Oil majors’ earnings have wobbly start

By Harry R. Weber and Emily Pickrell

Major oil companies’ run through fourth-quarter earnings reports got off to a bumpy start, with Royal Dutch Shell’s profit disappointing investors and ConocoPhillips projecting total production for this year will be lower than 2012.

Shares of both companies fell Thursday after the news.

Next up: Irving-based Exxon Mobil Corp. and San Ramon, Calif.-based Chevron Corp. report earnings Friday. London-based BP releases its results for the final three months of last year on Tuesday, followed by Houston-based Marathon Oil Corp. on Wednesday.

The companies are still posting big numbers and healthy returns for investors, even as costs drag down earnings. The devil is in the details.

“Exxon Mobil and Chevron results will be uninspiring,” Oppenheimer & Co. analyst Fadel Gheit predicted.

ConocoPhillips, based in Houston, said that because of planned maintenance, downtime at some facilities and seasonal issues in the second and third quarters of 2013, it expects full- year production from continuing operations of 1.48 million to 1.53 million barrels of oil equivalent per day. Full-year 2012 production was 1.58 million barrels per day.

The muted outlook came as the company reported late Wednesday that its fourth-quarter profit fell nearly 58 percent. The decline partly reflected the spinoff of downstream businesses that were included in the year-ago results. The spinoff of the new Phillips 66 removed ConocoPhillips from the ranks of integrated, Big Oil rivals against which it’s been measured in the past.

CEO Ryan Lance said during a conference call that the company must execute on its business plan following the spinoff and other big divestitures.

ConocoPhillips earned $1.43 billion, or $1.16 a share, in the final three months of 2012, compared to a profit of $3.39 billion, or $2.56 a share, for the same period a year earlier when results included earnings from the spun-off downstream businesses.

Excluding one-time items, fourth-quarter adjusted earnings were $1.43 per share.

Revenue for the period was $16.4 billion, compared with $16.1 billion a year earlier.

For all of 2012, the company earned $8.43 billion, or $6.72 a share, compared with full-year 2011 earnings of $12.44 billion, or $8.97 a share. The 2011 profit included 12 months of downstream earnings, and the 2012 figure included the four months of combined earnings before the spinoff of the new Phillips 66.

Royal Dutch Shell, based in the Netherlands with its U.S. headquarters in Houston, posted a 2.6 percent rise in fourth-quarter net earnings. The results fell short of expectations. Its production rose in the fourth quarter, but expenses including its problem-plagued initial foray into Alaskan Arctic waters took a toll on the bottom line.

It plans to continue with its aggressive investment programs in the year ahead.

The company reported $6.67 billion in fourth-quarter profit, or $1.06 a share, compared with a profit of $6.5 billion, or $1.04 a share, in the same period the previous year. Revenue in the quarter was $118.05 billion, compared with $115.58 billion in the year-ago quarter.

“Quarterly earnings are important, but they are only a snapshot of a much larger picture,” Simon Henry, Shell’s chief financial officer, said during a conference call.

Shell earned $26.59 billion, or $4.24 a share, in 2012, compared with $30.92 billion, or $4.97 a share, in 2011. Twelve-month revenue came to $467.15 billion, compared with $470.17 billion in 2011.

Shell plans ambitious exploration strategies to achieve its goals and has spent more than $5 billion on its Arctic exploration.

Shell’s Class A shares fell $2.20 to $70.52. ConocoPhillips shares fell $3.09 to $58.