US oil, gas producer earnings falter; service-suppliers' soar

Nov. 19, 2001
Third quarter earnings statements showed mixed results among US and Canadian oil and gas firms.

Third quarter earnings statements showed mixed results among US and Canadian oil and gas firms.

Most integrated and independent exploration and production companies saw earnings decline from the third quarter of last year as ample supplies and weakening demand sent commodity prices lower, decreasing many firms' realizations for oil and gas. Downstream earnings improved on stronger refining and marketing margins, but chemicals earnings were soft on the weakness of the general economy.

Comparing a sampling of US-based companies shows a 37% decline in third quarter earnings for both integrated firms and independent producers. Among the 59 companies in this group, 35 saw their earnings decline from the same period a year ago.

Service and supply companies fared much better during the quarter, with most in the sample showing improved earnings from third quarter 2000. Earnings for this group were up 66% on revenues that were 29% stronger.

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Looking at a sampling of Canadian firms shows that while revenues gained 1% for the group, earnings declined 14% (see related story, p. 28).

Chevron, Texaco

Following the Oct. 9 merger of Chevron Corp. and Texaco Inc., the new ChevronTexaco Corp., reported third quarter stand-alone operating results for each company.

Chevron posted earnings of $1.17 billion compared with third quarter 2000 earnings of $1.53 billion. Revenue decreased to $11.9 billion from $13.6 billion a year ago.

Chairman and CEO Dave O'Reilly said, "Weakened demand in the world economies, even before the tragedies of Sept. 11, pushed oil and gas prices significantly lower than the year-ago quarter. For example, the company's average US crude oil realization fell over $5/bbl between periods to about $23/bbl, and the average US natural gas realization was off nearly 40% to about $2.75/Mcf. These lower prices worldwide were the main reason for a 39% decline in earnings from our exploration and producing operations."

US E&P operating earnings of $281 million declined 51% in the third quarter, but Chevron received a special gain of $49 million resulting from the sale of the company's interest in Shenandoah Energy Inc., an equity affiliate with producing properties in Utah. International E&P earnings of $502 million were off about 30%, also a result of lower oil and gas realizations.

O'Reilly also said that Chevron's downstream business benefited from improved refining and marketing margins brought about by lower crude oil feedstock and fuel costs, higher refined product sales volumes, and improved refining capacity utilization.

Regarding Chevron's international downstream sector, O'Reilly said that excess capacity and weak demand continued to affect the Asia-Pacific operations of Caltex. But profits for the international shipping operation were up from a year earlier mainly through lower operating expenses.

Chemical operations incurred operating losses of $5 million vs. earnings of $35 million in last year's third quarter. The general economic downturn depressed product sales margins and sales volumes of the Chevron Phillips Chemical Co. LLC affiliate, of which Chevron owns 50%.

The company's earnings from its 26% ownership interest in Houston-based Dynegy Inc. increased $15 million to $72 million for the quarter.

The former Texaco reported drastically reduced earnings in the third quarter. Net income was $101 million, down from $798 million for the same quarter a year ago. Excluding net charges for special items in both quarters, earnings on an operational basis declined to $531 million from $815 million.

Like Chevron, Texaco's lower earnings can be attributed to falling commodity prices in the upstream that were unable to be overcome by higher marketing margins in the downstream.

Daily output by Texaco's US E&P operations decreased 5% for the third quarter to 524,000 boe/d. Much of the expected reduction stemmed from last year's sales of noncore producing properties. Natural field declines and lower production in the company's California fields due to reduced steam injection also contributed to the lower production volumes. Sales of noncore producing assets also resulted in a 3% decline to 511 boe/d in daily production during the quarter for Texaco's international E&P operations.

"Our capital spending program continued to show success as we announced oil and natural gas discoveries in offshore Brazil, the Gulf of Mexico, and coastal Louisiana," Vice-Chairman of ChevronTexaco and former Chairman and CEO of Texaco Glenn Tilton commented on operations. "Additionally during the quarter, we confirmed the significant potential of the Agbami field in Nigeria with the completion of appraisal drilling. Also, our Hamaca oil project in Venezuela remained on schedule, and first gas was produced at the Malampaya deepwater project in the Philippines."

ExxonMobil

ExxonMobil Corp. reported net income of $3.18 billion for the quarter. This compares with net income of $4.49 billion in the third quarter of last year. For the first 9 months, earnings remain above year-ago levels at $12.64 billion vs. $12.5 billion.

Reflecting lower oil and gas realizations, upstream earnings were $2.13 billion, down $969 million from last year's record third quarter. Chairman Lee R. Raymond said, "Liquids production decreased 1%, as growth from new capacity additions in Canada, Equatorial Guinea, Venezuela, and Kazakhstan was offset by natural field decline in mature areas and the impacts of civil unrest on our operations. Gas volumes increased by about 3% absent the impact of reduced operations in the Aceh province of Indonesia due to security concerns."

Worldwide liquids production during the quarter averaged 2.48 million b/d, while gas production, getting a boost in Europe from North Sea capacity additions, averaged 8.6 bcfd.

Downstream earnings of $942 million were up $49 million from the same period a year ago, as the effects of lower refining margins were more than offset by stronger marketing margins, particularly outside the US, Raymond noted. Sales volumes were down 1% reflecting weakness late in the quarter, especially in transportation fuels.

In the chemicals segment, earnings declined $108 million to $156 million due to weaker commodity margins. US volumes were down 2% on continued weakness in the manufacturing sector, but outside the US, volumes were up, reflecting capacity additions in Saudi Arabia and Singapore.

Earnings from other operations, including coal, minerals, and power, were down $28 million to $120 million due mainly to lower copper prices that offset higher coal production rates and realizations.

Conoco

Conoco Inc. said lower prices for oil and North American natural gas contributed to reduced earnings for the third quarter, down by almost half from the same period last year.

Third quarter net income was $257 million vs. the $497 million Conoco declared for third quarter 2000. Revenue for the third quarter was $9.7 billion, down from $10.7 billion for third quarter 2000.

Conoco noted that special items for the quarter were $147 million, mostly associated with the company's $6.7 billion (Can.) acquisition of Gulf Canada Resources Ltd. and related actions to reduce debt (OGJ Online, May 29, 2001). Net income before special items was $404 million, down 23% from the same quarter a year ago.

"Conoco had an excellent quarter despite a struggling economy, suppressed demand, and lower prices for crude oil and natural gas. Downstream earnings, aided by solid US refining margins and higher international upstream production, underpinned the quarter," said Archie W. Dunham, Conoco's chairman and CEO.

Conoco's upstream segment earned $370 million before special items, down 20% from the same period last year. The company said increased production partially offset the fall in prices and higher costs. Exploration expenses were $109 million, up 35%, reflecting the addition of Gulf Canada and higher dry hole costs.

The company's worldwide net realized crude oil price decreased 20% to $21.65/bbl. The worldwide net realized natural gas price declined 14% to $2.87/Mcf, resulting from a 28% decrease in US natural gas prices to $2.81/Mcf, which was partially offset by international gas prices of $2.91/Mcf, a rise of 12%.

Overall, total production for the quarter of 831,000 boe/d, including syncrude, was up 34% from the same period last year. The Gulf Canada acquisition added about 209,000 boe/d, in line with expectations.

Third quarter downstream earnings of $185 million increased 16%, due to improved refinery optimization and stronger US inland refining margins.

US downstream earnings of $104 million improved by 42%, benefiting from strong margins in inland markets and the fall in crude oil prices, which strengthened coproduct margins. Domestic refinery throughputs declined 4% to 559,000 b/d caused by downtime at the Ponca City, Okla., facility.

International downstream earnings decreased $6 million to $81 million due to weaker refining margins in Europe and Asia. Weaker margins were partly offset by improved refinery operations and marketing margins. International throughputs were up slightly to 341,000 b/d, reflecting the return of the UK Humber refinery to full capacity.

Corporate operating and nonoperating expenses totaled $130 million, up $44 million, as the company incurred increased interest expense on debt to finance the Gulf Canada acquisition.

"Fourth quarter earnings continue to be under price pressure with demand impacted by market uncertainty associated with recent events," Dunham said. "Crude prices have continued to slide pending further OPEC action, but natural gas prices have strengthened from their early September lows, reversing some of the third quarter decline. Global refined product demand is expected to remain weak due to seasonal patterns, compounded by slowing economies," he said. "Exploration in the fourth quarter remains very active, with 17 wells drilling, including 5 appraisal wells, in the US, Canada, Viet Nam, Indonesia, and Venezuela."

USX-Marathon

USX-Marathon Group declared earnings of $193 million for the third quarter. Revenue for the quarter was $8.3 billion.

For the same quarter 2000, the group earned $121 million on revenue of $9.2 billion.

Net income before special items was $319 million, up from third quarter 2000's $356 million.

For the quarter, Marathon Group took a $126 million after-tax loss on the sale of its heavy oil assets in Canada in an effort to focus on Canadian gas.

USX Corp. Chairman Thomas J. Usher said, "Our downstream refining and marketing segment continued to perform very well this quarter, and upstream production levels surpassed our third quarter production targets. However, crude oil and natural gas prices declined by quarter-end."

Upstream segment income was $259 million in the third quarter, compared with $465 million for the same quarter a year ago. Marathon said the decrease was due to lower oil and gas prices and increased depreciation, which was partially offset by reduced exploration expense from the timing of well expenditures and reduced geophysical contract expenditures.

During the quarter, East Foinaven field in the UK Atlantic Margin began production and is flowing at 16,000 b/d. Marathon owns 28% of Foinaven and 47% interest in East Foinaven.

Marathon had to delay its planned Gulf of Mexico exploration program because it rejected Transocean Sedco Forex's ultradeepwater semisubmersible Cajun Express (OGJ Online, July 27, 2001). It has rescheduled the two wells for December and January.

However, the company is participating in Deep Ozona and Timber Wolf, drilling on Garden Banks 515 and Mississippi Canyon 555, respectively. It also plans to participate in drilling the Paris Carver prospect on Green Canyon 601 in the fourth quarter.

Marathon is participating in a shallow-water Nova Scotia well and expects to participate in spudding Angolan and other Nova Scotia deepwater wells in the fourth quarter.

The company expects fourth quarter production of 415,000-420,000 boe/d and 2002 production of 430,000-435,000 boe/d.

Downstream segment income for the quarter was $575 million, compared with $299 million in third quarter 2000. The results reflected a higher refining and wholesale marketing gross margin, partially offset by lower gasoline and distillate sales volumes and increased refining and marketing transportation expenses.

Marathon said the coker at its Gary- ville, La., refinery was mechanically complete in early October and is operating at more than 80% of capacity. It will be at full production during the fourth quarter, allowing the plant to use heavier, lower-cost crude and reducing the production of heavy fuel oil.

Anadarko, Apache, XTO

Anadarko Petroleum Corp., Houston, declared a third quarter loss of $268 million.

A $483 million, noncash after-tax impairment of the carrying value of producing properties in Canada and South America contributed to Ana- darko's loss. Before special items, Ana- darko's net income was $213 million on total revenue of $1.74 billion.

For the same quarter a year ago, Anadarko posted earnings of $250 million on revenue of $1.82 billion.

Robert J. Allison Jr., Anadarko chairman and CEO, said, "Our third quarter financial results were impacted, like everyone else's in the energy industry, by lower oil and natural gas prices and higher costs for drilling rigs and other oil field services, but our operating results were better than expected."

He said the company produced more than 51 million boe in the third quarter, slightly more than forecast, because of higher production from Alaska and Algeria and increased recovery of natural gas liquids. In third quarter 2000, Anadarko produced 40 million boe.

Anadarko's natural gas prices averaged $2.89/Mcf, down 94¢ from third quarter 2000.

Exploration activity continues, especially in the US Gulf of Mexico where Anadarko agreed to farm into 95 blocks owned by BP Exploration & Production Inc. (OGJ Online, Oct. 25, 2001).

Apache Corp. posted earnings of $156.8 million. The Houston-based company's third quarter revenue totaled $652.4 million, up from $618.5 million for the same quarter 2000 when the company earned $202.2 million.

During the latest quarter, the company increased production by 90,000 boe/d to 360,000. Those gains partially offset price declines as the quarter's average $2.80/Mcf gas price was down 24% from a year ago, and the average $24.14/bbl oil price was down 17%.

Apache Chairman and CEO Raymond Plank said, "Declining natural gas prices are causing North American drilling activity to plummet, threatening energy supplies.... Regrettably, at a time when stability and rationality should be the call words, we find ourselves in the most volatile natural gas pricing environment in history."

Plank attributed gas price volatility to "excessive speculation inherent in a gas market driven by paper trades" and said that market conditions jeopardized US security.

Fort Worth-based XTO Energy Inc. announced third quarter earnings of $70.3 million.

XTO reported $197.3 million in revenue for the third quarter, up from $160.5 million for the same quarter a year ago when the firm posted earnings of $31.8 million.

The company produced 426 MMcfd of gas in the latest quarter, up sharply from 342 MMcfd a year ago.

A successful development program and natural gas hedges contributed to a good quarter and bode well for the future, said Steffen E. Palko, vice-chairman and president.

For the fourth quarter, XTO has hedged 413 MMcfd of gas at $4.11/ Mcf.

The company expects fourth quarter natural gas production of 450-455 MMcfd, bringing its yearly average to 415-420 MMcfd.

XTO expects its natural gas liquids production to remain flat at 4,000-4,500 b/d. Its oil production should average 13,300-13,800 b/d for the fourth quarter and for the year, officials said.

Devon, Mitchell

Devon Energy Corp., Oklahoma City, reported third quarter results with earnings of $84.7 million, down from $164.9 million for the same quarter last year. This included a $5 million net after-tax effect of a non-recurring impairment charge and a noncash gain attributable to a change in the fair market value of derivatives.

During the quarter, Devon increased its output of oil, gas, and natural gas liquids 6% for a total of 31.3 million boe, a quarterly record in production for the company.

Despite production gains, revenue decreased 18% to $586.7 million. The company said this decline is entirely due to lower oil, gas, and NGL prices. The average price Devon received for third quarter gas production fell 27%, while NGL prices were 25% lower, and the price received for oil was 15% lower than in third quarter 2000.

Devon recorded a nonrecurring after-tax charge of $6.7 million associated with the impairment of the company's properties in Thailand, which were obtained in last year's acquisition of Santa Fe Snyder Corp. Devon has decided to discontinue operations in Thailand. This decision follows the company's decision in the second quarter to exit Malaysia, Qatar, and the majority of its operations in Brazil.

On Jan. 1, the Financial Accounting Standards Board Statement 133 established new accounting procedures for certain derivative instruments. As a result of the new procedures, Devon realized an after-tax gain of $1.7 million for the third quarter.

Devon completed an acquisition of Anderson Exploration Ltd. on Oct. 15 in an all-cash transaction. On Aug. 14, the company announced plans to acquire Mitchell Energy & Development Corp. for stock and cash. Devon expects to complete this merger by yearend.

Mitchell, based in The Woodlands, Tex., reported third quarter earnings of $10.5 million compared with $74.4 million in the prior-year quarter. The company said that current quarter earnings were reduced by an after-tax proved property impairment charge of $16.9 million related to one field, while last year's third quarter earnings benefited from a $6.3 million reversal of certain previously provided deferred income taxes.

Mitchell said that as a result of higher production volumes, earnings were increased $14.1 million, but sharply lower prices decreased earnings by $41.5 million, and higher operating expenses cut earnings by $6 million, more than offsetting the benefit of the volume gains.

Aggressive exploitation of the Barnett Shale in North Texas combined with successful exploratory and follow-up drilling along the Texas Gulf Coast to boost natural gas sales volumes to 420 MMcfd, a 31% increase from third quarter 2000 production. NGL volumes were up 6%, while pipeline throughput rose 20%.

As a result of much lower gas prices, Mitchell said it is curtailing its drilling program to better balance capital spending with reduced cash flows. In the Barnett Shale, the company plans to maintain only 18 rigs rather than going to the previously announced 20-rig program by yearend. In the company's East Texas and Texas Gulf Coast drilling programs, lower prices and relatively high rig rates are leading Mitchell to reduce the number of rigs from nine at the end of September to as few as two by yearend. The company said that prospects in these areas are held by production leases and still will be available for drilling when prices return to more attractive levels.

Refining, chemicals

Lyondell Chemical Co., Houston, reported a net loss of $67 million in the quarter vs. a profit of $133 million for third quarter 2000. This loss includes charges related to the shutdown of the company's aliphatic diisocyanates business at Lake Charles, La.

Lyondell-Citgo Refining LP, which is 58.75% owned by Lyondell, posted record earnings-before interest, taxes, depreciation, and amortization-of $116 million in the third quarter compared with $110 million for the same period last year. The company attributes this gain to record operational performance during July and August, lower gas and energy costs, and higher contract margins. These benefits were partially offset by lower spot crude margins and by the unplanned outage of a fluid catalytic cracking unit during September, which negatively affected third quarter results by $10 million.

Lyondell also owns a 41% interest in Equistar Chemicals LP, which saw decreased earnings on falling ethylene and coproduct prices in its petrochemicals segment.

Lyondell Pres. and CEO Dan F. Smith commented, "While our third quarter results benefited from record performance in refining, as well as continued declines in natural gas and energy costs, their improvements were more than offset by lower margins in many of Lyondell's businesses, primarily petrochemicals and [methyl tertiary butyl ether]."

San Antonio-based Tesoro Petroleum Corp. announced earnings of $33 million compared with $25 million for third quarter 2000. These results include refining and marketing assets acquired from BP PLC in a deal that closed Sept. 6. Among these assets-which contributed $13 million to operating profits for 25 days of operations-were refineries in Mandan, ND, and Salt Lake City. Total operating profit for the refining and marketing segment of the company was $87 million, up 42% from last year's third quarter.

Tesoro's results received a boost from lower delivered-crude costs and record refinery throughput, up more than 11,000 b/d from the same period a year earlier, excluding the newly acquired refineries.

Sunoco Inc., Philadelphia, reported third quarter net income of $92 million compared with a net loss of $25 million in the third quarter of last year. Although Sunoco's northeast marketing unit earned a record $41 million in the quarter, the company's two largest business units suffered under difficult market conditions.

The northeast refining segment had lower production due to the acceleration of planned maintenance, and margins were about $2.50/bbl, bringing earnings to $5 million for the period. Meanwhile, the chemicals unit continued to feel the impact of the economic slowdown, with decreased volumes and margins, and the segment recorded a $6 million loss for the quarter.

Service-supply

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Transocean Sedco Forex Inc., Houston, announced a third quarter net income of $97.6 million. This included a net after-tax gain of $7.5 million on the sale of two Nigerian-based land rigs and the disposal of an inland drilling barge. For the corresponding 3 months of 2000, net income was $49.3 million, including a net after-tax gain of $7.1 million, resulting primarily from the sale of rigs and partially offset by net charges resulting from adjustments to provisions for legal claims.

For the first 9 months of 2001, net income was $196.6 million on revenue of $2 billion, up from earnings of $117.7 million on revenue of $914.6 million last year. Transocean Sedco Forex completed a merger with R&B Falcon Corp. on Jan. 31, so results for the first 9 months reflect only 8 months of operating results of R&B Falcon.

Revenue from the company's international and US floater contract drilling services unit accounted for 85% of total operating revenue during the third quarter. Fleet utilization for this segment during the quarter was 81%, while average segment day rates were $86,600, up from $82,000 for the second quarter.

Revenue from the company's Gulf of Mexico shallow and inland water business segment declined 17% from the previous quarter on declining fleet utilization. Day rates in this segment for the 3 months ending Sept. 30 averaged $30,000.

Transocean Sedco Forex president and CEO J. Michael Talbert commented, "Improving day rates within our international fleet and the US-based floating rigs helped offset the declining contribution from our Gulf of Mexico shallow and inland water business segment, a situation created by weakening US natural gas prices and constrained customer spending since July 2001."

Talbert added that the company remains confident of its long-term fundamentals, particularly in the deepwater arena. "With the recent completion of our deepwater rig construction program, which added 15 new or converted ultradeepwater floaters to our fleet since 1998, we are in a strong position to capture the opportunities that we expect to develop as deepwater drilling prospects expand around the world."

Petroleum Geo-Services ASA, based in Houston and Oslo, reported third quarter revenue of $290 million, up 17% from the third quarter of last year. As a result of an improved contract seismic market and the temporary reduction in floating production, storage, and offloading operations, 58% of PGS's revenue came from its geophysical operations unit, a shift from the same quarter in 2000 when the production operations business segment accounted for 51% of revenue.

Reidar Michaelson, PGS chairman and CEO stated, "The 2001 third quarter represented a significant milestone for PGS, as we celebrated our 10-year anniversaryellipse In the third quarter we have achieved the highest revenue level in our brief history. The revenue level achieved in this quarter is also significant because it keeps PGS on track to exceed $1 billion in annual revenue for 2001."

Halliburton

Halliburton Co., Dallas, reported third quarter earnings of $179 million on revenue of $3.4 billion, up from earnings of $157 million on revenue of $3 billion during the same period a year ago.

Earnings from continuing operations increased by 39% to $181 million, the highest level since the 1998 merger with Dresser Industries Inc., said Halliburton officials.

"Both our business segments delivered outstanding results,'' said Dave Lesar, chairman, president, and CEO of Halliburton. "While the near-term industry outlook is less robust, the longer-term fundamentals are strong. Our global presence and market-leading products and services position us extremely well to perform under all market conditions,'' he said.

Halliburton's Energy Services Group increased its revenue by 33% to $2.3 billion for the quarter compared with the previous year. Within that group, Halliburton Energy Services in Houston increased its revenue for all geographic regions and product service lines 32% overall from a year ago.

Including an $88 million gain from sale of marine vessels, operating income for the Energy Services Group segment was $321 million, up 41% from the 2000 third quarter. For Halliburton Energy Services, operating income increased 129%.

Revenue from Halliburton's Engineering and Construction Group totaled $1.1 billion, down from $1.3 billion during the same quarter last year due to completion of several large pro- jects. That group's backlog of work increased to $7.1 billion by the end of the latest quarter from $6.3 billion at its start.

Smith International

Houston-based Smith International Inc. declared net income of $42.1 million for the third quarter, up from $20.5 million in the third quarter of 2000.

Revenue for the third quarter was $909.7 million, up 27% from the same quarter a year ago.

"The majority of the revenue improvement related to increased natural gas-directed drilling activity in the US, which grew over 30% between the comparable periods," the company said. It added that the improvement was also attributable to incremental revenue from acquisitions as well as increased customer spending outside the US.

Oil field segment revenue was up 23% over the prior quarter; drilling activity was up 15%.

Chairman and CEO Doug Rock said, "Smith reported record revenues and earnings in the third quarter...Although US gas drilling activity has fallen 12% since the end of the second quarter, we continue to believe the medium to longer-term fundamentals for the North American natural gas market remain very strong. The US gas drilling decline has had little impact on our US revenues to date; however, further significant drilling reductions, if they were to occur, could effect Smith's future results."

Smith's M-I business unit brought in $412.4 million for the quarter, up 26% from the same period a year ago and up 19% excluding the effects of acquired operations. Most of the revenue growth related to increased sales of base-fluid products because of a 27% improvement in US land-directed drilling, Smith said. Increased demand for fluid processing and waste management also contributed.

Revenue for the Smith Bits unit was $105.1 million, 25% above third quarter 2000 revenue. Increased drilling worldwide increased bit sales volumes.

Smith Services reported revenue of $104.7 million, a 39% increase over the third quarter of 2000. Improved North American spending levels accounted for most of the increase, Smith noted. On a product basis, more than 60% of the improvement was attributable to higher drilling products and services revenue, including increased demand for tubular products and inspection services.

Cooper Cameron

Cooper Cameron Corp., Houston, increased both revenue and earnings during the third quarter, but a reduced US rig count and lower spending by customers will dampen the company's business "for at least the next several quarters," said Sheldon R. Erikson, chairman, president, and CEO.

"Looking ahead, North American markets are clearly slowing, but it appears that bidding and project awards in the subsea markets, especially non-US, will continue to be reasonably active," he said.

"The weakness in domestic natural gas that developed during the summer and a declining US rig count coupled with the uncertainty in energy markets stemming from the global slowdown are expected to lead to weakness across our North American gas market-related business lines during the next several quarters," Erikson said.

Third quarter revenue increased 19% to $417.2 million from $350 million a year ago, with each of Cooper Cameron's business segments posting increases. Earnings jumped to $34.4 million vs. $8.3 million during the same period in 2000.

Revenue generated by Cooper Cam- eron Valves (CCV) was up substantially from year-ago levels and modestly higher sequentially. But Erikson said the slowing of oil field activity is beginning to affect certain of CCV's product lines. "CCV has begun to see some weakness in oil field valves, though the pipeline ball valve and Orbit valve businesses have held up fairly well," he said.

Orders received by the company during the third quarter totaled $478 million, up 47% from the same period last year. Cameron's total orders were up more than 57%, primarily as a result of a $100 million multi-year order from ExxonMobil for its Kizomba project off West Africa, officials said.

At the end of September, the company's backlog of orders totaled $686 million, the highest level since first quarter 1999. The backlog increased 10% during the quarter because of the Kizomba award and is up 40% from the same period last year.

Cooper Cameron's total debt, net of cash and investments, was $310 million at the end of the quarter, up from $176 million at the end of last year. Its net debt-to-total capitalization ratio was 26% at the quarter's close.

Erikson said the company has the financial flexibility to pursue a variety of opportunities. "Acquisitions within our current product lines will continue to be a priority, and additional stock repurchases will also be considered," he said. Cooper Cameron repurchased 611,000 shares during the third quarter under a previously authorized program.