www.bayarea.com Posted on Fri, Jan. 31, 2003

ChevronTexaco Corp. (CVX), the second-largest U.S. oil company, www.chevrontexaco.com, had fourth-quarter profit of $904 million as energy prices rose. Chief Executive David O'Reilly called the results "unsatisfactory" after a refining loss, merger costs and a failed partnership eroded earnings.

Net income was 85 cents a share, the company said in a statement. That compared with a fourth-quarter 2001 loss of $2.52 billion, or $2.38 a share, on asset writedowns and costs from Chevron Corp.'s acquisition 15 months ago of Texaco Inc. Revenue rose 26 percent to $27.1 billion.

ChevronTexaco recorded $160 million in merger expenses and costs tied to its stake in Dynegy Inc., which today restated four years of earnings and reported a loss. ChevronTexaco's $151 million loss in the refining business eroded profit from oil and natural-gas production, which more than doubled. Earnings fell short of analyst expectations.

"It wasn't a very good report at all," said James Halloran, who oversees $24 billion, including nearly 1.3 million ChevronTexaco shares, at National City Wealth Management. "Refining wasn't competitive. Production was down. When do they turn this thing around?"

Profit after one-time costs and gains, including $52 million in expenses related to ChevronTexaco's 27 percent stake in Dynegy, was $1 a share, up from 47 cents a year earlier. Analysts expected per-share profit of $1.28, according to the average estimate in a Thomson First Call poll.

Shares of San Ramon-based ChevronTexaco fell $1, or 1.6 percent, to $63.20 at 1:03 p.m. in New York Stock Exchange composite trading and slid as much as 3.3 percent. The stock has fallen 25 percent in the past year.

Operating profit from exploration and production jumped to $1.23 billion from $544 million a year earlier, the statement said. Cold weather across much of the nation stoked demand for heating fuel and concerns over supply disruptions pushed prices higher.

A national strike in Venezuela choked off shipments from the No. 5 oil-producing country, and the possibility of a U.S.-led attack on Iraq threatened to disrupt supplies from the Middle East, which produces about one-fourth of the world's oil.

Price gains helped make up for a 6 percent decline in fourth-quarter production, to the equivalent of 2.57 million barrels of oil a day.

Equity movers

Concord-based biotechnology firm Cerus Corp. (CERS), www.ceruscorp.com, fell $5.76, or 40 percent, to $8.56 and traded as low as $8.47. Cerus said it will delay the introduction of some of its blood-purifying systems. The company was downgraded by analysts at companies including J.P. Morgan and Merrill Lynch.

Hayward's Impax Laboratories Inc. (IPXL), www.impaxlabs.com, rose 74 cents, or 19 percent, to $4.73 and traded as high as $5.05. The drugmaker received Food and Drug Administration final approval for its generic version of Claritin-D, which it will make for over-the-counter use.

In December, the FDA approved the switch in the drug's status from a prescription drug to an over-the-counter drug.

Under the non-exclusive licensing, contract manufacturing and supply agreement with Schering-Plough and a semi-exclusive development, license and supply germinate with Wyeth's consumer healthcare division, Impax said it will supply both companies for the over-the-counter market.

Wyeth in December said U.S. regulators had approved its rival over-the-counter version of Claritin.

Shipment of the product is expected to commence shortly, Impax said.

Compiled by Ellen Lee from company and wire reports. A new column is posted weekdays at the Business site on www.contracostatimes.com at 12:30 p.m. Got East Bay business news? Reach Lee at 925-952-2614 or at elee@cctimes.com.

biz.yahoo.com Reuters Friday January 31, 12:23 pm ET

LONDON, Jan 31 (Reuters) - European petrol prices edged up this week as the wholesale gasoline market registered 20-month highs, industry experts said on Friday. London-based consultancy Oil Price Assessments Limited (OPAL) said German retailers had increased its prices by two euro cents ($0.021) over the week, while on Friday prices in Spain were raised by 1.6 euro cents and in the Netherlands by one euro cent.

ADVERTISEMENTFrance and the UK had seen tiny increases though further rises were likely, the London-based consultancy said.

"In the UK, (retailer) margins are getting very tight, at under four pence (six cents) a litre," said Peter Regnier of OPAL.

Gasoline on the benchmark Rotterdam barge market traded at $327 a tonne for 10 parts per million (ppm) refinery material on Thursday and Friday, the highest levels since May 2001, according to Reuters calculations.

Germany, Europe's largest consumer of motor fuels, switched to the cleaner 10ppm petrol on January 1. The rest of northwest Europe still uses 50ppm petrol, which last traded at a very high $319 a tonne.

Wholesale buying from major BP (London:BP.L - News) prompted by a 10-day partial shutdown of its Nerefco refinery in Rotterdam helped drive the already tightly supplied market to the high.

Wholesale prices have also been boosted by underlying fears of a war in Iraq and strong demand from the U.S. to make up for lost supplies from oil producer Venezuela, where a general strike has dragged on for more than eight weeks.

reuters.com Fri January 31, 2003 12:12 PM ET

LONDON (Reuters) - Oil prices took a breather from the week's gains on Friday amid indications of a further recovery in oil production from strike-ridden Venezuela.

But trading volume was relatively low as dealers were closely monitoring the latest Iraq talks between U.S. and British leaders for any signs of an impending war in Iraq.

U.S. light crude CLc1 was 10 cents lower at $33.75 a barrel while London Brent LCOc1 was up 11 cents at $31.31.

Low global oil stocks and limited spare production capacity to counter the severe reduction in Venezuelan oil exports, and the potential disruption to Iraqi oil sales, have taken crude prices up more than 30 percent since late November.

Analysts see little relief for the time being to high oil costs, which are beginning to percolate into the broader global economy.

But Fimat Banque's Mark Head said on Friday some players were cashing in some front month positions and new Venezuelan figures showing an increase in output was for the moment stopping oil rising higher.

He also noted OPEC's 1.5 million barrels per day (bpd) output increase to take effect February 1 was due to kick in on Saturday, as was a 110,000 bpd hike from non-OPEC Mexico.

"With the increase in Venezuelan exports and output hikes from OPEC and Mexico there's a lot of crude around," Head said.

On Friday, Ali Rodriguez, president of state oil firm Petroleos de Venezuela, said the country's crude production had recovered to over 1.5 million barrels per day, well up from lows of 150,000 in December but still only half normal levels.

He said it could reach 1.8 to 1.9 million bpd by next week as four Orinoco upgrading plants are restarted.

But striking oil workers put crude output at around one million bpd on Thursday.

Envoys from the United States, Brazil, Mexico, Chile, Spain and Portugal gathered in Caracas on Thursday to bolster talks between President Hugo Chavez and his opponents.

The strike has slashed Venezuelan oil sales to the United States, where fuel inventories are hovering close to historic lows. OPEC president Abdullah al-Attiyah said on Thursday that the producers' group had done all it could to control prices.

ALL EYES ON IRAQ

On the Iraq front, British Prime Minister Tony Blair arrived in Washington late on Thursday for talks at Camp David with President Bush on the next step in the showdown with Baghdad.

Ahead of the talks Blair said it was important to press for a new U.N. resolution.

"It is right that we go for a second resolution because that is a way of saying this is an issue that the international community is not going to duck."

But he added: "If the process of disarmament cannot happen through the U.N. inspectors, then it will probably have to happen through force. I believe that is consistent with the U.N. position in (resolution) 1441."

Bush said on Thursday that he would give diplomacy "weeks not months." Secretary of State Colin Powell is due to present evidence on Wednesday to the U.N. Security Council to show that Baghdad is pursuing programs to build biological, chemical or even nuclear weapons.

Washington and its staunchest ally, London, are massing a huge military force in the Gulf, and Bush has vowed to disarm President Saddam Hussein, with or without United Nations backing.

Iraq is eighth in world crude exporter rankings, selling up to two million barrels per day to the international market, and dealers fear an invasion of the country could put a heavy strain on global supplies.

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

cbs.marketwatch.com By Myra P. Saefong, CBS.MarketWatch.com Last Update: 4:29 PM ET Jan. 31, 2003

NEW YORK (CBS.MW) -- Oil futures fell Friday but ended 10 percent higher for the month, with traders still concerned about the state of oil supplies in the face of an ongoing strike in Venezuela and a potential U.S.-led war with Iraq.

On the New York Mercantile Exchange, the benchmark March crude contract closed at $33.51 a barrel, down 34 cents. The contract closed at $30.59 a barrel on Dec. 31.

Meanwhile, gold futures eased back, ending the session nearly dead even with where it closed a week ago but $20 higher for the month. See Metals Stocks.

Thorsten Fischer, an energy economist at Economy.com, believes crude prices will remain high in the run-up to any war, which he expects to begin by March.

Under this scenario, prices will likely peak "when the first shots are fired, assuming everything is going to plan," he said.

And "once there is progress in the campaign, oil prices will come down quickly," he said.

On Friday, President Bush and British Prime Minister Tony Blair discussed possible timetables for diplomacy and war in Iraq. See CBS News for the latest.

Michael Cavanaugh, an analyst at Peak Trading Group in Chicago, said the only amount of uncertainty with relation to petroleum prices surrounds various war scenarios, including the possibility that President Saddam Hussein will destroy Iraq's oil fields or that the U.S. opening the borders for international oil players.

Looking ahead to next week, Cavanaugh said "the market, barring any shocking news, should trade sideways until Powell speaks" on Wednesday at the United Nations.

In a much-anticipated address, Secretary of State Colin Powell is expected to provide intelligence illustrating Washington's assertion that Iraq has been defying U.N. weapons inspectors.

Oil supplies at minimum

U.S. crude inventories remain low at 273 million barrels, and a war with Iraq on top of Venezuela's ongoing oil strike could tighten supplies further.

The low supplies "already led to reduced crude refinery inputs and consequently lower output of refined products," said Fischer.

This week, the American Petroleum Institute and Energy Department reported hefty declines in distillate and gasoline supplies.

Distillate inventories declined by 6.8 million barrels during the week ended Jan. 24, according to the Energy Department, while the API said supplies fell by 7.5 million barrels. Both groups said gasoline stocks fell by 3.3 million barrels. See full story.

At the same time, the strike in Venezuela seeking to topple leftist President Hugo Chavez seems to be "easing" with oil production above 1 million barrels per day, or at about a third of normal output, said Fischer.

But the government has been extracting oil from newer fields, which is easier to pump, he noted.

"Additional increases in production will be hard to come by unless oil workers return to their job," he said, adding that such a scenario is unlikely given that "oil workers are among the fiercest opponents" of Chavez.

In Friday's Nymex action, February unleaded gasoline fell by 1.13 cents to 97.56 cents a gallon, while February heating oil eased back by 2.17 cents to 95.88 cents a gallon.

March became the lead-month contract after the market closed. March unleaded gasoline fell 1.19 cent to 96.6 cents a gallon and March heating oil closed at 93.26 cents a gallon, down 0.94 cent.

In other energy news, March natural gas closed higher by 2.2 cents at $5.605 per million British thermal units, after falling by nearly 5 cents a day earlier.

Natural-gas inventories fell by 247 billion cubic feet to total 1.729 trillion cubic feet in the week ended Jan. 24, the Energy Department said early Thursday.

Over in the equities arena, most oil service stocks closed higher. The Oil Service Index ($OSX: news, chart, profile) climbed 1.6 percent. See Energy Stocks.

The Reuters/CRB Index, a broad-based measure of the commodity futures market, closed at 248.5, up 0.5 percent. Myra P. Saefong is a reporter for CBS.MarketWatch.com in San Francisco.