Late summer storms weighed on U.S. exploration and production companies in the third quarter, pushing down oil and natural gas output in North America for most of the largest producers. On Friday, ChevronTexaco Corp. and Anadarko Petroleum Corp. both reported strong earnings but mediocre production, while Pioneer Natural Resources reported mediocre income — because of tax changes — but stronger U.S. natural gas output.

San Ramon, CA-based ChevronTexaco reported a 62% increase in its quarterly profit to $3.2 billion ($1.51/share), from $1.98 billion ($1.01) for the same period of 2003. The latest results included $486 million (23 cents) on the sale of nonstrategic assets. Revenue also rose 32% to $40.72 billion from $30.84 billion.

However, worldwide oil equivalent production fell 6% over a year ago. About two-thirds of the decline was associated with asset sales, while the rest followed the shut-ins in the Gulf of Mexico (GOM) because of storms late in the quarter. Damage from Hurricane Ivan is expected to restrict 4Q production by 50,000-60,000 boe/d.

Despite the strong commodity prices — and an increase in global upstream spending — net oil-equivalent production declined 13%, or 116,000 boe/d from 3Q2003. Net natural gas production averaged 1.8 Bcf/d, down 15%. Excluding the lower production attributable to properties sold since 3Q2003 and the effect of hurricanes, net boe declined about 7%, the company said. This decrease resulted mainly from normal field declines, the effects of which were only partially offset by new or increased production in certain fields. On this basis, net liquids declined 6% and net natural gas production declined 9%.

In the United States, Chevron spent $434 million for exploration and production, up from $378 million a year earlier. However, the company only gained 1.8 Bcf/d in net gas production in the United States, compared with 2.1 Bcf/d in 3Q2003. Worldwide, gas production fell to 3.7 Bcf/d from 4.1 Bcf/d.

Houston-based Anadarko reported net income of $399 million ($1.58/share), compared with $274 million ($1.09). Net income for the current quarter included costs associated with repurchasing debt and the sale of non-core properties, which amounted to $74 million (29 cents/share). Cash flow from operating activities totaled $992 million, compared with $884 million a year ago.

During the quarter, sales volumes totaled 49 MMboe, or 534,000 boe/d, down from 50 MMboe or 541,000 boe/d because of “high natural decline rates on properties that are currently being divested.” Anadarko’s volumes also were reduced an estimated 200,000 boe by hurricane-related shut-ins in the GOM. However, sales were up more than 4% sequentially from the second quarter following the start-up of Anadarko’s Marco Polo field in the deepwater GOM, continued drilling success in East Texas and North Louisiana tight gas plays and the timing of sales in Algeria.

In the United States, gas volumes in the quarter fell to 132 Bcf, or 1.4 Bcf/d, compared with 136 Bcf, or 1.48 Bcf/d in 3Q2003. In Canada, however, volumes rose to 35 Bcf, or 385 MMcf/d, from 33 Bcf, or 357 MMcf/d. Worldwide capital spending totaled $710 million, up from $566 million a year ago. The costs were not broken down by region.

Pioneer, headquartered in Houston, reported net income of $80.9 million (67 cents/share), a drop from $191.8 million ($1.62) in 3Q2003. Pioneer said the quarterly results included an 8 cent/share after-tax impairment charge related to the company’s decision to not pursue development of the Olowi field in Gabon. Also, the company said, “the significant year-to-year change in net income is principally attributable to the company’s reversal of its deferred tax valuation allowance in the U.S. during the third quarter of 2003.”

Expecting the charges, Wall Street analysts, on average, had expected the company to post earnings of 65 cents/share.

However, quarterly oil and gas sales were up, averaging 180,020 boe/d. Gas sales averaged 676 MMcf/d. U.S. gas sales were 499,012 Mcf, up from 487,000 Mcf. In Canada, however, gas sales were down at 38,837 Mcf, from 41,253 Mcf in 3Q2003.

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