Adamant: Hardest metal
Thursday, January 23, 2003

Imperial Oil doubles 3-month profit - Soaring crude, gas prices fuel rich returns across industry - Canada's biggest producer drills $454 million in earnings

www.thestar.com Jan. 23, 2003. 01:00 AM

Fourth-quarter profit more than doubled for Imperial Oil Ltd. because of sky-high crude and natural gas prices that are fuelling rich returns across the energy industry, the company said yesterday.

Imperial, Canada's biggest oil producer, refiner and retailer, also said better profit margins at its refining and marketing division helped drive the better-than-expected results.

The company, which is majority-owned by U.S. oil giant Exxon Mobil Corp., earned $454 million, or $1.19 cents a share, up from year-earlier $194 million, or 51 cents a share. That beat an average estimate of 91 cents among analysts polled by Thomson First Call.

Revenue was $4.8 billion, up from $3.5 billion in the fourth quarter of 2002.

Full-year profit was $1.21 billion, down from $1.24 in 2001, although earnings per share rose to $3.19 from $3.15 as Imperial cut the amount of stock outstanding under a buyback.

That represented the company's third-highest annual profit, Imperial chief executive Tim Hearn said.

"As a result, we were able to successfully complete one of our largest capital programs ever, while retaining a very strong financial position," Hearn said in a statement.

The stock closed up 59 cents at $44.99 yesterday, continuing a nearly flat performance since the start of the fourth quarter.

Imperial, known for its national chain of Esso service stations and dominant position in western Canadian heavy oil and oil sands, has the biggest stake in the Syncrude Canada oil-sands venture in Alberta and owns the province's Cold Lake bitumen project. Both are undergoing major expansions.

It is also leading a consortium of major oil companies planning a $4 billion pipeline to tap huge gas reserves in the Mackenzie Delta of the Northwest Territories.

Imperial's jump in fourth-quarter earnings follows a strong showing Tuesday from rival Suncor Energy Inc., and analysts expect similar results throughout the industry thanks to sizzling oil and gas markets.

In the quarter, crude prices jumped 38 per cent from 2001 on fears of a Middle East war, and after a strike in Venezuela that cut shipments from the world's fifth-largest exporter.

Canadian natural gas prices soared 67 per cent from the fourth quarter of 2001 amid cold weather in major U.S. consuming regions and lower-than-average inventories.

Earnings at Imperial's resources division surged 160 per cent to $312 million even as oil production slipped by 1,000 barrels a day to 255,000 and natural gas sales fell by 50 million cubic feet a day to 475 million.

REUTERS NEWS AGENCY

Rig use in Gulf continues 3-week slide

vh80299.vh8.infi.net John Sullivan January 23, 2003   LAFAYETTE — Rig use in the Gulf of Mexico has declined for a third consecutive week while the possibility of a war in the Middle East is keeping oil above $32 a barrel on world markets.

“The market is very volatile now,” said Patrick Burke, an investment representative with the New Iberia office of Edward Jones. “War fear is the driving force behind high prices now, and the strike in Venezuela is also adding to that figure.”

Venezuela was the fifth-largest exporter of oil in the world, before the almost six-week strike that has paralyzed the nation. Before the strike, Venezuela was exporting about 2 million barrels of oil per day. Currently, Venezuela exports less than 200,000 barrels of oil per day.

The price of crude for March delivery closed Wednesday at $32.85, down 34 cents from the opening bell. On Tuesday, it closed at $34.61, the highest closing price since Nov. 30, 2000, when it closed at $33.82.

While the price of oil continued to swing back and forth, the number of mobile offshore drilling rigs in the Gulf of Mexico dropped by three rigs to 122, according to Tom Marsh, associate publisher of the ODS-PetroData weekly rig report.

“Rig utilization in the Gulf of Mexico is at 65.6 percent,” Marsh said Wednesday. “The world fleet held steady this week with 523 rigs under contract out of a total of 656 rigs.”

The high price of oil on the world market is having an effect on exploration and production in the Gulf of Mexico, Burke said. As long as oil prices remain high, companies will continue to cut their spending, and that means less drilling exploration, Burke said. That directly affects oil service support and drilling companies.

As the possibility of war between the United States and Iraq nears, Burke said he believes oil could jump above the $35-a-barrel mark and stay there for the short term.

A short war, Burke said, and prices should settle down to the normal range of $22 to $28 a barrel. A prolonged war could see oil stay at inflated prices, which could stop more oil drilling and exploration in the Gulf of Mexico.

“Venezuela and Iraq are the two wild cards now,” he said. “Everyone in the industry is watching to see what will happen next.”

Federal heating aid may increase

www.dailyfreeman.com By Jonathan Ment, Freeman staff January 23, 2003

THERE'S GOOD news for people feeling the combined sting of bitter cold temperatures and high heating costs: The federal government may increase funding for its energy assistance program, and meteorologists think temperatures might climb by early next week - all the way to the freezing mark. The U.S. Senate on Tuesday voted to provide almost $300 million in additional funding for the Low-Income Home Energy Assistance Program, which provides states with grants to help households in need with winter heating costs.

The Senate wants to raise the HEAP budget from $1.7 billion to $2 billion. The House has approved a $1.7 billion package, so the two sides will have to work out a compromise.

THE EXTRA money is needed in New York, where this winter is colder than last yet HEAP funding is down.

"We're operating based on the projection of $191 million," said Michael Hayes, a spokesman for the state Office of Temporary and Disability Assistance, which administers the program in New York. "Last year, we received $212 million."

Hayes said the New York program is going through available funds more quickly that it did a year ago, but because fewer households are being served this year, the situation is not yet critical.

"We've served 572,000 households (so far this year)," Hayes said. "Last year, we served 658,000 for the entire year. "We think we have enough (money) to run through February."

Of the 658,000 households served last winter, 13,000 were in Ulster, Dutchess, Greene and Columbia counties.

GLENN Decker, commissioner of the Ulster County Department of Social Services, said his office is getting a steady stream of requests for HEAP money.

"People hear about it by word of mouth and come in," he said. "We did 30 (on Tuesday. We could probably have 100 applicants between walk-ins and phone calls.

"We're (also) finding the (fuel) dealers are backed up on their service calls," Decker said. "It puts a strain on the whole system. I just heard that one of our employees has been without heat for three days. Their oil company can't get the parts to repair their furnace."

BARRY Motzkin, vice president and general manager of the Kingston Oil Supply Co., said the region was "due for a real winter, and (KOSCO was) prepared for it."

Other factors weighing on oil prices, Motzkin said, are the labor problems in Venezuela, a key oil-producing nation; and the possibility of the United States waging war against Iraq, which sits in the heart of the oil-rich Middle East.

KOSCO was charging $1.499 per gallon of home heating oil on Wednesday, though people who use the company's "price protection plan" pay $1.099, which is less than last year.

"Price protection plans level out volatility in the market, which is what they're supposed to do," said Motzkin, who also is a spokesman for the Hudson Valley Oil Heat Council.

AS FOR Mother Nature's role, temperatures this winter have been about 15 percent colder than last year, which was one of the warmest on record.

"It's so cold right now, it's hard to think that it's ever going to get warm again," Hayes said. "But should the demand decrease, we (HEAP's resources) could go longer."

Hugh Johnson, a meteorologist with the National Weather Service in Albany, said unlike recent years, when the Mid-Hudson's low temperatures never dropped below zero, "we've had our fifth day below zero in the past week."

And today may be the coldest day yet, with a high temperature of only 15 degrees.

But relief may be in sight: The Weather Service is predicting highs near 30 on Monday, Tuesday and Wednesday, with lows only in the teens.

DECKER SAID Ulster County is taking care of all qualified people who need help with heating costs.

"If you tell me you're without (heat), we'll arrange for an emergency delivery," he said. "We will not allow anyone to go without heat. We will find a way."

Motzkin said oil customers can help delivery drivers by uncovering fill caps that are buried in the snow and clearing driveways.

"Cold we handle pretty well; snow is a variable," he said. "Trucks are wider than passenger vehicles, so making sure the driveway is clear and well-sanded is essential."

Venezuela Suspends Nationwide Referendum - In Blow to Opposition, Venezuelan Court Suspends Referendum on Chavez's Rule

abcnews.go.com The Associated Press CARACAS, Venezuela Jan. 23 —

President Hugo Chavez applauded a Supreme Court decision to postpone a Feb. 2 referendum on his rule and announced he would impose foreign exchange controls to protect Venezuela's sagging currency.

In a speech broadcast late Wednesday, Chavez said he would set limits starting next week on the amount of dollars or other foreign currencies Venezuelans can accumulate. Earlier in the day, the central bank suspended foreign currency trading as political and economic uncertainty fed a surge in demand for dollars.

Also Wednesday, Venezuela's high court indefinitely suspended the opposition-backed nonbinding referendum on Chavez's rule. The decision came just 11 days before the scheduled vote and stunned the opposition, which hoped the plebiscite would prompt the embattled leader to quit.

Chavez called the ruling "fair," adding that "it eliminates the terrible uncertainty that was affecting the country."

Government opponents presented the elections council with over 2 million signatures in November to convoke the referendum. They called a general strike, which has lasted 52 days, to demand Chavez accept the outcome of the vote.

The strike has dramatically reduced oil production in the world's fifth largest exporter and caused the bolivar to lose 25 percent of its value this year as Venezuelans and investors sell the currency to buy dollars amid the uncertainty.

The court ruling prompted angry reactions from the opposition.

"It's a slap in the face for millions of Venezuelans who are waiting for a solution to the crisis," said opposition leader Rafael Alfonzo.

Justices ruled that no national vote a referendum or election can be held until it decides whether elections council member Leonardo Pizani, who helped organize the referendum, is eligible to serve on the panel.

Pizani had resigned from the council in 2000, only to rejoin last November. He insisted he could rejoin because Congress, by law, had failed to formally accept his resignation.

Members of Chavez's ruling party filed suit arguing that Pizani's absence from the council made his resignation legally binding.

While government adversaries criticized the ruling, residents of Caracas braced for a pro-government march on Thursday to celebrate the downfall of Marcos Perez Jimenez, Venezuela's last dictator, in 1958. Government allies urged Chavez supporters from across the country to turn out for the march.

Strike leader Carlos Ortega, president of the nation's largest labor union, accused Chavez's supporters of planning a violent rampage in the capital. He urged government adversaries, who have staged near daily street marches since the strike began on Dec. 2, "to stay at home" to avoid "a massacre."

Interior Minister Lucas Rincon guaranteed security forces would maintain public order.

Chavez, a self-proclaimed "revolutionary" whose leftist rhetoric has scared off foreign investment, said he was against imposing the new currency controls but had to do it out of necessity.

Meanwhile, the "Group of Friends of Venezuela," a forum of six nations supporting OAS-mediated negotiations to end Venezuela's crisis, prepare for a first meeting.

Diplomats from Brazil, Chile, Mexico, Portugal, Spain and the United States are to meet at the Organization of American States in Washington on Friday. Cesar Gaviria, secretary general of the Organization of American States, began mediating the talks over two months ago.

Chavez has welcomed the "Friends" initiative, but he warned Wednesday that Venezuela would not accept foreign interference in domestic affairs.

"Sovereignty isn't debated, much less negotiated," he said.

Venezuela Postpones Nationwide Referendum

www.austin360.com By CHRISTOPHER TOOTHAKER Associated Press Writer

CARACAS, Venezuela (AP)--President Hugo Chavez applauded a Supreme Court decision to postpone a Feb. 2 referendum on his rule and announced he would impose foreign exchange controls to protect Venezuela's sagging currency.

In a speech broadcast late Wednesday, Chavez said he would set limits starting next week on the amount of dollars or other foreign currencies Venezuelans can accumulate. Earlier in the day, the central bank suspended foreign currency trading as political and economic uncertainty fed a surge in demand for dollars.

Also Wednesday, Venezuela's high court indefinitely suspended the opposition-backed nonbinding referendum on Chavez's rule. The decision came just 11 days before the scheduled vote and stunned the opposition, which hoped the plebiscite would prompt the embattled leader to quit.

Chavez called the ruling fair,'' adding that it eliminates the terrible uncertainty that was affecting the country.''

Government opponents presented the elections council with over 2 million signatures in November to convoke the referendum. They called a general strike, which has lasted 52 days, to demand Chavez accept the outcome of the vote.

The strike has dramatically reduced oil production in the world's fifth largest exporter and caused the bolivar to lose 25 percent of its value this year as Venezuelans and investors sell the currency to buy dollars amid the uncertainty.

The court ruling prompted angry reactions from the opposition.

``It's a slap in the face for millions of Venezuelans who are waiting for a solution to the crisis,'' said opposition leader Rafael Alfonzo.

Justices ruled that no national vote--a referendum or election _ can be held until it decides whether elections council member Leonardo Pizani, who helped organize the referendum, is eligible to serve on the panel.

Pizani had resigned from the council in 2000, only to rejoin last November. He insisted he could rejoin because Congress, by law, had failed to formally accept his resignation.

Members of Chavez's ruling party filed suit arguing that Pizani's absence from the council made his resignation legally binding.

While government adversaries criticized the ruling, residents of Caracas braced for a pro-government march on Thursday to celebrate the downfall of Marcos Perez Jimenez, Venezuela's last dictator, in 1958. Government allies urged Chavez supporters from across the country to turn out for the march.

Strike leader Carlos Ortega, president of the nation's largest labor union, accused Chavez's supporters of planning a violent rampage in the capital. He urged government adversaries, who have staged near daily street marches since the strike began on Dec. 2, to stay at home'' to avoid a massacre.''

Interior Minister Lucas Rincon guaranteed security forces would maintain public order.

Chavez, a self-proclaimed ``revolutionary'' whose leftist rhetoric has scared off foreign investment, said he was against imposing the new currency controls but had to do it out of necessity.

Meanwhile, the ``Group of Friends of Venezuela,'' a forum of six nations supporting OAS-mediated negotiations to end Venezuela's crisis, prepare for a first meeting.

Diplomats from Brazil, Chile, Mexico, Portugal, Spain and the United States are to meet at the Organization of American States in Washington on Friday. Cesar Gaviria, secretary general of the Organization of American States, began mediating the talks over two months ago.

Chavez has welcomed the ``Friends'' initiative, but he warned Wednesday that Venezuela would not accept foreign interference in domestic affairs.

``Sovereignty isn't debated, much less negotiated,'' he said.