Twenty of the largest U.S. oil and natural gas companies collectively reported $17.4 billion of net income in 3Q2010, one-third (32%) more than in the same period of 2009 -- but 41% below their third quarter average in 2005-2009, adjusting for inflation, according to the Energy Information Administration (EIA).

Leading operations, in terms of net income, for the U.S. producers in the latest quarter were foreign oil and natural gas production ($9.6 billion); U.S. oil and natural gas production ($5.7 billion); and worldwide chemicals ($1.6 billion), according to the EIA's latest report, which was published on Tuesday.

"All of the lines of business" for the producers tracked by EIA recorded higher earnings in 3Q2010 versus the year-ago period. EIA used data collected from company press releases for the July through September time period of 2009 and 2010.

"Domestic oil and gas production operations generated 15% more income than a year earlier, but income was 36% less than the average for the third quarter of 2005-2009 of $8.8 billion," the report said.

The producers' investments in their U.S. oil and gas production operations increased 67% relative to 3Q2009, and was 24% higher than the $5.6 billion third quarter average for the last five years (i.e., 2005-2009).

"Upstream capital expenditures by these companies increased despite more than a year of consistently lower-than-average (relative to the five-year average for the particular quarter) net income," the report said.

The latest quarterly review excluded the $7 billion pre-tax special charge in 3Q2010 for BP plc's U.S. operations related to the Gulf of Mexico oil spill.

"Such a charge is considered an unusual item and excluded in making the quarter-to-quarter and year-to-year comparisons that follow," said EIA. If the one-time charge had been included, 3Q2010 operating expenses would have jumped by $7.7 billion and reduced net income by $5 billion.

The U.S. producers tracked by EIA for the report were Alon USA, Anadarko Petroleum Corp., Apache Corp., BP plc's U.S. operations, Cenovus Energy Inc.'s U.S. operations, Chesapeake Energy Corp., Chevron Corp., ConocoPhillips and Devon Energy Corp. Also tracked were El Paso Corp., Encana Corp.'s U.S. operations, EOG Resources Inc., EQT Corp., ExxonMobil Corp., Hess Corp., Marathon Oil Corp., Occidental Petroleum Corp. and Sunoco Inc. In addition Tesoro Corp., Valero Energy Corp., Western Refining Inc. and Williams Cos. reports were included.

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