Most major integrated oil companies, including ExxonMobil, Chevron, Royal Dutch Shell, BP, and ConocoPhillips reported third quarter 2009 earnings this past week, and they weren't particularly good, at least not compared to the third quarter of last year.
BP, the first major integrated oil company to report its third quarter 2009 financial results, said last Tuesday that its profit fell to $5.336 billion from the prior year's $8.049 billion. Excluding the impact of unsold inventories, profit would have dropped to $4.981 billion in a quarter that included $307 million of special items and fair-value accounting effects. Although down from the same quarter 2008, BP's third quarter profit exceeded the second quarter 2009 profit of $4.385 billion. BP's 2009 nine months profit fell to $12,283 from $24,501 during the same period in 2008.
ExxonMobil reported last Thursday that third quarter profits fell 68 percent to $4.73 billion. Excluding the previous two quarters this year, ExxonMobil has not reported quarterly profits this low in at least the past four years. Net income fell in the third quarter across Exxon's various operations. Its oil refining business posted a loss of $203 million in the United States compared with a profit of $978 million in the same three-month period of 2008. Sequentially, ExxonMobil reported better third quarter 2009 earnings than the second quarter 2009 earnings of $3.95 billion. Overall, profits in ExxonMobil's downstream operation fell 89 percent to $325 million compared with the year-ago period. Its upstream business saw earnings drop 63 percent to $4.01 billion in the third quarter.
The plunge in crude oil prices over the past year is the primary reason for the year-over-year declines in oil profits, which should be no surprise to anyone. Recall that crude oil prices traded at a level near $147 per barrel at the beginning of the third quarter 2008, decreasing to $94 per barrel the end of the third quarter 2008. Please also recall that crude oil prices traded at a level of $52 per barrel at the beginning of the second quarter 2009, increasing to $65 per barrel the end of the second quarter 2009. It is not surprising therefore that on a year-over-year basis third quarter profits of most integrated oil companies declined, while sequentially their third quarter 2009 profit improved compared to the second quarter 2009.
ConocoPhillips reported last Wednesday that low natural gas prices and thin margins from its gasoline refining business drove profits down 71 percent in the third quarter. The company said it made $1.5 billion for the quarter ended September 30 compared with a profit of $5.2 billion in the year-ago third quarter. Revenue totaled $41.3 billion, down from $71.4 billion in the year ago quarter.
Royal Dutch Shell last Thursday reported that its third quarter 2009 earnings were $3,247 million (euro2.21 billion), down 62 percent, compared to earnings of $8,448 million in the same quarter a year ago. Revenue fell 43 percent to $75.0 billion. Shell's refining earnings fell 47 percent to $1.29 billion, including a gain of $536 million because of a rise in the estimated value of inventories.
Chevron last Friday reported earnings of $3.83 billion for the third quarter 2009, compared with $7.89 billion in the 2008 third quarter. Earnings in the 2009 period included gains of approximately $400 million from asset sales and tax items. Foreign-currency effects reduced earnings in the 2009 quarter by $170 million, compared with a benefit to income of $303 million a year earlier. For the first nine months of 2009, earnings were $7.41 billion, down 61 percent from $19.04 billion in the first nine months of 2008. Sales and other operating revenues in the third quarter 2009 were $45 billion, compared with $76 billion in the year-ago quarter. For the first nine months of 2009, sales and other operating revenues were $120 billion versus $222 billion in the corresponding 2008 period
Valero Energy Corporation, the largest independent petroleum refiner in the U.S., reported last Tuesday it lost nearly $500 million in the third quarter. It was the second consecutive quarterly loss for Valero, who lost $254 million in the second quarter of 2009. "Refiners" such as Valero typically fare better when crude oil prices are lowest since the have to purchase crude oil to feed their refineries.
Finland's Neste Oil Interim reported third quarter 2009 operating profit of EUR 42 million, down 79 percent, compared to the same quarter 2008 of EUR 199 million.
Italy's Eni posted a profit of 1.24 billion euros ($1.8 billion) while its adjusted operating profit fell 50% to 3.12 billion euros in the latest quarter. The company's adjusted net profit figure, which strips out the volatile value of oil inventories, showed a quarterly decline of 60.5%, to 1.15 billion euros from 2.91 billion euros.
PetroChina, Asia's biggest oil company and the world's most valuable company after Exxon Mobil, reported a 23.4% third-quarter earnings decline. Earnings were 30.8 billion yuan ($4.5 billion), down from 40.1 billion yuan a year earlier, as revenue fell 12% to 267.7 billion yuan on weak demand and lower crude oil prices.
