Three of the largest oil and gas companies in the world, Exxon Mobil (XOM), ChevronTexaco and Royal Dutch/Shell Group, posted third quarter earnings Thursday, with both Exxon and Shell reporting encouraging production results. Meanwhile, ChevronTexaco was blasted off its track with more than $2 billion in charges, including a $1.55 billion write-down against Dynegy Inc., in which it is a 26.5% shareholder (see related story). Meanwhile, independents’ quarterly earnings also are coming in, including Anadarko Petroleum Corp., which upped its fourth quarter and year-end earnings on stronger-than-expected results.

ExxonMobil reported net income of $2.64 billion, or 39 cents a share, including special items and merger effects, compared with earnings of $3.18 billion, or 46 cents, for the third quarter of 2001. Minus the merger costs, it would have earned $294 billion, or 44 cents, beating Wall Street estimates by one cent. Revenue was $54.2 billion, up from $52.1 billion a year earlier.

Exploration and production (E&P) stood at $2.42 billion for the quarter, an increase of $286 million from the third quarter of 2001. Higher crude prices helped with the gain, and ExxonMobil also performed well internationally. However, lower refining margins, which are affecting many of the oil-heavy companies, dropped earnings in that segment to $125 million from last year’s quarterly earnings of $817 million.

Steven Pfeifer, a Merrill Lynch analyst, was enthused by the major’s increased production volumes, which he said had “turned a corner” in the quarter,” especially in regard to natural gas growth. Overall, volume rose 2% versus a year ago. “After posting steep quarter-to quarter declines in U.S. gas production during the first half of 2002, XOM’s production began to stabilize in Q3,” he said.

London-based giant Shell reported a 17% drop in earnings for the quarter over a year ago, but still was in the high end of the forecast. More important, Shell reported that its production growth for oil and natural gas was on target — unlike rival BP, which revised downward its annual forecast on Monday. It has forecast a 3% annual growth rate through 2005, but said it would not update that forecast before February. BP said it would have a 3% hike in production this year, which is down from an earlier forecast of 5.5%.

UBS Warburg’s Neil Perry said Shell had released a “very solid set of numbers,” adding that while “expectations for Shell’s third quarter production figures were much lower than for BP’s, but they have outperformed expectations, while BP has underperformed on their more aggressive full-year target.”

Blaming the earnings drop on weaker market conditions for its refining and marketing division, Shell’s net profit, adjusted to reflect the current cost of supply, was $2.241 billion, off from $2.686 billion in 3Q2001. Reported net income, however, was up 7% after Shell made some portfolio changes, including its acquisition of Enterprise Oil.

One of the strongest growth areas was in the Gulf of Mexico, and Shell Chairman Phil Watts boasted of the company’s performance there as a highlight in the quarter. He said despite production shut-ins and other storm problems, Shell had performed at “record levels.”

Shell also is downplaying the desire to buy anything, which analyst David Cumming of Standard Life said was positive, in light of current investor mood. “They’re happy with their strategic positioning,” he said. “I think the market will take that relatively well because they were worried about them spending money on acquisitions.”

Meanwhile, the number one U.S. independent producer, Houston-based Anadarko, reported a profit in the quarter, and boosted its earnings guidance for the rest of the year because of higher energy prices. Net income was $189 million, or 74 cents, compared with a net loss of $1.35 billion, or $5.41 a year ago. Excluding charges from 3Q2001, earnings fell 11% in this year’s quarter, but they still surpassed Wall Street forecasts.

For the fourth quarter, Anadarko raised its forecast to $1.05 a share, compared with Thomson First Call estimates of 90 cents. The full year earnings are expected to be 16 cents higher than previously estimated, said Anadarko, which would bring annual earnings to $3.05 per share. Wall Street estimates earnings will be $2.86.

North American natural gas volumes declined 8% from last year, to 1.76 Bcf/d, mostly in lower U.S. production. However, Anadarko said it was on track to meet a 2002 target of 196 MMboe, despite the problems with two major Gulf of Mexico storms. The company forecast production would be 203 million boe.

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