Oil companies made $31 billion, analysts say

WASHINGTON – The oil industry’s profit party is still raging, just not as wildly as last year.

Five of the world’s largest energy companies are expected to report combined third-quarter earnings this week of more than $30 billion, though profits were weighed down by falling prices for natural gas and gasoline.

The industry derived much of its strength from crude oil prices, which averaged roughly $70 a barrel in the July-September period and hit an all-time peak above $78 amid conflict in the Middle East. A sharp decline in crude-oil futures since then, however, suggests profit growth in the oil patch could slow further in the months ahead, analysts said.

The major integrated oil companies releasing third quarter results this week – BP Plc, Chevron Corp., ConocoPhillips, Exxon Mobil Corp. and Royal Dutch Shell Plc – “likely have witnessed peak earnings, at least for the near-term,” said A.G. Edwards energy analyst Bruce Lanni.

Analysts surveyed by Thomson Financial expect these five companies to report quarterly profits of $30.71 billion – an amount larger than the annual economic output of Bolivia. Still, Wall Street judges companies by how rapidly they are growing, and on that basis the oil industry’s results aren’t as impressive.

In the third quarter of 2005, these same five companies earned $32.88 billion.

That bonanza came on the heels of hurricanes Katrina and Rita, which sent energy prices soaring even as they curtailed some Gulf of Mexico production and Gulf Coast refining.

Chevron is expected to benefit nicely from the restoration of a huge Mississippi refinery that was shuttered by last year’s storms. Analysts are predicting year-over-year third-quarter profit growth of 23 percent for the San Ramon, Calif.-based company.

BP, on the other hand, is likely to turn in one of the more disappointing performances because of a wide range of operational troubles, including a pipeline leak in Alaska and the slower-than-anticipated recovery of a Gulf of Mexico platform.

Its third-quarter profit is forecast to decline by roughly $1 billion, according the consensus of analysts surveyed by Thomson Financial.

BP, with results coming out today, will be the first of the major integrated companies to report earnings.

Among companies reporting earnings Monday:

•NightHawk Radiology Holdings Inc. reported record third-quarter net income of $6.4 million, or 21 cents a share.

The earnings compared to income of $3.4 million for the same period last year.

The Coeur d’Alene-based company uses U.S. board-certified radiologists in different time zones in Australia and Switzerland to provide off-hours radiology interpretations.

Based on year-to-date revenues, company officials revised estimates of 2006 earnings upward to about $91 million, or 67 cents to 69 cents a share. Previous guidance was in the range of 61 cents to 64 cents per share.

•Bankcda reported earnings of nearly $415,400 through the first nine months of the year, compared with a loss of $8,500 for the same period in 2005. Bankcda’s headquarters is in Coeur d’Alene.

•Sterling Financial Corp., the Spokane-based parent company of Sterling Savings Bank, said it earned $19.3 million, or 52 cents a share, in the third quarter. In the year-ago period, Sterling earned $13.9 million, or 40 cents a share.

Total assets increased 31 percent year over year to a record $8.91 billion. Total deposits also hit a record, at $5.95 billion.

•Netflix Inc., the top online DVD rental service in the U.S., said Monday its third-quarter profit rose 84 percent as the company added more subscribers.

Quarterly earnings increased to $12.8 million, or 18 cents a share, from $6.9 million, or 11 cents a share, during the same period last year. Excluding stock-based compensation, the Los Gatos, Calif.-based company recorded adjusted earnings of 21 cents a share.

•Xerox Corp., a maker of copiers, printers and other imaging equipment, on Monday reported a sharp jump in third-quarter profit, helped by a tax benefit and better-than-expected sales.

Quarterly profit at the Stamford, Conn.-based corporation grew to $536 million, or 54 cents a share, from $49 million, or 5 cents a share, a year earlier.

•Kraft Foods Inc., the world’s second-biggest food manufacturer, said Monday that its third-quarter profit grew 11 percent thanks in part to a one-time gain related to its acquisition of United Biscuits’ operations in Spain and Portugal.

For the quarter that ended in September, Northfield, Ill.-based Kraft said its net income was $748 million, or 45 cents a share, compared with $674 million, or 40 cents a share, a year earlier.

Kraft makes its namesake cheeses, Oscar Mayer hot dogs, Maxwell House coffee, Jell-O and Oreo cookies.

•Tissue and diaper giant Kimberly-Clark Corp. said Monday that profits rose 12 percent in the July-September period as sales increased, especially in developing markets.

On paper, the company beat Wall Street’s profit estimate, but several analysts downplayed the results. They said Kimberly-Clark beat expectations only because taxes were lower than the company had predicted and because it reaped currency-exchange benefits on earnings outside the United States.

Kimberly-Clark said it earned $364 million, or 79 cents a share, in the quarter compared with $325 million, or 68 cents a share, a year earlier.

•Amgen Inc.‘s third-quarter earnings surged 15 percent and exceeded Wall Street expectations Monday even as the world’s largest biotechnology company ramped up research spending.

Amgen reported earnings of $1.1 billion, or 94 cents a share, compared with $967 million, or 77 cents a share, in the same period last year.

Excluding special charges, including stock option expenses, the Thousand Oaks, Calif.-based company said it would have earned $1.22 billion, or $1.04 cents a share.