Awaiting merger approval, Texaco and Chevron post record earnings
Texaco Inc., White Plains, NY, and Chevron Corp., San Francisco, Calif., each reported record first-quarter earnings, saying they are well positioned financially pending completion of their merger. Texaco noted it received $7.14/Mcf for natural gas in the quarter while Chevron got $7.57/Mcf.
By the OGJ Online Staff
HOUSTON, Apr. 26 -- Texaco Inc., White Plains, NY, and Chevron Corp., San Francisco, each reported record first-quarter earnings, saying they are well positioned financially pending completion of their merger.
Texaco reported net income of $833 million, or $1.53/share, compared with $574 million, or $1.05/share, for the same period last year. Chevron reported net income of $1.6 billion, or $2.49/share, up from $1.04 billion, or $1.59/share.
Texaco Chairman and CEO Glenn Tilton said it was the third consecutive quarter that Texaco's earnings surpassed $800 million.
"Propelled by strong worldwide crude oil and US natural gas prices, our upstream results were their highest ever. Operationally, we exceeded our production target for the quarter," Tilton said. "Downstream earnings were mixed."
Commenting on Texaco's proposed merger with Chevron, Tilton said the two companies are making progress. The European Commission has approved the merger. The US Federal Trade Commission continues its review.
Texaco received $7.14/Mcf for gas during the first quarter, 191% higher than last year. It received $24.31/bbl for crude for the first quarter, down slightly from last year.
Daily production for the first quarter was 534,000 boe/d, 12% lower than last year. The reduction stemmed from sales of noncore producing properties and from lower production in California because high gas prices made some steam-assisted recovery uneconomical.
Texaco's quarterly operating expenses were 13% higher because gas prices led to higher utility expenses and production taxes. Exploratory expenses for the quarter were $33 million before tax, $14 million higher than last year.
Chevron Chairman and CEO Dave O'Reilly said, "We've started off the year on a very high note. Our first quarter results continue a trend that carried us to record earnings in 2000. Our return on capital employed for the past 12 months was a solid 23%."
Chevron's first-quarter average sales realization increased from $2.40/Mcf to $7.57/Mcf. Average US crude oil realizations dropped 6% to $24.50/bbl.
"Both our domestic and international downstream businesses recovered from the depressed earnings of a year ago. Margins strengthened this year, with higher product prices," O'Reilly said.
He said the combined companies should achieve a targeted $1.2 billion/year in cost savings.