In yet another record year that was spurred by its upstream operations, ExxonMobil Corp. boosted its fourth quarter income 63% over a year ago, reporting $6.65 billion ($1.01/share), an increase of $2.56 billion year-over-year. Excluding still-lingering merger effects, discontinued operations and special items, ExxonMobil’s earnings were up $630 million from 4Q2002.

All of the corporation’s business lines contributed to the strong earnings growth, according to investor relations chief Pat Mulva. In a conference call with analysts, Mulva said ExxonMobil’s strong earnings were leveraged by innovative technology, “coupled with superior execution” that distinguished the world’s largest oil and gas company over its peers. As he detailed the accomplishments of each business segment, Mulva noted that liquefied natural gas (LNG) was becoming a more important element of the company’s success.

“The continued growth in LNG is evident,” said Mulva. He detailed a November 2003 agreement with Qatar Petroleum, which, among other markets, will bring ample LNG supplies to North America. “We also have begun the first permitting process for two LNG facilities in Texas, which are expected to be operational by a 2008-2009 time frame. They will each have at least 1 Bcf/d of capacity.”

Mulva said ExxonMobil expects to grow its LNG business worldwide with a patented LNG technology from a UK-based company that would provide a “high degree of safety and significant cost savings for import and export terminals.”

Fourth quarter natural gas production was 10.858 Bcf/d, down from 11.667 Bcf/d last year. However, worldwide oil and gas production was up 3.9% to 2.56 MMboe/d.

Number two major ChevronTexaco Corp.‘s fourth quarter income nearly doubled from a year ago on higher commodity prices and improved refining margins. It posted net income of $1.74 billion ($1.63/share), up from $904 million (85 cents), while revenue increased 13% to $30.47 billion from $27.06 billion. Thomson First Call analysts had forecast earnings of $1.59/share.

In the upstream, income jumped 25% to $1.57 billion. The average U.S. natural gas sales price increased more than 20% to about $ 4.35/Mcf. Net boe production declined 3%, or 29,000 boe/d from the 2002 quarter. “This resulted primarily from normal field declines, the effects of which were only partially offset by first-time production in certain fields and higher production in areas of the Gulf of Mexico that were affected by storm damage in late 2002,” the company said. The net liquids component of production was down 2% to 547,000 bbl/d.

Net natural gas production averaged 2.1 Bcf/d, down 4% from a year ago.

Unocal Corp. reported last week that its capital expenditures this year will reach about $1.93 billion, up from last year’s $1.66 billion. About 94% of the total capital spending plan is for exploration and production projects, with two-thirds targeted for projects outside North America.

This year, the El Segundo, CA-based major expects to maintain an exploration capital budget of about $325 million. The primary focus will be deepwater Gulf of Mexico (GOM) and Indonesia. Exploration spending on the deep shelf program in the GOM represents about 10% of the overall spending plan, but it will be less than one-half of the 2003 funding level. In the United States, Unocal said it would be completing its deepwater GOM Mad Dog field and beginning development of the K2 field.

Production-wise, Unocal said its worldwide average would be flat compared with last year, at about 450,000 boe/d. Several of its major development projects are not expected to come online until 2005.

In other news, Timothy H. Ling, 46, the president and chief operating officer of Unocal, died suddenly on Wednesday, the company said. He had been a member of Unocal’s board of directors since 2000 and also was a member of the company’s management committee. Ling joined Unocal in 1997 as CFO and had previously been executive vice president of Unocal’s North American operations. Before joining the El Segundo, CA-based company, Ling had been a partner at McKinsey and Co. in Los Angeles. He also worked as a research geologist for the U.S. Geological Survey at Woods Hole, MA, where his focus was on the assessment of deepwater energy and mineral resources.

Marathon Oil Corp.‘s 2003 profit more than doubled on gains from asset sales, but its operating earnings dropped because of declining oil and gas production and weak refining earnings. For the year, Marathon reported net income of $1.321 billion ($4.26/share), compared with 2002 net income of $516 million ($1.66/share). Adjusted earnings were $1 billion ($3.33/share), compared with the prior year’s $563 million ($1.81/share).

Production numbers were down for the year, and some of the losses followed asset sales, after Marathon divested $1.2 billion of non-core upstream assets with more than 270 million boe of proved reserves. However, production from its core assets also was down. Excluding acquisitions and dispositions, Marathon only replaced approximately 75% of oil and gas production. At year end, Marathon had proved reserves of approximately 1,040 million boe.

The company is forecasting flat oil and gas production this year will average approximately 365,000 boe/d. However, production is expected to grow once recent discoveries ramp up, and Marathon forecast more than 3% growth on an annual basis between 2003 and 2008, with most of the growth coming after 2005. Upstream production was lower in the quarter than a year ago, but quarterly revenue still climbed 30% to $11.1 billion on asset sales and higher commodity prices. Total oil and gas production fell 10% year-over-year to 373,100 boe/d, reflecting asset sales, the company said. Marathon said it had replaced 120% of its produced volumes.

ConocoPhillips, headquartered in Houston, reported a 43% increase in operating earnings on the strength of its exploration and production (E&P) businesses. In the final quarter of 2002, ConocoPhillips was still moving through its merger-related special charges for restructuring that crippled its results. Wednesday, the company posted fourth quarter net income of $1.02 billion ($1.48/share), compared with a loss of $428 million (minus 63 cents/share) one year ago. Total revenue rose 11% to $26 billion from $23.5 billion.

Upstream improved 23% to $991 million. Downstream income of $2002 million was up 93% from 4Q2002, however, it was off 58% from 3Q2003.

CEO Jim Mulva told analysts in a conference call on Wednesday that ConocoPhillips has sold $3.4 billion in assets since its merger and plans to sell about $1 billion more this year. Most of the merger-related assets have been completed, and going forward, the company will concentrate on debt reduction. Mulva said no acquisitions were on the horizon, but added that the company may consider joint ventures.

Kerr-McGee Corp., based in Oklahoma City, turned around its losses from a year ago, boosted by strong commodity prices and lower exploration expenses. Income from continuing operations was $50.5 million (50 cents/share), compared with a loss of $345 million (minus $3.43/share) for 4Q2002.

Fourth quarter daily sales of natural gas averaged 742 MMcf/d, compared with 792 MMcf/d a year earlier. The average sales price for the 2003 fourth quarter, including the effects of the company’s hedging program, was $4.25/Mcf, 22% higher than a year earlier. Daily oil production averaged 139,900 bbl in the quarter, versus 178,400 bbl in 4Q2002. Kerr-McGee replaced 135% of its 2003 worldwide production from continuing operations of 99 MMboe at an average finding, development and acquisition cost of $9.14/boe.

Integrated energy company Amerada Hess Corp. also reversed its year-ago losses, reporting net income of $68 million, compared with a net loss of $371 million a year earlier. Net income was $643 million for the year, compared with a loss of $218 million in 2002.

The New York City-based company’s oil and gas production was 356,000 boe/d in the fourth quarter, compared with 434,000 boe/d a year earlier. Nearly 70% of the decline in production was blamed on asset sales and exchanges. The company’s average U.S. natural gas selling price, including the effect of hedging, was $3.96/Mcf in the quarter, a drop of 41 cents from 4Q2002. The average U.S. price for the full year was $4.02/Mcf, a 30 cent increase over 2002.

Houston-based Apache Corp. crossed the billion dollar earnings mark in 2003, earning almost twice as much as it did in 2002, to stand at $1.1 billion ($3.43/share), compared with $544 million ($1.80) the year before. And while most of the growth followed major exploration successes overseas, the CEO noted that U.S. operations are still an important part of the company’s operations.

Along with record production numbers, Apache said earnings were boosted by strong commodity prices. Cash from operations before changes in operating assets and liabilities totaled $2.8 billion in 2003, up 79% from $1.6 billion in 2002. For the fourth quarter, Apache reported income of $260 million (80 cents/share), which was 45% higher than in 4Q2002’s $179 million (59 cents). Cash from operations in the quarter was up 69% to $786 million.

Apache ended 2003 with proved reserves of 1.7 billion boe, which marked its 18th consecutive year of reserve growth. Production averaged a record 417,400 boe/d, and it added 234 million boe of proved reserves (154% of 2003 production) through exploration and development activities — one of the company’s best drilling performances ever. Apache also added another 267 million boe through acquisitions. Fourth quarter production averaged 441,400 boe/d, compared with 338,300/d in 4Q2002. Liquid hydrocarbon production averaged 231,400 bbl/d, up 45%. Natural gas production averaged 1.26 Bcf/d, 17%.

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