Exxon Announces Estimated Third Quarter 1999 Results

Irving, Texas (PROTEXT) - Third Quarter Nine Months 1999 1998 1999 1998 Net Income - $ Million 1,500 1,400 3,725 4,840 Net Income - $ Per Common Share 0.62 0.58 1.54 1.98 Net Income - $ Per Common Share Assuming Dilution 0.61 0.58 1.52 1.96 Revenue - $ Million 33,072 28,496 89,378 87,825 Capital & Exploration Expenditures - $ Million 1,982 2,553 6,602 7,079 Exxon Corporation (NYSE: XON) today reported third quarter 1999 net income of $1,500 million, up 7% from $1,400 million in the third quarter of 1998. On a per share basis, quarterly net income was $0.61 per share compared to $0.58 per share in last year's third quarter. Revenue for the third quarter of 1999 totaled $33,072 million compared to $28,496 million in the third quarter of 1998. Capital and exploration expenditures were $1,982 million in the third quarter 1999 compared to $2,553 million in last year's third quarter. Exxon Chairman Lee R. Raymond commented as follows: "Exxon's net income of $1.5 billion increased $100 million from the third quarter of 1998. The improvement was driven by higher crude prices, which were up about $8 per barrel on average. Upstream earnings more than doubled compared to last year's third quarter and represented the highest third quarter upstream results in 15 years. Record chemicals sales volumes and reduced operating expenses across the segments also benefited earnings. However, depressed downstream margins in all geographic areas, weaker chemicals margins and lower coal prices continued to negatively affect total results. Unfavorable foreign exchange effects also lowered earnings. "With the improvement in oil prices, third quarter results exceeded the second quarter of 1999 by $295 million or 24%, in contrast to the seasonal earnings decline normally seen from the second to the third quarter of each year. "Third quarter crude oil prices were up about $5 per barrel from the second quarter of this year. U.S. gas prices also improved almost $0.50 per kcf (thousand cubic feet) from the second quarter. However, natural gas prices were still depressed in Europe as the impact of rising crude and petroleum product reference prices have not yet been reflected in contractual prices. "As crude prices increased rapidly during the quarter, downstream earnings decreased substantially versus the same period last year, reflecting the inability to raise product prices in line with rising crude prices. Downstream margins in all markets were depressed. International downstream earnings were also adversely affected by foreign exchange effects. As a result of these factors, third quarter downstream earnings, excluding non- recurring items, were the lowest quarterly results in over a decade. "Chemicals earnings were up slightly, as record quarterly sales volumes and lower operating expenses offset the impact of higher feedstock costs which depressed margins. Earnings from other operations also improved slightly due to higher copper prices and volumes and lower operating expenses. "During the quarter, Exxon continued its active investment program, spending nearly $2.0 billion on capital and exploration projects." Additional comments follow comparing earnings from major operating segments with the third quarter of last year: Third Quarter 1999 vs. Third Quarter 1998 Exploration and production earnings benefited from rising crude oil prices, which averaged about $8 per barrel more than the third quarter of 1998. Natural gas prices were higher in the U.S., but were lower in Europe. Exploration and producing expenses were reduced versus the prior year. Liquids production decreased to 1,514 kbd (thousand barrels per day) compared to 1,553 kbd in the third quarter of 1998, primarily due to lower liftings in Alaska, Malaysia and Canada. The decline was partly offset by production from new developments in the North Sea, the Gulf of Mexico and Azerbaijan. Fourth quarter production is expected to increase due to the start-up of new developments in Norway. Production from the Balder field began at the end of September. The Jotun development is planned to start up at the end of October. Third quarter natural gas production of 5,078 mcfd (million cubic feet per day) was down 129 mcfd from the prior year. Earnings from U.S. exploration and production were $451 million, an increase of $240 million from last year. Outside the U.S., earnings from exploration and production were $563 million, an increase of $289 million from the third quarter of 1998. Petroleum product sales of 5,431 kbd equaled last year's record third quarter results. Downstream earnings declined as petroleum product prices were not able to keep up with the steep increase in crude costs during the quarter. Downstream earnings outside the U.S. were also adversely affected by unfavorable foreign exchange effects. In the U.S., refining and marketing earnings were $118 million, down $24 million from the prior year. Refining and marketing operations outside the U.S. earned $19 million, a decrease of $420 million from 1998. Chemicals earnings were $303 million compared with $301 million in the same quarter a year ago. Margins were compressed as feedstock costs increased faster than product prices. Prime product sales volumes of 4,596 kt (thousand metric tons) established a quarterly record and were 6% higher than the same period a year ago. Chemicals operating expenses were reduced from the prior year. Earnings from other operations, including coal, minerals and power, totaled $108 million, compared to $102 million in the third quarter of 1998. Earnings improved on higher copper prices and volumes and continued reductions in operating expenses. Corporate and financing expenses of $62 million compared with $69 million in the third quarter of last year. During the third quarter of 1999, Exxon purchased 1.0 million shares of its common stock for the treasury at a cost of $84 million, representing a continuation of purchases to offset shares issued in conjunction with the Company's benefit plans and programs. Purchases are made in open market and negotiated transactions and may be discontinued at any time. As a consequence of the proposed merger of Exxon and Mobil, the repurchase program to reduce the number of Exxon shares outstanding was discontinued in December of 1998. First Nine Months 1999 vs. First Nine Months 1998 Net income was $3,725 million for the first nine months of 1999, a decrease of 23% from the $4,840 million earned in 1998. Net income for the first nine months of 1999 included a $120 million charge for the restructuring of Japanese operations, while the prior year period included a $70 million charge relating to an accounting change. Excluding non-recurring items, net income for the first nine months of 1999 declined 22% to $3,845 million or $1.57 per share, compared to $4,910 million or $1.99 per share last year. Exploration and production earnings have increased due to the improvement in crude prices. Crude oil realizations were up almost $3 per barrel versus the first nine months of 1998. However, European gas prices were about 20% lower than the previous year. Liquids production of 1,544 kbd compared to 1,595 kbd in the same period of 1998, primarily due to natural field declines, steps to curtail marginal volumes in the low price environment of the first half of the year and lower liftings in Canada. Partly offsetting this was increased production from new developments in the North Sea, the Gulf of Mexico and Azerbaijan. Worldwide natural gas production of 6,008 mcfd was essentially unchanged from the prior year. Exploration and producing expenses were reduced from prior year levels. Earnings from U.S. exploration and production operations for the first nine months were $856 million, an increase of $231 million from 1998. Outside the U.S., exploration and production earnings were $1,488 million, up $34 million from last year. Petroleum product sales of 5,443 kbd increased 30 kbd over last year, principally due to volume growth in North America. Earnings from U.S. refining and marketing operations were $214 million, down $254 million from 1998, reflecting the inability to pass through higher crude costs to the marketplace. Outside the U.S., refining and marketing earnings for the first nine months, excluding non-recurring items, decreased $1,020 million to $327 million, driven by much lower margins, higher planned maintenance activities and unfavorable foreign exchange effects. Reduced operating expenses provided some offset to these factors. Chemicals earnings totaled $882 million for the first nine months of 1999 compared with $970 million last year. Industry margins declined versus last year due to lower product prices and higher feedstock costs. Prime product sales volumes of 13,428 kt were a record for the first nine months and increased 4% over last year. Chemicals earnings also benefited from lower operating expenses. Earnings from other operations totaled $290 million, a decrease of $4 million from the first nine months of 1998, reflecting depressed copper and coal prices, offset by reduced operating expenses and higher production volumes. 1999 year-to-date production volumes for copper and coal were at record levels. Corporate and financing expenses decreased $36 million to $212 million, reflecting lower tax-related charges. During the period, the Company's operating segments continued to benefit from the impact of lower effective tax rates and the favorable resolution of tax-related issues. During the first nine months of 1999, Exxon purchased 7.5 million shares of its common stock for the treasury at a cost of $579 million, representing a continuation of purchases to offset shares issued in conjunction with the Company's benefit plans and programs. Estimates of key financial and operating data follow. Financial data, except per share amounts, are expressed in millions. ots Original Text Service: Exxon Corporation Internet: http://www.newsaktuell.de Contact: Ed Burwell of Exxon Corporation (USA) 972-444-1108 Web site: http://www.exxon.com Subscribers please note that material bearing the slug "PROTEXT" is not part of CTK's news service and is not to be published under the "CTK" slug. Protext is a commercial service providing distribution of press releases from clients, who are identified in the text of Protext reports and who bear full responsibility for their contents. PROTEXT