With few exceptions to the rule, U.S.-based producers reported soaring 3Q income, however, U.S. natural gas production continued to fall, and capital spending for exploration and production dropped for some of the largest operators.

On Thursday, ExxonMobil Corp., Unocal Corp. and Apache Corp. reported strong quarterly income, but the trio also shared in reporting declining U.S. gas production. Apache, however, reported a rise in its Canadian gas output.

Irving, Texas-based ExxonMobil, the world’s largest producer, reported that quarterly profit was up 56% on high commodity prices and strong results from worldwide refining operations. Net income for the third quarter was $5.68 billion (88 cents/share), from $3.65 billion (55 cents) in 3Q2003. Excluding a $550 million charge to cover exposure in a lawsuit brought by thousands of gas station dealers, 3Q earnings would have set a quarterly record of $6.23 billion. Revenue also jumped 28% to $76.38 billion from $59.84 billion.

Worldwide, the major’s production inched up slightly by 1% over a year ago, with growing oil production from overseas fields partially offsetting declines in older fields. Gas production also edged slightly upward by 1.3% to 8.43 Bcf/d from 8.32 Bcf/d in 3Q2003, also on higher overseas volumes.

However, the story was not as good in North America. In the United States, gas production fell to 1.877 Bcf/d from 2.179 Bcf/d, while in Canada, it dropped to 954 MMcf/d from 943 MMcf/d.

Also troubling to some analysts is the spending on capital and exploration, which declined by 5.5% in the quarter over a year ago to $3.63 billion from $3.84 billion. Exxon said new exploration is difficult in many areas of the world, and where it can more easily explore, like in North America, the fields are in decline.

Still, Chairman Lee R. Raymond said that “plans for long-term capacity increases remain on track as reflected by continued high levels of capital spending.” Even though the spending is lower — despite higher upstream earnings — he said the company would continue an “active investment program,” which reflected “continued strong levels of upstream spending.”

Earnings from U.S. upstream operations were $1.17 billion, up $290 million. Non-U.S. upstream earnings of $2.75 billion were $937 million higher than last year’s third quarter.

Houston-based Apache Corp. reported record earnings of $432 million ($1.31/share), up 57% from $276 million (84 cents). Apache credited a combination of continued strong commodity prices as well as record oil production. Quarterly earnings were reduced by 6 cents/share because of the impact of foreign currency swings on deferred taxes and by 4 cents/share because production was curtailed by Hurricane Ivan.

Worldwide daily production averaged 458,412 boe, up 2%. Higher production in Australia, the North Sea and China more than offset the impact of Hurricane Ivan, which reduced Apache’s U.S. oil production by 4,042 bbl/d. Natural gas production averaged 1.23 Bcf/d, down about 30 MMcf/d from a year ago and about 20 MMcf/d lower sequentially from the second quarter.

U.S. gas production fell to 640,467 Mcf/d from 717,988 Mcf/d in 3Q2003. In Canada, gas production was higher, at 325,535 Mcf/d, compared with 319,522 Mcf/d. Apache also increased its North American exploration budget from a year ago, spending $380,000 on U.S. and Canadian projects, compared with $240,000 a year earlier.

“Apache established a new production record despite the negative effects of Hurricane Ivan,” said CEO G. Steven Farris. “What made the difference was growth in other regions, including a 23% increase in production from the North Sea.” He said, “with the impact of our recently completed acquisitions in the Permian Basin and the Gulf of Mexico, coupled with our active drilling program, we have great momentum going into the fourth quarter and into 2005.”

Unocal, headquartered in El Segundo, CA, more than doubled its quarterly profit from a year go, but its production numbers were not as stellar. Quarterly income was $330 million ($1.23/share), from $152 million (58 cents). Excluding one-time items, Unocal’s adjusted income of $294 million ($1.09), which beat Thomson First Call analysts’ forecast of 96 cents.

Worldwide hydrocarbon liquids and natural gas production averaged 407,000 boe/d, compared with 441,000 boe/d in 3Q2003. Unocal blamed the decline on the sale of oil and gas assets in North America, which accounted for nearly 27,000 boe/d in 2003, Hurricane Ivan, which reduced production by 2,400 boe/d, natural declines in North America and lower contractor’s cost recovery barrels in Asia. Unocal currently expects worldwide production for the full-year 2004 to exceed 405,000 boe/d.

U.S. gas production fell to 486 MMcf from 644 MMcf a year earlier. In Canada, gas production for the quarter was 83 MMcf, compared with 90 MMcf. Unocal also spent less on exploration and production in North America compared with a year ago. Overall, the company spent $112 million, down from $114 million a year ago.

CEO Charles R. Williamson said the company was continuing to execute on “major development programs in the Caspian Sea, Thailand, Bangladesh and deepwater Gulf of Mexico — programs that we believe will contribute to production growth in 2005 and 2006.”

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