Major US Petroleum Companies Suffer Declines in 2nd Quarter 1994 Earnings

Strategic Insights -

Major US petroleum companies, including Exxon, Mobil, Amoco, Texaco, and Atlantic Richfield, reported significant declines in second-quarter 1994 earnings due to lower crude petroleum prices and weak margins in their refining operations. While Mobil's earnings were only 1% lower than the same period in 1993, special charges resulted in a 48% drop to net profits. Chairman Lee R. Raymond of Exxon stated that higher crude costs were not matched by equivalent gains in refined product values, contributing to the decline. Despite these challenges, Mobil's operating performance remained strong, with chairman Lucio A. Noto noting that "Mobil's operating performance continues strong" in the face of weaker industry fundamentals.

Key Takeaways:

  • Exxon's second-quarter profits declined 28% to $885 million, with year-earlier net including $210 million in non-recurring gains.
  • Mobil's earnings excluding special items were down only $6 million, or 1%, from a year ago, but net tumbled 48% after special items to $198 million.
  • Amoco's second-quarter earnings declined 16% to $410 million, with results including $256 million in non-recurring charges and $270 million in non-recurring gains.
  • Texaco's second-quarter profits from continuing operations before special items fell 50% to $155 million, with after-special-charge net income tumbling 91% to $28 million.
  • Atlantic Richfield's second-quarter profits, after special charges, tumbled 91% to $24 million, with a 10% reduction in revenues to $4.3 billion.
  • The companies' upstream profits declined due to lower crude oil prices, with Exxon's upstream results falling 21% to $603 million and Texaco's upstream profitability declining 53% to $115 million.
  • Mobil's downstream earnings for the second quarter jumped 44% to $189 million, while Exxon's downstream profits plunged 55% to $201 million.
  • Capital spending for the first six months declined for all companies, with Exxon purchasing 2.3 million of its shares for $147 million.
  • Return on stockholders' equity for the 12 months ended June 30 was down for all companies, with Mobil's return on equity decreasing from 12.3% in calendar 1993 to 10%.

Statistics:

  • Exxon's second-quarter profits: $885 million (down 28%)
  • Mobil's earnings excluding special items: down $6 million (1%)
  • Amoco's second-quarter earnings: $410 million (down 16%)
  • Texaco's second-quarter profits from continuing operations: $155 million (down 50%)
  • Atlantic Richfield's second-quarter profits, after special charges: $24 million (down 91%)
  • Exxon's upstream results: $603 million (down 21%)
  • Texaco's upstream profitability: $115 million (down 53%)
  • Mobil's downstream earnings: $189 million (up 44%)
  • Exxon's downstream profits: $201 million (down 55%)
  • Capital spending for the first six months ( Exxon ): $3.536 billion (down 5%)
  • Capital spending for the first six months (Mobil ): $1.665 billion (down 8%)
  • Return on equity (Mobil ): 10% (down from 12.3% in 1993)
  • Liquids output (Exxon): 1.712 million b/d (up 4%)
  • Natural gas output (Exxon ): 5.394 Bcfd (up 15%)

Sources:

  • Exxon's investor relations department
  • Mobil's investor relations department
  • Amoco's investor relations department
  • Texaco's investor relations department
  • Atlantic Richfield's investor relations department
  • Various news articles, including the Wall Street Journal