The downward trend in producers’ earnings continues this week, with newly merged major ChevronTexaco Corp. especially hard hit — not only by lower commodity prices, but also special charges and merger-related costs that brought fourth quarter earnings down about $3.5 billion. However, Marathon Oil Co. and Unocal Corp., which also reported quarterly and year-end earnings on Tuesday, also saw their fortunes fall on dismal commodity prices and other charges toward the end of 2001.

Echoing other executives’ sentiments in recent weeks, ChevronTexaco CEO Dave O’Reilly said his company’s “operating earnings in the fourth quarter suffered from weakened market fundamentals in all of our major business sectors.” O’Reilly also was candid regarding problems associated with Chevron and Texaco merging in 2001. “We made some difficult decisions on investment priorities for the combined asset portfolio following the merger. Many of these investment and operating decisions had unfavorable impacts on fourth quarter earnings, including some that were treated as special items.”

Briefly, earnings for companies reporting on Tuesday were the following:

ChevronTexaco: This newly merged major now based in San Francisco reported a preliminary net loss of $2.522 billion, or $2.36 per share (diluted) for fourth quarter 2001, compared with fourth quarter 2000 net income of $2.039 billion, or $1.92 per share (diluted). Excluding net charges for special and merger-related items, fourth quarter 2001 operating earnings were $498 million or $0.47 per share (diluted), compared with $2.293 billion or $2.15 per share a year earlier.

For the full year, ChevronTexaco reported net income of $3.288 billion, or $3.08 per share (diluted), compared with $7.727 billion or $7.21 per share in 2000. Operating earnings were $6.810 billion or $6.37 per share (diluted) in 2001, compared with $8.105 billion or $7.57 per share a year earlier. For more detail, visit the web site at www.chevrontexaco.com.

Marathon: This Houston-based producer reported fourth quarter 2001 net income, adjusted for special items and losses related to the separation from the USX Corp., of $98 million or $.32 per diluted share, compared to adjusted net income of $386 million, or $1.25 per diluted share, in the fourth quarter of 2000. Income for Marathon’s reportable segments was $360 million in fourth quarter 2001 and $3.4 billion for full year 2001, compared with $723 million and $2.8 billion in the same periods of 2000.

Marathon’s worldwide exploration and production segment income totaled $117 million in fourth quarter 2001 and $1.4 billion for the year, compared to $403 million and $1.5 billion in the same periods of 2000. Domestic upstream income also was down, standing at $112 million in fourth quarter 2001 and $1.1 billion for the year, compared to $330 million and $1.1 billion in the same periods of 2000. For more detail, visit Marathon’s web site at www.marathon.com.

Unocal: The El Segundo, CA-based producer reported adjusted after-tax earnings from continuing operations (excluding special items) in the fourth quarter were $58 million, or 24 cents per share (diluted), in line with consensus estimates of Thomson/ First Call analysts, who estimated 23 cents per share. In the fourth quarter 2000, Unocal had adjusted after-tax earnings from continuing operations of $261 million, or $1.04 per share (diluted). Including special items, Unocal reported a preliminary unaudited net loss of $29 million, or 12 cents per share (diluted), for the fourth quarter. This compares with net earnings in the same period a year ago of $173 million, or 70 cents per share (diluted).

For the entire year, Unocal’s adjusted after-tax earnings from continuing operations were $753 million, or $3.04 per share (diluted), compared with $798 million, or $3.22 per share, for 2000. Including special items, discontinued operations and the cumulative effect of an accounting change, Unocal’s preliminary unaudited net earnings for full-year 2001 were $615 million, or $2.50 per share (diluted), down from $760 million, or $3.08 per share in 2000. See more detail on Unocal’s earnings on its web site at www.unocal.com.

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