said net income rose to $1.56 billion, or
$1.25 a share, a record for the third quarter, from $1.50 billion, or
$1.20 a share, in the 1995 quarter. Sales rose almost eight per cent
to $33.32 billion from $30.97 billion.
"Worldwide crude oil prices averaged about $4.50 per barrel more
than last year, natural gas prices were higher, particularly in North
America, and worldwide gas sales were up eight per cent," Exxon
chairman Lee Raymond said in a statement.
Weak Margins
Mobil, the No. 2 oil company in the U.S., said refinery outages and
weak refining margins trimmed third quarter earnings.
Earnings at Fairfax, Va.-based Mobil fell to $769 million, or $1.92 a
share, from $786 million, or $1.95 a share, in the year-ago period.
Sales grew to $20.3 billion from $18.6 billion. In a statement
accompanying the results, Mobil chairman Lucio Noto said the
company planned to make changes to "compete in the long term"
but did not elaborate.
Chicago-based Amoco Corp.'s earnings also were trimmed by
weak refining and marketing profits. Excluding a one-time $97
million gain from the sale of a foam products business, Amoco
said earnings fell to $538 million, or $1.08 a share, from $599
million, or $1.21 a share, in the 1995 quarter. Sales grew to $9.02
billion from $7.64 billion.
"Our third-quarter 1996 performance was below the year-earlier
period, as lower downstream margins more than offset strong
exploration and production results worldwide," Amoco chairman
Laurance Fuller said.
Chevron Corp. said its average price for crude oil rose to $18.88
a barrel from $14.91 in the 1995 quarter. Natural gas prices
jumped to $2.06 for 1,000 cubic feet from $1.40. San Francisco
based Chevron reported earnings of $655 million, or $1 a share,
up from $282 million, or 44 cents a share, in the 1995 period,
which included $222 million in one-time charges. Excluding the
charges and a one-time gain of $5 million in the latest quarter,
earnings rose 29 per scent.
At Texaco, based in White Plains, N.Y., net income jumped to
$434 million, or $1.61 a share, from $290 million, or $1.06 a
share, for the 1995 quarter. Sales grew to $11.10 billion from
$8.81 billion. Its average crude oil price rose $3.05 a barrel.
Strong Quarter
"Texaco's higher worldwide crude oil and natural gas production
and the continuing strength in commodity prices led our strong
third quarter and year-to-date results," chairman Peter Bijur said
in a statement.
Ashland Inc., based in Ashland, Ky., said it earned $46 million,
or 64 cents a share, in its fourth quarter, compared with a loss
of $30 million, or 55 cents a share, in the 1995 quarter. Sales
rose to $3.5 billion from $3.3 billion.
New York-based Amerada Hess Corp. said it earned $97.8
million, or $1.05 a share, compared with a loss of $104.6 million,
or $1.13 a share, in the year-ago quarter. The latest period
included a one-time gain of $71.1 million from the sale of oil
properties in Britain and the U.S.
Texaco stock jumped $2.75 to $106.125, Amoco added 50
cents to $75.375, Mobil fell $1 to $119.875, Exxon lost 37.5
cents to $89 and Chevron fell 12.5 cents to $67.25, all on the
New York Stock Exchange.
Ashland stock fell 12.5 cents to $42.75, and Amerada Hess
lost 25 cents to $55.875, also on the Big Board. |
