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, up7% 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 thethird quarter of 1998. Capital and exploration expenditures were $1,982 million in the third quarter1999 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. Theimprovement 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 thehighest third quarter upstream results in 15 years. Record chemicals sales volumes and reducedoperating expenses across the segments also benefited earnings. However, depressed downstreammargins in all geographic areas, weaker chemicals margins and lower coal prices continued tonegatively 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 tothe 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 andpetroleum product reference prices have not yet been reflected in contractual prices. "As crude prices increased rapidly during the quarter, downstream earnings decreasedsubstantially versus the same period last year, reflecting the inability to raise product prices inline with rising crude prices. Downstream margins in all markets were depressed. Internationaldownstream earnings were also adversely affected by foreign exchange effects. As a result of thesefactors, third quarter downstream earnings, excluding non- recurring items, were the lowestquarterly results in over a decade. "Chemicals earnings were up slightly, as record quarterly sales volumes and lower operatingexpenses offset the impact of higher feedstock costs which depressed margins. Earnings from otheroperations also improved slightly due to higher copper prices and volumes and lower operatingexpenses. "During the quarter, Exxon continued its active investment program, spending nearly $2.0 billionon capital and exploration projects." Additional comments follow comparing earnings from major operating segments with the thirdquarter 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., butwere 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 thethird quarter of 1998, primarily due to lower liftings in Alaska, Malaysia and Canada. The declinewas partly offset by production from new developments in the North Sea, the Gulf of Mexico andAzerbaijan. Fourth quarter production is expected to increase due to the start-up of newdevelopments in Norway. Production from the Balder field began at the end of September. The Jotundevelopment is planned to start up at the end of October. Third quarter natural gas production of5,078 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 millionfrom last year. Outside the U.S., earnings from exploration and production were $563 million, anincrease of $289 million from the third quarter of 1998. Petroleum product sales of 5,431 kbd equaled last year's record third quarter results. Downstreamearnings declined as petroleum product prices were not able to keep up with the steep increase incrude costs during the quarter. Downstream earnings outside the U.S. were also adversely affected byunfavorable foreign exchange effects. In the U.S., refining and marketing earnings were $118 million, down $24 million from the prioryear. Refining and marketing operations outside the U.S. earned $19 million, a decrease of $420million 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 salesvolumes of 4,596 kt (thousand metric tons) established a quarterly record and were 6% higher thanthe 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 andvolumes and continued reductions in operating expenses. Corporate and financing expenses of $62 million compared with $69 million in the third quarter oflast year. During the third quarter of 1999, Exxon purchased 1.0 million shares of its common stock for thetreasury at a cost of $84 million, representing a continuation of purchases to offset shares issuedin conjunction with the Company's benefit plans and programs. Purchases are made in open market andnegotiated transactions and may be discontinued at any time. As a consequence of the proposed mergerof Exxon and Mobil, the repurchase program to reduce the number of Exxon shares outstanding wasdiscontinued 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 millioncharge for the restructuring of Japanese operations, while the prior year period included a $70million charge relating to an accounting change. Excluding non-recurring items, net income for thefirst nine months of 1999 declined 22% to $3,845 million or $1.57 per share, compared to $4,910million or $1.99 per share last year. Exploration and production earnings have increased due to the improvement in crude prices. Crudeoil 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 kbdcompared to 1,595 kbd in the same period of 1998, primarily due to natural field declines, steps tocurtail marginal volumes in the low price environment of the first half of the year and lowerliftings in Canada. Partly offsetting this was increased production from new developments in theNorth Sea, the Gulf of Mexico and Azerbaijan. Worldwide natural gas production of 6,008 mcfd wasessentially unchanged from the prior year. Exploration and producing expenses were reduced fromprior year levels. Earnings from U.S. exploration and production operations for the first nine months were $856million, an increase of $231 million from 1998. Outside the U.S., exploration and productionearnings 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 volumegrowth 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 themarketplace. Outside the U.S., refining and marketing earnings for the first nine months, excludingnon-recurring items, decreased $1,020 million to $327 million, driven by much lower margins, higherplanned maintenance activities and unfavorable foreign exchange effects. Reduced operating expensesprovided some offset to these factors. Chemicals earnings totaled $882 million for the first nine months of 1999 compared with $970million last year. Industry margins declined versus last year due to lower product prices and higherfeedstock costs. Prime product sales volumes of 13,428 kt were a record for the first nine monthsand 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 ninemonths of 1998, reflecting depressed copper and coal prices, offset by reduced operating expensesand higher production volumes. 1999 year-to-date production volumes for copper and coal were atrecord levels. Corporate and financing expenses decreased $36 million to $212 million, reflectinglower tax-related charges. During the period, the Company's operating segments continued to benefitfrom 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 forthe treasury at a cost of $579 million, representing a continuation of purchases to offset sharesissued 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

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