Earnings Down for Most Oil Companies

Many oil companies reported a decrease in net income for the second quarter, compared to the previous year's results, although - in most cases - the second quarter still outperformed the first. While the decreases ranged in percentage, only a few companies' results were virtually unchanged from the previous year's performance. However, higher crude oil prices resulted in many companies' exploration and production net income actually increasing over the previous year. "I am encouraged second-quarter operating earnings, although down from year-ago levels, were more than six times higher than in the first quarter, reflecting the impact of higher crude oil and natural gas prices, higher motor fuel margins and improved plant operations," said Jim Mulva, CEO of Phillips Petroleum Company, which reported second-quarter net income of $68 million, a 57 percent decrease from earnings of $158 million for the same period last year. For the six months, net income was $138 million compared with $401 million for the same period in 1998. Total revenues were $5.8 billion, versus $6.3 billion a year ago. Exploration and production net operating income for the quarter was $99 million, up from $76 million in the same quarter a year ago, primarily due to higher crude oil prices, partly offset by higher dry hole costs. Exploration and production net operating income for the six-month period was $153 million, down from $174 million a year ago, mainly due to lower natural gas prices and higher foreign dry hole costs. Mobil Corporation reported second quarter 1999 estimated operating earnings of $650 million. This is essentially unchanged from the $655 million earned in the same period last year. Operating earnings per common share, assuming dilution, were $0.81, the same as in the second quarter of 1998. USX-Marathon Group's net income adjusted for special items was $119 million in second quarter 1999, compared with net income adjusted for special items of $162 million in second quarter 1998. The Marathon Group recorded second quarter 1999 net income of $134 million. Net income in second quarter 1998 was $162 million. Income for Marathon's operating segments was $371 million in second quarter 1999, versus $473 million in second quarter 1998. Worldwide exploration and production (upstream) operating segment income totaled $124 million in second quarter 1999, versus $73 million in second quarter 1998. Chevron Corp. announced second quarter 1999 net income of $350 million, a decrease of 39 percent from net income of $577 million for the 1998 second quarter. Net income for the first six months of 1999 was $679 million, down 37 percent from $1.1 billion for the first half of 1998. U.S. exploration and production net income for the 1999 second quarter was $98 million, up from $85 million in the 1998 second quarter. Unocal Corporation reported preliminary net earnings of $9 million in the second quarter 1999. The 1999 results compare with reported earnings of $105 million a year ago. "During the quarter, we demonstrated we can drill deepwater exploration wells at significantly lower cost than our competition," said Roger C. Beach, Unocal chairman and CEO. "You can't find oil and gas unless you drill wildcats, and not every well is going to be successful. The key to success in this business is to maximize your drilling dollar, and the combination of our large prospect inventory and our 'top of class' drilling capabilities allow us to do just that. We intend to maintain our cost leadership, which will allow reserve and production growth with higher returns on investment and future earnings." Spirit is currently preparing to launch its "ultradeep" Gulf of Mexico program, which will focus on prospects in the emerging fold belt and sub-salt trend that showed significant potential in the Spirit's earlier discoveries. Texaco reported second quarter 1999 income before special items of $286 million. This compares with income before special items of $335 million for the second quarter of 1998. Net income was $273 million for the second quarter of 1999 and $342 million for the second quarter of 1998. For the first half of 1999, income before special items was $391 million compared with $594 million for last year. Net income was $472 million for the first half of 1999 and $576 million for the first half of 1998.