ChevronTexaco Misses Mark

www.smartmoney.com January 31, 2003

SAN FRANCISCO -- ChevronTexaco Corp. (CVX) turned a profit in the fourth quarter after a loss a year earlier, when results were dragged down by charges. Higher crude oil and natural gas prices boosted exploration and production results in the latest period. Even so, results came in well shy of Wall Street's expectations.

The oil giant Friday posted net income of $904 million, or 85 cents a share, compared with a net loss of $2.52 billion, or $2.38 a share, a year earlier.

ChevronTexaco booked charges totaling $53 million related to its 26.5% stake in Dynegy Inc. (DYN) and environmental remediation matters, which were partially offset by a favorable tax adjustment. The company also recorded merger-related expenses of $108 million.

Results in the year-earlier quarter included $3.02 billion in charges and merger costs.

Absent items, ChevronTexaco said it earned $1.07 billion, or $1 a share, compared with $498 million, or 47 cents a share, a year earlier.

Analysts surveyed by Thomson First Call, which excludes items in its estimates, were looking for earnings of $1.28 a share, according to a survey by Thomson First Call.

Revenue increased 26% to $27.06 billion from $21.46 billion a year earlier.

ChevronTexaco, the second-largest U.S. oil company behind Exxon Mobil Corp. (XOM), said higher crude oil and natural gas prices boosted its exploration and production business. Those same price increases, however, resulted in higher feedstock costs and poor margins for the refining and marketing operations, the company noted.

Exploration and production operating earnings more than doubled to $1.23 billion, while the refining, marketing and transportation business swung to a loss of $151 million from a profit of $215 million a year earlier.

The oil sector saw volatile prices in the fourth quarter as prices spiked near the end of the period because of a strike in Venezuela and concern about possible war with Iraq.

ChevronTexaco, created by the October 2001 merger of Chevron Corp. and Texaco Inc., said it expects to meet its goal of carving out annual pretax merger-related savings of $2.2 billion by the end of the first quarter.

For the year, net income plunged 66% to $1.13 billion, or $1.07 a share, from $3.29 billion, or $3.09 a share, in 2001. Excluding items, earnings fell 34% to $4.47 billion, or $4.21 a share, from $6.81 billion, or $6.41 a share. Revenue declined 5.5% to $98.7 billion from $104.41 billion.

Earlier Friday, Dynegy reported a fourth-quarter net loss of $341 million, or $1.15 a share, and announced further restatements to its results from 1999 to 2001 as well as 2002.

-Yolanda E. McBride, Dow Jones Newswires, 609-520-7861

(END) Dow Jones Newswires