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Profits Drop at 4 Major Oil Firms

October 24, 1985

Four major oil companies--Exxon, Phillips Petroleum, Shell Oil and Amerada Hess--posted lower profits for the third quarter of 1985.

Exxon, the world's largest industrial company, said Wednesday that its earnings fell 22% to $995 million from $1.275 billion in the third quarter of 1984 because of falling oil prices, a declining dollar and plant closing expenses.

But Exxon said that operating profits, which exclude such special charges as $190 million in quarterly foreign exchange losses and $135 million for closing a refinery and chemical plant in West Germany, rose 10.5% from a year earlier.

A stock buy-back program, which reduced the number of outstanding shares, somewhat cushioned the impact of the drop in profits. Since beginning the program in 1983, Exxon has purchased 131.4 million of its own shares for $5.8 billion.

Revenue fell 5.2% to $22.298 billion from $23.518 billion.

Phillips Petroleum provided fresh evidence of the cost of surviving two bitter takeover battles, saying that its profits plunged 83% even though its revenue climbed 7%. Phillips, which underwent a major restructuring and costly stock buy-back program earlier this year, reported $62 million in expenses for the early retirement of 2,500 workers and $104 million in interest payments on its huge debt.

Phillips said earnings in the third quarter fell to $36 million on revenue of $4 billion from $217 million on revenue of $3.7 billion a year earlier. But analysts said that, despite the declines--mostly associated with earlier fights to avoid being taken over by groups led by T. Boone Pickens Jr. and by Carl C. Icahn--Phillips' results were much better than expected.

Phillips said its debt, which stood at $8.6 billion in April, would be about $1 billion lower by the end of this month. The company has been selling assets to reduce the debt burden that was swollen this year by a $4.5-billion stock repurchase program.

Shell Oil, which is wholly owned by the Royal Dutch-Shell Group of Cos., said that its profits fell 18.3% in the third quarter and that it did not expect results for the full year to equal the record earnings of $1.77 billion achieved in 1984.

Shell said earnings fell to $365 million on revenue of $5.12 billion in the third quarter, against $447 million on revenue of $5.32 billion a year earlier. However, operating profits rose 9%.

"While company earnings in the second half of this year should exceed those of the first half, full-year results are now expected to be somewhat lower than the record level set in 1984," said John Bookout, Shell's president.

Amerada Hess said that profits slid 10.3% to $36.4 million on revenue of $1.80 billion in the third quarter, against earnings of $40.6 million on revenue of $1.95 billion a year earlier.

Earnings for the quarter included $506,000 for the sale of investments in Louisiana Land & Exploration Co., compared to a gain of $2.7 million from such sales a year earlier. Losses from refining and marketing narrowed to $14.8 million in the latest quarter from $23.5 million in the same period a year ago.

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