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NEW YORK -- The results are in for the fourth quarter 2006, and it doesn't look good for the majority of oil companies. Earnings decreased for many of the industry's major players as crude oil prices dropped along with gasoline margins.
The biggest loser might be ExxonMobil, which posted a 4 percent drop in net income for the fourth quarter of 2006. The company saw 10.25 billion in net income, a $450 million drop from the 10.7 billion seen in 2005. For the full year, however, net income grew 9 percent to $39.5 billion from the $36.13 billion seen in the end of 2005.
Earnings for the company also showed a downward trend. Excluding special items, the company saw $9.84 billion in the fourth quarter of 2006, a 5 percent drop from the $10.32 billion seen in the fourth quarter of 2006. Again, the full year showed positive results, with a 15 percent gain in earnings over the year end of 2005.
ExxonMobil chairman Rex W. Tillerson said in a written statement "Full year 2006 earnings excluding special items were a record $39,090 million, driven by strong results in every business segment." He goes on to state "Lower natural gas realizations and refining margins [in the fourth quarter] were partly offset by higher crude oil realizations and improve chemical margins."
Hess Corp. estimated that its net income would decrease almost $100 million to $359 million for the fourth quarter of 2006, compared to the $452 million seen in the year prior. As with other oil companies, the net income for Hess' full year 2006 showed improvement, seeing $1.9 billion, compared to the $1.24 billion earned at the end of 2005.
Earnings for the company's marketing and refining segment fell significantly from the $229 million seen in the fourth quarter of 2005. The business segment saw $67 million in earnings for the fourth quarter of 2006. While refining earnings nearly halved from the $83 million seen in the fourth quarter of 2005, Hess' marketing earnings tumbled from $131 million to $17 million in the fourth quarter of 2006, primarily due to lower refined product margins, the company stated.
Sunoco, Inc. saw net income plunge to $123 million from the $287 million seen in the fourth quarter of 2005. Full year results improved over 2005, with the company seeing $979 million in net income, versus the $974 million seen in the full-year 2005.
"Seasonal declines in gasoline margins and an unseasonable warm start to the winter heating oil season reduced realized refining margins from second and third quarter levels," said John G. Drosdick, Sunoco chairman and chief executive officer.
The company's refining and supply business earned $881 million, with $205 million supplied from non-refining businesses. The company's retail marketing segment saw losses of $11 million in the fourth quarter, due to declining prices and tight margins compared to the fourth quarter of 2005, which saw $25 million in income. However, monthly gasoline throughput per company owned or leased location in the fourth quarter of 2006 increased 14 percent compared to the fourth quarter of 2005.
"With the introduction of ethanol-blended gasoline to much of our Northeast market and the shift to both low-sulfur gasoline and ultra-low-sulfur diesel fuel across the country, the year was one of significant transition for the industry," Drosdick added.
Net income slipped 9 percent for Chevron in the fourth quarter of 2006, totaling $3.77 billion, compared to the $4.14 billion seen in the fourth quarter a year prior. Full year net income increased 22 percent from the $14.10 billion seen in 2005 to $17.14 billion for 2006.
"Fourth quarter earnings benefited from an improvement in the operating performance of our oil and gas fields and refineries, especially in the United States," said chairman and CEO Dave O'Reilly. "However, this benefit to earnings was more than offset by the effect of a sharp decline in U.S. natural gas prices from a year earlier." Average price per barrel of crude oil and natural gas liquids in the U.S. dropped approximately $1 to $51 per barrel in the fourth quarter of 2006, compared to the prices seen in 2005.
Tesoro Corp. may be the one of the few oil companies to see a prosperous fourth quarter in 2006. Its net income in the fourth quarter totaled $158 million -- a record for the company -- compared to the $69 million seen in the fourth quarter of 2005. In addition, its full year results totaled $801 million, almost $300 million more than the year end results in 2005.
The company's fuel margins decreased to $.19 per gallon from the $.27 per gallon recorded in the fourth quarter of 2005. Gasoline and gasoline blendstock sales totaled 268,000 barrels per day, a decrease from the 292,000 seen in the fourth quarter of 2005.
Shell was another oil company that saw positive fourth quarter and year end results. Income for Shell in the fourth quarter was $5.28 billion, 21 percent increase from the same quarter a year ago, while full year 2006 income was $25.44 billion, similar to the income seen a year prior, the company stated.