Weak oil prices were the bane of three major producers reportingsecond quarter earnings so far. Depressed crude prices were blamedfor second quarter and 1998 first half results significantly offfrom year-ago periods. At least one company said it may refigureE&P expenditures should the low prices persist. Gas prices alsowere off in most cases but less so than oil.

For Texaco, improved margins and higher international salesvolumes and an 11% increase in worldwide production only partiallyoffset effects of lower oil prices. Texaco net income for thesecond quarter of 1998 was $342 million ($.61 per share). Thequarter included a net special gain of $7 million. Net income forthe second quarter of 1997 was $571 million ($1.05 per share),including a net special gain of $131 million. For the first half of1998, reported net income was $601 million ($1.07 per share),compared with $1,551 million ($2.85 per share) for last year.

Texaco domestic exploration and production earnings in thesecond quarter and the first half of 1998 were below last year’slevels due to the continued deterioration of oil prices. Slightlyhigher natural gas prices benefited second quarter 1998 results.

Exxon reported second quarter 1998 net income of $1,620 million,down 18% from the record $1,965 million in the second quarter 1997.On a per-share basis, net income declined 16% to $0.66 in thesecond quarter of 1998, reflecting the ongoing share repurchaseprogram.

“Exxon’s net income of $1.6 billion was down $345 million or18%, reflecting weaker crude oil prices which on average were about$5 per barrel or 26% lower than last year,” said Exxon Chairman LeeR. Raymond. “This year’s second quarter results benefited fromhigher liquids production, increased petroleum product and chemicalsales volumes, and improved downstream margins. Exxon net incomewas $3,510 million in the first half of 1998, a decrease of 15%from the $4,140 million earned in 1997. On a per share basis, netincome was $1.43 in the first half of 1998 compared to $1.66 in theprior year period. Exploration and production earnings declined onlower oil prices, which decreased by about $6 per barrel versus1997. Earnings were also negatively impacted by lower U.S. andinternational natural gas prices. Worldwide natural gas productionof 6,384 Mcf/d was down 185 Mcf/d from 1997 reflecting warmerweather in Europe.

Occidental Petroleum reported net income of $186 million ($.51per share) for the second quarter of 1998, compared with net incomeof $158 million ($0.41 per share) for 2Q97 (see story in Daily GPI7/21/98).

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