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SHELL OIL ANNOUNCES THIRD-QUARTER, NINE-MONTH EARNINGS

      SHELL OIL ANNOUNCES THIRD-QUARTER, NINE-MONTH EARNINGS
    HOUSTON, Nov. 1 /PRNewswire/ -- Shell Oil Company incurred a loss of $14 million in the third quarter of 1991, which included after-tax charges totaling $90 million related to the previously announced restructuring of operations at the Wilmington Manufacturing Complex and a litigation settlement in California, Frank H. Richardson, president and chief executive officer, announced today.
    Excluding these charges, earnings in the third quarter of 1991 were $76 million, down $151 million from the comparable 1990 period.  "The key factor in this decline was significantly lower crude oil prices, which averaged about $5.00 per barrel lower than in the 1990 period, when crude oil prices increased sharply due to events in the Middle East.  This price decline more than offset the benefits of increased domestic crude oil production in the 1991 quarter," Richardson said.
    For the nine months of 1991, net income was $43 million compared with $590 million in the same 1990 period.  In addition to the third quarter 1991 charges of $90 million related to the Wilmington restructuring and the litigation settlement, earnings to date also included a work-force reduction charge of about $90 million after tax. Oil and gas exploration and production earnings declined due to depressed prices for crude oil and natural gas, and lower production. Earnings in both oil and chemical products were impacted by unusually heavy maintenance costs during the first half of 1991 as well as by adverse market conditions, which resulted in lower sales volumes and margins in many key products.
    "We are continuing our efforts to streamline operations in a number of areas," Richardson said.  "As announced, Shell Oil has signed a letter of intent to sell a substantial portion of the Wilmington complex in California.  Activities continue towards finalizing this sale.  Our previously announced work-force reduction is proceeding on schedule.  In addition, we are further realigning our service station network to optimize Shell's marketing and logistical strengths.
    "We also continue to pursue divestiture of selected oil and gas properties to further upgrade our asset portfolio.  Based on existing business conditions, we now anticipate total capital and exploratory expenditures for 1991 will amount to $3.1 billion, $200 million less than previously estimated."
    Cash flow provided by operating activities totaled $589 million for the third quarter, compared with $1,071 million last year.  The decline in the quarterly comparison was mainly due to working capital changes and, to a lesser extent, lower earnings.  For the nine month period, cash flow provided by operating activities was $1,158 million, compared with $1,696 million in 1990, reflecting the effects of lower earnings in 1991.
    Revenues were $5.5 billion for the quarter and $16.5 billion for the nine months, compared with $6.2 billion and $17.1 billion in the respective 1990 periods.
    Earnings declined 93 percent for the nine months.
    Oil and Gas Exploration and Production
    Oil and Gas Exploration and Production earnings were $45 million for the quarter, a decrease of $158 million.  This was mainly due to significantly lower domestic crude oil prices, which averaged $16.01 per barrel, down $4.65 from last year.
    Nine month earnings were $146 million, a decline of $208 million from 1990.  This decline was due to lower crude oil prices, severely depressed natural gas prices and lower production.  Crude oil prices averaged $16.04 per barrel for the nine months, down $1.43 per barrel from 1990, while natural gas prices remained at a 10-year low.
    Total net crude oil production in the third quarter rose to an average of 472,000 barrels per day, compared with 467,000 in the same 1990 quarter. For the nine months, it declined to 475,000 barrels per day, from 484,000 in 1990, primarily due to natural declines in older domestic fields.
    "Domestic crude oil production in the third quarter increased over the same 1990 period reflecting higher offshore production.  Production also increased over the second quarter of 1991 as we completed the installation of permanent production facilities at our Bullwinkle platform in the Gulf of Mexico.  Net production from this location had reached 42,000 barrels per day by the end of the third quarter," Richardson said.
    Net natural gas production averaged 1,370 million cubic feet per day for the quarter and 1,399 million for the nine months, compared with 1,422 million and 1,460 million in the respective 1990 periods.  Lower production in both periods was due mainly to natural declines in older fields.
    Oil products
    Oil products incurred a loss of $14 million in the third quarter of 1991, a decline of $27 million from the same period last year.  Included in the 1991 quarter results was a $60 million after-tax charge associated with the restructuring of operations and anticipated sale of a substantial portion of the Wilmington Manufacturing Complex.
    Excluding this charge, oil products earnings in the third quarter were $46 million, an increase of $33 million over 1990.  The key factor was improved margins in 1991, compared with the unusually depressed 1990 period.
    For the nine months, oil products sustained a loss of $5 million, a decline of $70 million from 1990.  This loss included the $60 million after-tax charge for Wilmington, partially offset by benefits of about $40 million from the sale of an equity pipeline interest and a prior- year tax adjustment.
    Margins for the nine months of 1991 continued to be lower than last year.  This was due to extreme market pressures, primarily on the West Coast, and impaired light product yields as a result of major refinery maintenance turnarounds, primarily in the first half of 1991.  Overall, sales volumes were essentially the same in both periods.
    Chemical products
    Chemical products earnings in the third quarter of 1991 were $35 million, a decline of $30 million from 1990.  Nine month earnings were $164 million, a decrease of $90 million.  The major factors in the declines were lower margins in commodity chemicals and lower sales volumes in most product lines.
    "Earnings to date in commodity chemicals were severely depressed compared to the 1990 period, due to continuing weakness in the economy and industry overcapacity.  In addition, operating costs were higher in 1991, primarily during the first half, due to scheduled maintenance at a major olefins unit.  The nine month 1991 period benefited about $40 million from an asset sale and a prior-year tax adjustment," Richardson said.
    Corporate items
    Unallocated corporate items were higher by $23 million for the quarter and $170 million for the nine months.  The key factor in the higher quarter costs was the after-tax charge of about $30 million related to the litigation settlement in California.  The nine months of 1991 also included a work-force reduction charge of $90 million, while the 1990 period included benefits from tax adjustments of about $70 million.  Interest expense was lower in both 1991 periods, reflecting reduced interest rates.
                             SHELL OIL COMPANY
                    Financial and Operating Highlights
                            (Millions of Dollars)
                                    Third Quarter      Nine Months
                                    1991     1990     1991     1990
    Total Revenues                 $5,535   $6,205  $16,548  $17,133
    Cash Provided by Operating
      Activities                      589    1,071    1,158    1,696
    Net Income                        (14)     227       43      590
    Capital and Exploratory
      Expenditures                    752      701    2,241    1,917
                             SHELL OIL COMPANY
                       Operating Segments Information
                          (Millions of Dollars)
    Segment Income from Operations
      Oil and Gas Exploration
        and Production                $45     $203     $146     $354
      Oil Products                    (14)      13       (5)      65
      Chemical Products                35       65      164      254
      Other                             7       10       12       21
    Corporate Items                   (87)     (64)    (274)    (104)
    Net Income                        (14)     227       43      590
                             SHELL OIL COMPANY
                   Capital and Exploratory Expenditures
                          (Millions of Dollars)
    Capital Expenditures
      Exploration and Production
        Oil and Gas                  $314     $343   $1,037     $856
        Other Energy                   17       11       50       37
      Oil Products                    226      176      604      450
      Chemical Products                48       45      155      144
      Other                            34       34       84       93
          Total                       639      609    1,930    1,580
    Exploratory Expenditures          113       92      311      337
    Total Capital and Exploratory
      Expenditures                   $752     $701   $2,241   $1,917
                             SHELL OIL COMPANY
                           Operating Highlights
                           (Millions of Dollars)
                                    Third Quarter      Nine Months
                                    1991     1990     1991     1990
    Revenues
      Refined Products             $2,970   $3,469   $8,651   $9,322
      Chemical Products               828      936    2,488    2,633
      Crude Oil                     1,141    1,148    3,471    3,081
      Natural Gas                     211      243      684      826
      Coal                            167      161      471      464
      Other                           218      248      783      807
          Total                    $5,535   $6,205  $16,548  $17,133
    Chemical Products Revenues
      Primaries
        (olefins, aromatics)         $241     $286     $721     $802
      Intermediates and solvents      322      359      986    1,012
      Polymers                        243      256      709      721
      Other                            22       35       72       98
          Total                   $   828  $   936  $ 2,488  $ 2,633
    Volumes (Thousands of barrels daily, except natural gas)
    Refined Products Sales
      Automotive gasoline             661      665      640      663
      Jet fuel                        139      139      139      137
      Kerosene, heating and
        diesel oils                    48       51       45       55
      Heavy fuel oils                  96       87      112       83
      All other products              273      260      243      246
          Total                     1,217    1,202    1,179    1,184
    Refinery Processing Intakes     1,030      994      989      968
    Net Production
      Crude oil and condensate
        United States                 398      392      393      401
        Foreign                        74       75       82       83
      Natural gas liquids              58       62       57       61
      Natural gas (millions of
        cubic feet daily)           1,370    1,422    1,399    1,460
    Weighted Average Prices of Net Production ($/bbl)
      Crude oil and condensate
        United States             $ 16.01  $ 20.66  $ 16.04  $ 17.47
        Foreign                   $ 18.44  $ 22.51  $ 18.26  $ 18.75
      Natural gas liquids         $ 13.32  $ 13.99  $ 13.85  $ 13.01
                             SHELL OIL COMPANY
                      Consolidated Statement of Income
                           (Millions of Dollars)
                                   Third Quarter      Nine Months
                                   1991     1990     1991     1990
    Revenues
      Sales and Other Operating
        Revenue                    $6,211   $6,670  $18,273  $18,401
      Less:  Consumer Excise
        and Sales Taxes               698      533    1,929    1,499
     Total                          5,513    6,137   16,344   16,902
      Equity Earnings, Interest
        and Other Income               22       68      204      231
          Total                     5,535    6,205   16,548   17,133
    Costs and Expenses
      Purchases and Operating
        Expenses                    4,281    4,721   12,877   12,933
      Selling, General and
        Administrative Expenses       258      214      763      578
      Exploration, Including
        Exploratory Dry Holes         110       89      301      328
      Research Expenses                45       49      131      149
      Depreciation, Depletion,
        Amortization and
        Retirements                   558      485    1,545    1,541
      Interest and Discount
        Amortization                   73       87      204      256
      Income and Operating Taxes
        Operating Taxes               178      175      546      523
        Federal and Other Income
          Taxes                        46      158      138      235
          Total                     5,549    5,978   16,505   16,543
    Net Income                       $(14)    $227      $43     $590
    Net income decrease for the nine-month period 1991 is 93 percent
    -0-           11/1/91
    /CONTACT:  H. R. Hutchins or E. A. Pengelly, 713-241-4544 or N. Altstedter, 212-632-4888, all of Shell Oil/ CO:  Shell Oil Company ST:  Texas IN:  OIL SU:  ERN SM -- NY049 -- 0264 11/01/91 13:37 EST
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Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Date:Nov 1, 1991
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