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ChevronTexaco moves to profit after big writeoff a year ago Production drop, downstream loss lead company chairman and CEO Dave O’Reilly to call the fourth quarter and the rest of 2002 unsatisfactory Allen Baker PNA Contributing Writer
ChevronTexaco, the nation’s second-largest oil company, reported a profit of $904 million for the fourth quarter, compared with a huge loss a year ago due to merger writeoffs.
The company had also posted a third-quarter loss, oddly also totaling $904 million, on big charges related to writeoffs involving its stake in Dynegy Inc.
Even ChevronTexaco’s chairman and CEO, Dave O’Reilly, called the net income for the quarter, and the year, unsatisfactory. Still, after special items are subtracted, operating earnings for the fourth quarter were $1.07 billion, more than double the $498 million figure for the 2001 quarter.
Production drops With overall production down 6 percent, only higher prices kept up profits. Income from exploration and production was $1.25 billion, against a loss in the 2001 quarter. E&P earnings were $1.29 billion in the third quarter, though.
Lower volumes were attributed to OPEC quota, Gulf of Mexico shut-ins that cut 60,000 barrels a day from the total, and reductions that were triggered by cost-recovery formulas in Indonesia. All that aside, and production still would have slid about a percentage point compared to the figure in the last quarter of 2001.
Worldwide liquids production came in at 1,844,000 barrels daily, down 8 percent from 2,014,000 barrels a year ago. Natural gas volumes dropped just 1 percent to 4,336 million barrels a day.
Prices came to the rescue, with average U.S. liquids bringing in nearly $7 a barrel more, at $23.57. Internationally, liquids brought $25.46, up about $8 a barrel. Natural gas prices in the U.S. rose 56 percent to $3.55 per thousand cubic feet, while international gas sales brought $2.34, up 6 percent.
Downstream loss Unlike rivals ExxonMobil and ConocoPhillips, ChevronTexaco lost money on its downstream activities, to the tune of $166 million, against a profit of $99 million a year ago and $92 million in the third quarter, a tough one for most refiners compared to the latest period.
Chemicals earned $13 million, better than the $70 million loss in the 2001 quarter but a drop from $22 million in the third quarter.
Disappointing year Chevron and Texaco merged in October 2001 to form the new company, which is based in San Ramon, Calif., so 2002 was the first full year of operations for the oil giant. It earned a total of $1.13 billion for the full year, just under a fourth of what ExxonMobil made for the last quarter alone.
Refinery input was down 6 percent.
Annual revenues were $99.05 billion, about half of ExxonMobil’s. For the quarter, ChevronTexaco took in $27.06 billion, up 26 percent from $21.46 billion a year ago and a sequential improvement from $25.35 billion in the third quarter of 2002.
The company spent about $200 million less on upstream exploration and capital projects in 2002 than 2001 as a result of cuts in the U.S. ChevronTexaco is planning to spend $6.4 billion in E&P this year, with emphasis on the deepwater Gulf of Mexico, Nigeria and Angola, as well as projects in Kazakhstan, Africa and Venezuela.
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