Profits balloon for oil companies

October 23, 1990|By Los Angeles Times

Arco reported a nearly 22 percent increase in third quarter profits yesterday, and other oil companies posted significant gains as energy companies reaped the benefits of higher crude oil prices triggered by the Iraqi invasion of Kuwait.

Industry analysts said that profits of some companies would have been even higher if they had passed along to consumers the total increase in crude oil prices, which have shot up past $40 a barrel before retreating under $30 yesterday.

The robust earnings report come as energy companies face public ire over rising gasoline prices and claims that the industry is taking advantage of Mideast tensions to fatten its bottom line.

"The companies are very cognizant of what they want to show and what they don't want to show" in terms of profits, said Thomas Lewis, head of the energy research group at Duff & Phelps in Chicago. "They certainly don't want to be accused of gouging."

Los Angeles-based Atlantic Richfield said that its profit for the three-month period ending Sept. 30 rose to $462 million from $379 million in the same period last year. Quarterly revenue shot up about 30 percent to $4.82 billion.

Arco, one of the largest producers of Alaskan crude oil, said that the average price for its domestic crude rose to $16.89 a barrel in the third quarter from $12.97 a barrel in the same period last year.

The quarterly profit included an $80-million one-time gain from the settlement of an offshore accident and the sale of Arco's Norwegian assets. However, the gain was partially offset by Arco's payment to settle a dispute with the state of Alaska over North Slope oil royalties.

Given the degree of uncertainty in energy markets, "Arco made every effort to moderate prices to our dealers," said Chairman Lodwrick M. Cook, whose company froze gasoline prices for two weeks in August in response to President Bush's call for oil companies to show restraint in price hikes.

In other oil company earnings reports, Phillips Petroleum Co. said that higher crude oil and natural gas prices more than doubled its third-quarter profit, which rose to $178 million on revenue of $3.4 billion.

Ashland Oil Inc., whose fourth quarter ended Sept. 30, reported quarterly profits of $59 million, contrasted with a loss of $39 million in the year-ago period.

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