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SHELL OIL ANNOUNCES SECOND QUARTER, SIX MONTHS EARNINGS

 SHELL OIL ANNOUNCES SECOND QUARTER, SIX MONTHS EARNINGS
 HOUSTON, July 31 /PRNewswire/ -- Shell Oil Company earned $183 million in the second quarter of 1992, an increase of $251 million over the second quarter of 1991, President Frank H. Richardson announced today. Special items, primarily a prior-year tax adjustment, benefited the 1992 quarter earnings about $100 million.
 "Operating earnings in all business segments benefited from the progress we are making in our cost-reduction programs. In addition, oil and gas exploration and production benefited from higher crude oil prices and production volumes. Chemical products experienced higher sales volumes, but lower margins in both oil and chemical products continued to depress earnings," Richardson said.
 "As a further step in restructuring our asset base, we recently announced our intent to sell our coal mining subsidiary. We are pursuing this sale to take advantage of the value of these high-quality assets and to further concentrate our exploration and production resources in our core oil and gas business. In light of the continuing difficult industry environment, in addition to the steps already announced, we are considering additional options for further improving our cost structure company-wide."
 Earnings for the first half of 1992 were $377 million, compared with $57 million in 1991, an increase of $320 million. Tax adjustments applicable to prior years, including related interest, benefited 1992 earnings about $300 million, reflecting the resolution of several major tax cases. In 1991, a work-force reduction charge and asset write-offs more than offset a favorable prior-year tax adjustment.
 Operating earnings in oil and gas exploration and production in the first half of 1992 improved due to lower operating costs and increased production, partially offset by lower average crude oil and natural gas prices. Oil products, which incurred losses in both periods, improved in 1992 due to lower operating costs and increased manufacturing reliability. Chemical products results were impaired due to depressed selling prices and high scheduled maintenance activity in non-commodity businesses. Excluding tax benefits, corporate items remained virtually unchanged.
 Operating cash flow totaled $613 million for the 1992 quarter, compared with $82 million last year. About half of the improvement was due to higher earnings, while lower working capital requirements accounted for the balance. For the six-month period, operating cash flow was $750 million, compared with $569 million in 1991. Improved earnings was the major factor in the period-to-period increase. Capital expenditures decreased $303 million, or 23 percent, to $988 million in the first half of 1992, reflecting reduced spending in exploration and production.
 Revenues were $5.5 billion for the quarter and $10.4 billion for the first half, compared with $5.3 billion and $11 billion for the respective 1991 periods. Revenues in 1992 reflected lower selling prices, primarily in the first quarter.
 Oil and Gas Exploration and Production
 Oil and gas exploration and production earnings of $113 million were up $14.9 million from the same 1991 quarter. The second quarter of 1991 included a $46 million after-tax charge for work-force reduction.
 "Key factors in the operational improvement in second-quarter 1992 earnings were lower exploration and production costs, increased production of crude oil and natural gas, and slightly higher crude oil prices," Richardson said.
 For the first half of 1992, oil and gas exploration and production earnings were $224 million compared with $55 million last year. Net benefits from special items included $87 million as reported in the first quarter, while the 1991 second quarter included the work-force reduction charge. Operationally, lower costs and increased production more than offset lower crude oil and natural gas prices.
 Domestic crude oil prices in the second quarter of 1992 averaged $16.29 per barrel, an increase of $.74. The six-month average was $14.86 per barrel, down $1.20. Natural gas prices for the quarter were about the same as in the 1991 period, but declined 10 percent for the first six months.
 Total net crude oil production, on a barrels-per-day basis, averaged 470,000 in the second quarter of 1992, up 3,000 from 1991, and 485,000 in the first half of 1992, up 8,000. Domestic production of 387,000 in the quarter and 398,000 in the first half, increased 4,000 and 6,000, respectively. Retroactive property sales decreased second-quarter 1992 domestic production by 11,000 barrels per day. Improvements were attributable to increases from Gulf of Mexico locations, partially offset by natural declines in older fields. Production from international operations was essentially unchanged.
 Net natural gas production, expressed in millions of cubic feet per day, averaged 1,474 for the second quarter of 1992, up 51 over 1991. For the six months of 1992, it averaged 1,482, up 67. Both increases were partly due to production from the new Fairway Field in Mobile Bay.
 Oil Products
 Oil products earnings were $18 million in the second quarter of 1992, an increase of $45 million over the same 1991 period. For the first half of 1992, oil products incurred a loss of $16 million, compared with a loss of $23 million last year.
 "The major factors in the quarter improvement were significantly lower operating costs and increased manufacturing reliability. Cost improvements occurred mainly in manufacturing, the result of restructuring our West Coast refining system and a lower level of refinery turnaround maintenance," Richardson said. "The 1992 quarter benefited about $10 million from a gain on an asset sale, while 1991 results were adversely affected by net special items of about $10 million. First-half results were virtually unchanged, as benefits from cost reductions and manufacturing reliability were offset by depressed margins and lower sales volumes."
 Refined product sales volumes in the second quarter of 1992 averaged 1,122,000 barrels per day, down 80,000, and 1,075,000 barrels per day for the first half, down 85,000. Both declines were primarily due to withdrawals from certain markets.
 Chemical Products
 Chemical products earnings in the second quarter of 1992 were $17 million, down $27 million from last year, which included a $25 million gain from an asset sale.
 For the six months, earnings were $55 million, a decline of $60 million. Sales volumes increased across most product lines and operating costs were lower. However, operating earnings were lower as margins for commodity chemicals declined due to industry overcapacity and scheduled maintenance increased in non-commodity businesses.
 Corporate Items
 Corporate items contributed $33 million to earnings in the second quarter of 1992 and $104 million in the first half, improvements of $84 million and $199 million, respectively.
 Prior-year tax adjustments benefited both 1992 periods, totaling $90 million in the second quarter and about $200 million in the first half. Financing costs remained essentially unchanged in both comparisons.
 SHELL OIL COMPANY
 Financial and Operating Highlights
 (Millions of dollars)
 Second quarter Six months
 1992 1991 1992 1991
 Total revenues $5,455 $5,345 $10,446 $11,013
 Cash provided by operating
 activities 613 82 750 569
 Net income 183 (68) 377 57
 Capital and exploratory
 expenditures 654 791 1,143 1,489
 Operating segments information
 Segment net income
 Oil and gas exploration
 and production $113 $(36) $224 $55
 Oil products 18 (27) (16) (23)
 Chemical products 17 44 55 115
 Other 2 2 10 5
 Corporate items 33 (51) 104 (95)
 Net income 183 (68) 377 57
 Capital and exploratory expenditures
 Capital expenditures
 Exploration and production
 Oil and gas $219 $381 $420 $723
 Other energy 17 15 33 33
 Oil products 274 213 419 378
 Chemical products 43 52 83 107
 Other 16 24 33 50
 Total 569 685 988 1,291
 Exploratory expenditures 85 106 155 198
 Total capital and
 exploratory expenditures 654 791 1,143 1,489
 Operating Highlights
 (Millions of dollars)
 Second quarter Six months
 1992 1991 1992 1991
 Revenues
 Refined products $2,704 $2,884 $4,911 $5,681
 Chemical products 837 780 1,624 1,659
 Crude oil 1,156 1,080 2,282 2,330
 Natural gas 249 216 478 473
 Coal 144 141 308 304
 Other 365 244 843 566
 Total 5,455 5,345 10,446 11,013
 Chemical products revenues
 Primaries
 (olefins, aromatics) $251 $207 $473 $480
 Intermediates and solvents 295 309 585 664
 Polymers 258 238 507 466
 Other 33 26 59 49
 Total 837 780 1,624 1,659
 Volumes (thousands of barrels
 daily, except natural gas)
 Refined products sales
 Automotive gasoline 606 645 586 630
 Jet fuel 123 135 118 139
 Kerosene, heating and
 diesel oils 35 41 34 43
 Heavy fuel oils 108 118 118 120
 All other products 250 263 219 228
 Total 1,122 1,202 1,075 1,160
 Refinery processing intakes 992 1,013 920 968
 Net production
 Crude oil and condensate
 United States 387 383 398 392
 International 83 84 87 85
 Natural gas liquids 58 56 57 57
 Natural gas (millions of
 cubic feet daily) 1,474 1,423 1,482 1,415
 Weighted average prices of
 net production ($/bbl)
 Crude oil and condensate
 United States $16.29 $15.55 $14.86 $16.06
 International 18.96 17.22 17.87 18.18
 Natural gas liquids 12.61 13.30 11.96 14.11
 Consolidated Statement of Income
 (Millions of dollars)
 Second quarter Six months
 1992 1991 1992 1991
 Revenues
 Sales and other operating
 Revenue $5,923 $5,911 $11,279 $12,062
 Less: consumer excise
 and sales taxes 648 625 1,239 1,231
 Total 5,275 5,286 10,040 10,831
 Equity earnings, interest
 and other income 180 59 406 182
 Total 5,455 5,345 10,446 11,013
 Costs and expenses
 Purchases and operating
 expenses 4,122 4,255 7,816 8,596
 Selling, general and
 administrative expenses 224 351 424 504
 Exploration, including
 exploratory dry holes 82 102 149 191
 Research expenses 40 43 78 86
 Depreciation, depletion,
 amortization and
 retirements 483 519 1,006 987
 Interest and discount
 amortization 65 69 132 132
 Income and operating taxes
 operating taxes 159 175 338 368
 Federal and other income
 taxes 97 (101) 126 92
 Total 5,272 5,413 10,069 10,956
 Net income 183 (68) 377 57
 Net income change -- 561 pct. increase
 -0- 7/31/92
 /CONTACT: H.R. Hutchins, 713-241-4544, E.A. Pengelly, 713-241-4544, or M. Sternesky, 212-632-4888, all of Shell Oil/ CO: Shell Oil Company ST: Texas IN: OIL SU: ERN


CK -- NY019 -- 5524 07/31/92 10:46 EDT
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