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Oil companies' 2Q mixed
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July 24, 2001: 10:19 a.m. ET
Exxon Mobil earnings miss mark but Chevron, Sunoco shine
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NEW YORK (CNNfn) - Two of the biggest U.S. oil companies reported second-quarter earnings Tuesday with mixed results.
Exxon Mobil Corp., the No. 1 U.S. oil company, earned $4.38 billion, or 64 cents a diluted share, excluding one-time items. That was up from $4.15 billion, or 60 cents a share, a year earlier. Analysts surveyed by earnings tracker First Call expected Exxon Mobil to earn 66 cents a share.
"The improvement in earnings reflected higher U.S. natural gas realizations and refining margins, both of which were very strong early in the second quarter, but declined significantly as the quarter progressed," Exxon Mobil Chairman Lee Raymond said. "The decline in these key earnings drivers, along with crude oil prices, has continued into the third quarter."
The Irving, Texas-based company, a component of the Dow Jones industrial average, said its quarterly revenue rose to about $56.46 billion from $55.96 billion a year earlier.
"This is a good quarter; the only negative is that historically they have had upside surprises," ABN Amro analyst Gene Nowak said.
"It will probably disappoint people in the short term, because they do have that history of upside surprises," he added. "They didn't quite do that this time."
Chevron beats forecasts
Separately, the No. 3 U.S. oil company, Chevron Corp., reported second-quarter earnings before one-time items of $1.38 billion, or $2.15 a share, up from $1.14 billion before special items, or $1.74 a share, a year ago. Wall Street analysts expected Chevron to earn $2.06 a share, according to First Call.
"Our upstream business -- exploration and production -- continues to be the major contributor to overall profits," Chevron CEO Dave O'Reilly said. "However, the improvement in earnings from the year-ago quarter was largely driven by our U.S. downstream operations -- refining, marketing and transportation."
Still, San-Francisco-based Chevron, which is merging with the No. 2 U.S. oil company, Texaco Inc. (TX: down $0.32 to $65.78, Research, Estimates), said its quarterly revenue fell to $13 billion from $13.2 billion a year ago.
Most of Chevron's revenue drop was attributed to the loss of its petrochemical unit, which became part of a new joint venture called Chevron Phillips Chemical Co.
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Smaller oil company Sunoco Inc. reported slightly better news for the second quarter, saying it earned $204 million before one-time items, or $2.44 a share, up from $132 million, or $1.50 a share, a year earlier. Wall Street analysts polled by First Call expected Sunoco to earn $2.02 a share.
Philadelphia-based Sunoco's quarterly revenue rose to about $3.82 billion from about $3.63 billion a year earlier.
Shares of Exxon Mobil (XOM: down $1.13 to $41.37, Research, Estimates), Chevron (CHV: down $0.68 to $86.96, Research, Estimates) and Sunoco (SUN: down $0.33 to $33.50, Research, Estimates) fell in early trading Tuesday.
Strong energy prices, which have fueled big profits for Exxon Mobil and other oil companies in recent quarters, are slipping, leading a number of analysts to predict that earnings for the coming quarters will not show such big increases.
"The first half of 2001 is clearly the peak of the oil industry earnings cycle for the foreseeable future," said Michael Young, an analyst with Gerard Klauer Mattison & Co. "The second quarter is a blowout quarter for the industry, but the outlook for the second half of the year will be sharply lower." 
-- from staff and wire reports
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