Mobil is yet another major producer hit by lower oil and gasprices in the third quarter. Despite cost reduction efforts,earnings were off sharply. Mobil reported third quarter 1998estimated operating earnings of $497 million, a decline of $410million, or 45%, from the record $907 million earned in the sameperiod last year. Net income declined 43% to $509 million from $892million in the third quarter of 1997. “This quarter saw virtuallyall of our businesses experience sharp declines in industryfundamentals,” said CEO Lucio A. Noto. “Despite our self-helpefforts, earnings and cash generation are down significantly thisyear.”

Net domestic gas production was 1,091 MMcf/d, down from 1,124MMcf/d in the third quarter of 1997. Canadian production rose to435 MMcf/d from 376 MMcf/d. Domestic realized gas prices declinedto $1.84/Mcf from $2.06/Mcf in the third quarter of 1997. Notonoted crude oil prices were down about $6 per barrel and gas pricestrended lower, particularly for LNG; U.S. downstream margins wereoff and Asia Pacific downstream margins continued to be underpressure; petrochemical margins also weakened considerably.

“In response to continuing weak market conditions, theorganization will accelerate efforts to implement new self-helpinitiatives. In addition, we have a strategy to maintain a prudentlevel of investment spending, balancing near-term cash needs withspending for long-term growth. We are carefully assessing ourinvestment and exploration spending programs, and moderating thepace of spending by deferring discretionary projects.

“In the upstream, lower worldwide crude oil and natural gasprices impacted earnings by about $250 million. Additionally,Mobil’s third quarter production was almost 2% below last year.Also, in line with our planned 1998 investment program, explorationexpense was higher in the third quarter, following our typicalpattern of increased exploration spending in the second half of theyear.”

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