Producers report big, but declining, oil profits

Companies' exploration, production revenues rise

Posted: Friday, November 02, 2007

Alaska's major oil producers finished releasing their quarterly earnings, revealing slightly declining profits, except from oil production, which is their main activity in Alaska.

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Oil exploration and production profits rose, although they didn't reach the $90-a-barrel level until after the quarter ended Sept. 30.

Elsewhere, declining gasoline prices hurt profits made in refining oil as did losses in Venezuela, where the government expropriated some companies' operations.

Sen. Hollis French, D-Anchorage, chairman of the Senate Judiciary Committee, said he's been watching the oil company returns closely.

"They continue to make profits that were unimaginable just a few years ago," he said.

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Oil profit numbers

(Profit, Revenue)

Exxon Mobil: $9.4 $102

ConocoPhillips: $3.7 $46.1

BP: $4.4 $72.6

Numbers in billions; quarter ending Sept. 30

The Alaska Legislature is now meeting in special session, considering changes to the state's oil taxes, after last year's new Petroleum Profits Tax failed to bring in expected revenues.

In addition, several key legislators who were involved in crafting the tax structure have been accused of taking oil industry bribes.

The latest conviction was of former Rep. Vic Kohring, R-Wasilla, found guilty on bribery, extortion and conspiracy charges Thursday. Kohring was chairman of the House Special Committee on Oil and Gas, in which PPT began last year.

The Alaska producers reported the following earnings:

• Exxon Mobil Corp. Thursday announced a quarterly profit of $9.4 billion in the quarter ending Sept. 30, down from $10.5 billion in the same quarter last year. The Houston-based company, the largest in the world, had total revenues of $102 billion, as oil prices surged, up from $99.6 billion last year.

• ConocoPhillips Co. earlier reported earnings of $3.7 billion, down from $3.9 billion the previous quarter. Alaska's largest oil producer said a combination of higher oil prices helped it to offset a number of difficulties, including the loss of its Venezuela operations.

Less downtime than expected in its Alaska operations, and new production from the Alpine satellite fields on the North Slope contributed to strong earnings in Conoco's Exploration and Production segment.

• BP reported last week profits of $4.4 billion in the third quarter, down from $6.2 in he same quarter last year. Despite the decline in profits, total revenues climbed from $70.7 billion in the third quarter last year to $72.6 billion this year.

The Associated Press blamed higher maintenance costs for BP's declining performance, including dealing with an oil spill on the North Slope and a deadly Texas City, Texas, refinery fire.

All three companies reported they benefited from higher oil prices during the quarter. BP reported that the average price of Alaska North Slope crude oil on the West Coast was $76.31 during the quarter. Thursday, it ended the day at $92.04 a barrel.

Thursday morning's earnings announcement from Exxon was particularly interesting, he said.

French said his calculations showed the company was making $100 million in profits every day.

At that rate "they could pay off the punitive damages, at least the principal, in less than a month," he said.

Conoco also reported that an upgrade project at its Ferndale, Wash., refinery, where much Alaskan crude ends up, increased capacity by 4 percent and improved efficiency.

In addition, Conoco reported the first production from its Surmont oil sand project in Alberta, Canada.

BP reported that it produced oil for the first time at Greater Plutonio in Angola, where it is a 50 percent owner.

• Contact Pat Forgey at 586-4816 or

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