Monday, August 5, 2013   VOLUME 9 ISSUE 30  
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Major Oil Company 2Q Earnings Dive

Phillips 66 announced last Wednesday second-quarter earnings of $958 million, down 20 percent compared with earnings of $1.2 billion in the second quarter of 2012. Adjusted earnings were $935 million, compared with $1.4 billion in the same period last year. Refining recorded second-quarter earnings of $481 million, which were $404 million lower than adjusted earnings from a year ago. Second-quarter earnings for Marketing and Specialties (M&S) were $332 million. Adjusted earnings were $309 million, an increase of $25 million from the same quarter last year. Second-quarter Chemicals earnings were $181 million, $61 million lower than adjusted earnings from the same period last year. The Midstream segment generated earnings of $90 million in the second quarter of 2013, compared with adjusted earnings of $95 million in the same period last year.

BP last Tuesday reported its financial results for the second quarter of 2013. Underlying replacement cost profit for the quarter was $2.7 billion, compared to $4.2 billion in the first quarter of the year and $3.6 billion in the second quarter of 2012. Net profit for the quarter was $2.04 billion (1.54 billion euros), lifted by the absence of major write-downs, compared with a loss of $1.52 billion in the second quarter of last year. Operating cash flow in the quarter was $5.4 billion. BP’s total revenue decreased 0.3% to $94.7 billion in the quarter from the year-ago level of approximately $95.0 billion. The Downstream segment posted a profit of $1.2 billion in the quarter, up from the year-ago profit level of $1.1 billion. The result reflects the impact of robust performance by the fuels business along with an encouraging refining environment.

ExxonMobil reported last Thursday that its second quarter net income fell 57 percent on weaker refining results, lower production and minus a big gain in the year-ago quarter. ExxonMobil earned $6.86 billion on revenue of $106.47 billion in the quarter, compared to $15.91 billion in earnings on revenue of $127.36 billion in last year's quarter. Year-ago results were inflated by the sale of Japanese lubricants division. Removing those effects, net income fell 19 percent. ExxonMobi says oil and gas production fell 1.9 percent in the quarter, while refining margins slipped and output fell because refineries were undergoing maintenance. For the first six months, ExxonMobil earned $16.36 billion, down 35 percent, compared to $25.36 billion in earnings in last year's first six months. Downstream earnings were $396 million, down $6,250 million from the second quarter of 2012, due primarily to the absence of the $5.3 billion gain associated with the Japan restructuring. Weaker margins, mainly in refining, decreased earnings by $510 million. Volume and mix effects decreased earnings by $370 million, due primarily to higher planned maintenance. Earnings from the U.S. Downstream were $248 million, down $586 million from the second quarter of 2012. Non-U.S. Downstream earnings of $148 million were $5,664 million lower than last year. Chemical earnings of $756 million were $693 million lower than the second quarter of 2012. The absence of the gain associated with the Japan restructuring decreased earnings by $630 million. Upstream earnings were $6,305 million in the second quarter of 2013, down $2,053 million from the second quarter of 2012. All other items reduced earnings by about $2.1 billion, primarily reflecting the absence of a prior year gain in Angola and higher operating expenses, including reimbursement of past exploratory costs to Rosneft for the Black Sea and Kara Sea Joint Ventures.

Royal Dutch Shell last Thursday reported a 57 percent drop in second-quarter net profits. Shell posted a sharp drop in earnings as it suffered from attacks on its operations in Nigeria. Net profit in the quarter was $1.74 billion, down from $4.08 billion in the same period a year ago, in part because of a $2.2 billion impairment charge on its shale oil assets in North America. Shell’s second quarter 2013 earnings, on a current cost of supplies (CCS) basis, were $2.4 billion compared with $6.0 billion in the same quarter a year ago. Downstream second quarter earnings were $1.168 billion compared to $1,296 in the comparable quarter in 2012. For the first six months, downstream earnings were $3,016 billion compared to $2,418 in the comparable period in 2012. Shell, the largest foreign oil producer in Nigeria, has suffered several attacks on its pipelines in the country's eastern delta region in recent months. Shutdowns cost it about $250 million in the second quarter and are continuing.

Chevron last Friday reported earnings of $5.4 billion for the second quarter 2013, compared with $7.2 billion in the 2012 second quarter. Sales and other operating revenues in the second quarter 2013 were $55 billion, compared to $60 billion in the year-ago period. U.S. downstream operations earned $138 million in the second quarter 2013, compared with earnings of $802 million a year earlier. The decrease was mainly due to lower margins on refined product sales. Higher repair and maintenance expenses at the company’s refineries also contributed to the decrease. International downstream operations earned $628 million in the second quarter 2013, compared with $1.08 billion a year earlier. Current quarter earnings decreased due to lower gains on asset sales, primarily reflecting the absence of the 2012 sale of GS Caltex’s power operations in South Korea. An unfavorable change in effects on derivative instruments and lower margins on refined product sales also contributed to the decrease in the 2013 quarter. Foreign currency effects increased earnings by $30 million in the 2013 quarter, compared with a decrease of $22 million a year earlier.

French oil company Total SA said its core earnings slid 3 per cent in the second quarter as lower crude and gas prices offset slightly higher production. Adjusted net income fell to euros 2.7 (US$3.5) billion from euros 2.8 billion in the same period a year earlier. Total's net profit, including one-off charges and profits or losses on the value of held assets, rose 67 per cent to euros 2.54 billion in the second quarter. The gain was attributed to a lower after-tax inventory effect as well as a large gain on the sale of its stake in an Italian oil field. Revenue in the April-June period fell 4 per cent to 47 billion euros from a year ago. Adjusted net income for the first six months of 2013 fell 5% to euros 5.6 billion compared to the same period a year earlier.


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