Chesapeake, Occidental, Valero, Record Net

123jump.com Staff
01 Nov, 2005
New York City

Last week, oil giants Exxon Mobil, Royal Dutch Sheel, BP, and Chevron, Murphy Oil, Amerada Hess, Kerr-McGee and Conoco Phillips reported a combined third quarter profit of $30 billion. Occidental, Chesapeake and Valero are latest energy sector companies to report a record quarter.

Chesapeake Energy

Chesapeake Energy ((CHK)) reported third quarter profit of $149.1 million or 43 cents per share from $85.6 million or 29 cents a year ago. The 43 cents per share earnings include unrealized loss of $66 million related to hedging program, $0.5 million related to debt repayment and $17.7 million related to conversion of preferred stocks and convertible debt into equity.

Excluding one-time charges the company’s earnings would have been 65 cents per share or $234.1 million on revenue of $1.1 billion and production of 120.4 bcfe.

Chesapeake's 2005 third quarter production of 120.4 bcfe was comprised of 108.8 billion cubic feet of natural gas (bcf) (90% on a natural gas equivalent basis) and 1.93 million barrels of oil and natural gas liquids (10% on a natural gas equivalent basis). Chesapeake's average daily production rate of 1.308 bcfe consisted of 1.183 bcf of gas and 20,935 barrels of oil and natural gas liquids (bbl).

Average prices realized during the 2005 third quarter (including realized gains or losses from oil and gas derivatives, but excluding unrealized gains or losses on such derivatives) were $53.30 per bbl and $6.64 per thousand cubic feet (mcf), for a realized gas equivalent price of $6.85 per mcfe.

Chesapeake's average realized pricing differentials to NYMEX during the third quarter were a negative $4.81 per bbl and a negative $1.14 per mcf.

Oil and natural gas production increased 28% from a year ago and 5% sequentially from the previous quarter. The company raised the guidance for the organic growth for the year from 7% to 10% in the years 2005 and 2006.


Occidental Petroleum

Occidental Petroleum ((OXY)) reported third quarter income of $1.747 billion or $4.32 per share vs. $758 million or $1.91 per share.

Third quarter results included one-time charges related to tax benefit of $335 million, $463 million of after-tax benefit arising from the sale of refining company Premcor to Valero Energy and $98 million of write-off related to chemical plant assets.

Excluding one-time charges company generated revenue of $4.06 billion vs. $3 billion a year ago and earned $1.09 billion compared to $759 million a year ago. Earnings per share for the quarter jumped to $2.69 per share from $1.92 a year ago.

For the first nine months the company reported net income of $4.1 billion compared to $1.8 billion a year ago.

In July, the company began its drilling operation in Libya and signed oil field development and exploration project with Oman government.


Valero Energy

San Antonio, Texas based Valero Energy ((VLO)) reported third quarter net income of $858 million vs. $431 million a year ago. Earnings per share for the quarter jumped to $2.97 from $1.57 a year ago. Excluding inventory related charges of $621 million arising from the recent acquisition of Premcor, earnings were $4.31 per share or $1.3 billion.

The company also stated that the current CEO will step down at the end of the year but will remain as chairman.

For the nine months ended Sept 30, net income was $2.7 billion vs. 1.3 billion a year ago representing earnings per share of $9.42 vs. $4.78 a year ago.

The company guided that the current fourth quarter earnings estimates of $3.67 remain too low and indicated that the company in October alone will earn $2.30 per share.

The company also noted that the Gulf Coast gasoline margins based on the forward curve for November and December are trading around $4.00 per barrel and heating oil margins are around $17.00 per barrel. As for sour crude discounts, they have continued to widen from what were already at historic levels. For example, Maya crude oil discounts are currently at around $15.00 per barrel and are expected to widen further.

Revenue for the third quarter jumped to $23.3 billion from $14.33 billion a year ago.

The company owns and operates 18 refineries throughout the United States, Canada and the Caribbean with a combined throughput capacity of approximately 3.3 million barrels per day, making it the largest refiner in North America. The company operated app. 4,700 gas stations selling gasoline under various brand names.