HIGHER PETROLEUM PRICES BOOST OIL COMPANY PROFITS.

Byline: Loren Steffy Bloomberg Business News

Six big U.S. oil companies posted higher second-quarter earnings, driven by rising prices for petroleum and stronger-than-expected profits at most chemical divisions, while earnings at Exxon Corp. fell.

Mobil Corp., Texaco Inc., Chevron Corp., Amoco Corp., Atlantic Richfield Co. and Occidental Petroleum Corp. posted better results as all benefited from higher oil prices. Exxon, whose chemical division accounts for a larger part of revenue, reported a 3.7 percent decline.

The spot price of West Texas Intermediate crude, an industry benchmark, averaged $21.57 a barrel in the quarter, up 12 percent from $19.29 a year ago.

Natural gas prices averaged $2.05 per thousand cubic feet, 40 percent higher than last year's $1.46 average. Meanwhile, prices for chemicals fell because of sluggish demand and higher raw materials costs.

``The big question mark has been how bad will chemical earnings be?'' said Rosario Ilacqua, an analyst with Rothschild Inc. in New York. ``Chemical earnings so far look pretty good.''

Mobil, the biggest gainer among the major oil companies, reaped the benefit of a cost-cutting program, while Exxon found it harder to match its strong results from a year ago, when it got a boost from restructuring.

``It was hard for them to improve,'' Holly Gustafson, an analyst with NatWest Securities Corp., said of Exxon.

All of the companies' shares fell or were unchanged.

Atlantic Richfield's net income climbed 11 percent to $434 million, or $2.66 a share, from $391 million, or $2.39, a year ago. In addition to higher prices, the company attributed the increase to improvements in its West Coast refining and marketing operations, higher natural gas volume and lower interest expense.

Revenue for the Los Angeles-based company rose 8.3 percent to $5.07 billion from $4.69 billion.

The results exceeded an average estimate of $2.45 a share compiled by Zacks Investment Research from 19 analyst forecasts.

Arco shares fell -1/4 to 118-5/8.

Chevron Corp.'s profit from operations rose 15 percent to $700 million, or $1.07 a share, from $611 million, or 94 cents, a year earlier.

Revenue rose 15 percent to $11 billion from $9.57 billion.

Wall Street was expecting the San Francisco-based oil and natural gas company to earn 98 cents a share, based on the average estimate from 20 analysts surveyed by Zacks Investment Research.

Exxon's net income fell 3.7 percent to $1.57 billion, or $1.26 a share, from $1.63 billion, or $1.30, a year ago.

The largest U.S. energy company said revenue rose 1.7 percent to $32.21 billion from $31.67 billion.

Mobil, based in Fairfax, Va., reported a 15 percent increase in second-quarter profits from operations, fueled by higher oil and natural gas prices.

Profit from operations rose to $814 million, or $2.03 a share, from $706 million, or $1.75, a year earlier.

Occidental's net income fell to $181 million, or 49 cents a share, from $227 million, or 63 cents, in the year-earlier period. In last year's quarter, a charge of $40 million, or 12 cents a share, resulted in net income of $187 million, or 51 cents.

Wall Street expected the Los Angeles oil and natural gas company to earn 38 cents a share, based on the average estimate from 13 analysts surveyed by Zacks Investment Research.

Occidental shares fell -3/8 to 22-3/4.

Revenue fell 8.3 percent to $2.46 billion from $2.68 billion.

``Chemical prices last year were much stronger than they are right now,'' said Howard Collins, an Occidental spokesman. ``Last year was very good for the chemical industry.''

Forty percent to 50 percent of Occidental's sales come from chemicals, Collins said.

Chemical earnings before special items fell to $160 million from $314 million in the year-ago period because of narrower profit margins in petrochemicals and PVC resins.

Texaco, which sold its chemical operations two years ago, said its profit from operations rose 72 percent to $465 million, or $1.73 a share, from year-earlier net income of $271 million, or 99 cents.