Several big oil companies Monday reported a hefty drop in operating profits in the fourth quarter because of last year's slump in oil prices, but retrenchment and other factors had beneficial effects on the bottom line.
Exxon, the world's biggest company, actually managed to set a per-share earnings record for all of 1986 as net income rose 10%, to $5.36 billion, in the face of the steepest drop in crude-oil prices since the Depression.
The results reported Monday by five major oil producers and refiners are among the first official full-year tallies of the financial effects of the nose dive in prices. Prices have risen about 25% to the $18.50-per-barrel range since late December, when OPEC agreed to trim production and return to a system of fixed prices. While far short of the $31 range of late 1985, crude prices are nearly double the $10 that prevailed last summer.
The reports from Exxon, Atlantic Richfield, Unocal, Amoco and Amerada Hess generally supported the expectation that the fourth quarter would show slightly improved profits from oil production but lower earnings from refining and marketing. That is a reversal from the first half of 1986 and a result of the second half's rise in crude oil prices.
Net Income Dropped
Exxon's October-December net income dropped 18% to $1.48 billion, and nearly $500 million of it was in such one-time gains as the proceeds from the sale of its New York corporate office building. On an operating basis, Exxon said, earnings tumbled 47% to $980 million. Dollar sales were off 23%.
For the year, operating earnings slipped 8% to $5.13 billion on an 18% decline in revenues.
Predicting brighter days ahead, Arco said earnings fell 55% to $64 million in the fourth quarter. For all of 1986, net income of $615 million compared to a 1985 loss of $202 million, the big turnaround reflecting the $1.6 billion in extraordinary charges Arco took in 1985. On continuing operations, Arco said earnings for the year fell 59%.
Unocal's net results improved sharply in the fourth quarter over the year-ago period, when the company took a $125-million writedown against its Colorado oil-shale project. Unocal said it earned $49.2 million, compared to a year-earlier loss of $134.7 million. Unocal didn't break out operating profits for the comparison quarters, but said it benefited in the latest period from lower foreign taxes, reduced interest expense and higher gains on the sale of assets.
For the year, Unocal's earnings fell 46% to $175.8 million.
Amoco, formerly Standard of Indiana, reported a 58% drop in fourth-quarter earnings to $165 million.
For the year, Amoco said it earned just $746 million, a plunge of 62%.
Amerada Hess said it earned $58.3 million in the fourth quarter, versus a year-earlier loss of $365.8 million, when the company took a large one-time charge against earnings. Earnings from operations declined from the year-ago $66.9 million. For the year, Amerada Hess lost $219.4 million compared to a 1985 loss of $260.4 million.