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Oil concerns slip on 3Q
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October 22, 1998: 2:32 p.m. ET
Chevron, Arco and Shell mimic rivals with dramatic quarterly earnings drop
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NEW YORK (CNNfn) - It's been a lousy quarter for the oil industry, and corporate executives are the first to admit it.
After disclosing a 37 percent drop in third-quarter earnings Thursday, Chevron Corp. Chairman and Chief Executive Ken Kerr told investors he was "disappointed" with the company's results, at the same time warning them he sees no immediate improvement in the offing.
"We had disappointing results in the third quarter due primarily to weak crude oil prices and several hurricanes in the Gulf of Mexico that severely impacted operations," he said.
Kerr added, "The fourth quarter will be a difficult one. Our results will continue to be affected negatively by low crude oil prices and low margins on refined products and chemicals, since we do not foresee any significant near-term improvement in these areas."
Chevron reported net income of $461 million, or 70 cents per share, for the three months ended Sept. 30. That figure is down 37 percent from profit of $727 million, or $1.10 per diluted share, for the year-ago quarter.
On an operating basis, which excludes a one-time gain from an insurance settlement and a one-time currency-related loss, the company earned 62 cents a share, in line with Wall Street estimates.
About $26 million in overseas currency losses were included in the most recent quarter, while gains of $36 million were rolled into last year's results.
Revenue fell to $7.7 billion from $10.3 billion last year.
Chevron's net income for the first nine months of the year reached $1.5 billion, or $2.34 per share, down from $2.4 billion, or $3.62 per share, last year.
Shares of Chevron (CHV) were off 6 at 81-1/4 Thursday afternoon on the New York Stock Exchange.
Atlantic Richfield Co., or Arco, posted similar results.
The Los Angeles oil company reported net income of $872 million, or $2.67 per diluted share, for the third quarter, compared with earnings of $516 million, or $1.57 per share in the year-ago quarter.
Operating earnings, however, which exclude special items, fell to $61 million, or 19 cents per share -- a penny above estimates -- from $313 million, or 96 cents per share, last year.
Revenue in the quarter fell to $2.8 billion, from $3.6 billion.
"From an industry perspective, the 1998 third quarter results were driven by low oil prices, which were down $5.60 per barrel relative to the same quarter in 1997 and were the lowest seen in 12 years," Arco Chairman and Chief Executive Mike R. Bowlin said.
For the nine months, Arco posted earnings of $1.25 billion, or $3.81 per diluted share, down from $1.39 billion, or $4.24a share, a year ago.
Arco (ARC) shares fell 2-7/16 to 67-1/8 early Thursday on the Big Board.
And lastly, Shell Oil Co. of Houston, a wholly owned subsidiary of Royal Dutch/Shell, posted net income of $258 million, down 46 percent from earnings of $479 million last year.
Revenues also tumbled to $3.9 billion, from $7.1 billion last year.
For the nine month period, Shell earned $746 billion, down 51 percent from $1.53 billion last year.
"Lower prices for crude oil, natural gas and all major downstream oil and chemical products continued to depress earnings," Shell Oil President Jack E. Little said. "Market conditions have deteriorated even further since the second quarter of this year, with average crude oil prices at their lowest level in 12 years." 
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Shell
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