Oil Firm Profitability Falls in 1st Half

WASHINGTON — The profitability of the 20 largest U.S. oil companies fell during the first half of the year, the American Petroleum Institute said Sunday, despite a rise in revenues.

But the companies’ prospects are likely to improve dramatically in the second half of the year due to the 50% rise in crude prices since the Iraqi invasion of Kuwait.

The API said profit as a percentage of stockholder equity fell to 13.2% from 15.8% last year.

A spokesman said the decline in profitability was due largely to depressed oil prices early in the year.

Soaring oil prices since the invasion of Kuwait are expected to boost oil company profits the second half of the year. The effects on individual firms are expected to vary widely, however, based on whether they earn most of their money from pumping oil or refining it into petroleum products.

Profits from continuing operations, which exclude one-time gains or costs, also declined in the first six months of the year, as well as in the second quarter.

The API said operating income of the 20 companies during the second quarter was $4.0 billion, compared to $4.5 billion a year ago, an 11% drop.

Operating income during the first six months was $8.1 billion, compared to $8.9 billion during the first six months of 1989.

Revenues for the 20 companies were up during both the second quarter and the first six months. In the second quarter, they totaled $94.9 billion, 2% higher than the $93 billion during the same period last year.

Revenues during the first half of the year totaled $194 billion, 6.4% higher than the $182.4 billion in revenues during the same period last year.

The 20 companies in the analysis were Amerada Hess Corp., American Petrofina Inc., Amoco Corp., Ashland Oil Inc., Atlantic Richfield Co., Chevron Corp., Diamond Shamrock, Exxon Corp., Kerr-McGee Corp., Maxus Energy Corp., Mobil Corp., Murphy Oil Corp., Occidental Petroleum Corp., Oryx Energy Co., Pennzoil Co., Phillips Petroleum Co., Shell Oil Co., Sun Co Inc., Texaco and Unocal.