Chevron Net Drops; Occidental Profit Up

Chevron said its first-quarter earnings fell 47% to $198 million from the year-ago period, but this at least represented a return to profitability following an $86-million loss in the final quarter of 1986.

Occidental Petroleum reported a 31% increase in the first quarter, but that included after-tax gains of $103 million from the sale of chemical assets and $20 million in tax credits.

San Francisco-based Chevron had first-quarter revenue of $6.8 billion, down 22% from the year-earlier quarter, because of declines in both average crude oil and petroleum product prices, plus lower crude oil production, it said.

One reason for the earnings shortfall this year was a poor performance in Chevron’s refining and marketing operations, which lost $52 million, compared to a $48-million profit in the year ago period.

Results from last year’s refining and marketing, the so-called downstream end of the business, were the most profitable the oil industry had seen in 20 years because oil prices fell faster than the price of gasoline and other refined products.

“During the first quarter of last year our domestic refining and marketing operations benefited from petroleum product prices not falling as rapidly as crude oil prices, resulting in increased sales margins,” the company said.

But the opposite happened in this year’s first quarter. “Petroleum product prices lagged the increase in crude oil prices, resulting in reduced sales margins and losses for our U.S. refining and marketing operations,” Chevron said.

“By the end of the quarter, sales margins, although still unsatisfactory, had improved,” it added.

Chevron said U.S. exploration and production operations made money in the first quarter for the first time since last year’s first quarter.

An improvement in oil prices that began in late 1986 helped turn the tide.

Occidental, which is based in Los Angeles, said it netted $97 million in the first quarter on revenue of $4.16 billion, up 14.6% from a year earlier.

Without the $103-million assets sale, Occidental’s $366-million operating profit would have been $263 million, about $1 million more than it posted a year earlier.

Hurt by a continued slump in petroleum prices, Occidental’s earnings from its oil and gas operations plunged 72% to $49 million.

The company’s chemical operations posted a profit of $161 million, compared to $26 million a year earlier, but the most recent quarter included the $103-million after-tax gain on the sale of some assets of that division.

A bright spot for Occidental was its natural gas transmission segment, which posted a profit of $138 million, compared to $45 million in the year-ago period. Most of that came from the company’s $3-billion acquisition of Midcon Corp., only part of which was reflected in the first quarter of 1986.