Bloomberg: Exxon, BP, Shell to Report 3rd-Quarter Profit Gain on Oil Price: “Van der Veer said at an Energy Institute luncheon in London last week that the peak of the oil and gas industry lies beyond the year 2030, adding that Shell views oil price of $20 a barrel as ``conservative,'' and that in years to come average prices will be ``a lot lower than the $50 we see today.'' (ShellNews.net)

Oct. 25 (Bloomberg) -- Exxon Mobil Corp., BP Plc and Royal Dutch/Shell Group, the world's three largest publicly traded oil companies, will probably report surging profits for the latest quarter after crude prices rallied to records.

The companies earned a combined $14.2 billion in the third quarter, excluding some one-time costs, analysts at Deutsche Bank AG forecast, about equal to the quarterly gross domestic product of Peru. In the year-earlier period, they had profits of $9.83 billion. London-based BP will be the first to report tomorrow.

``Every oil company will be benefiting from high oil prices at the moment,'' said Jeffrey Currington, who manages $6 billion in European stocks, including BP and Shell, at HSBC Asset Management in London. ``We expect oil prices to be lower at some stage next year but it's not imminent. We're not yet at a point where we'll get a sell-off.''

Oil surged to $50 a barrel in New York in the third quarter and on Friday closed above $55 for the first time, as a Chinese-led surge in world demand strained the limits of the Organization of Petroleum Exporting Countries to supply more. Inventories of U.S. heating oil that have dropped 15 percent below the five-year average contributed to higher profits in refining, the industry's second-largest business, mainly in Europe and Asia.

Shell Chairman Jeroen van der Veer, BP Chief Executive Officer John Browne and ChevronTexaco Corp. Chairman and Chief Executive David O'Reilly will join energy ministers from Iraq and Norway and other oil officials this week at London's annual ``Oil & Money'' conference to discuss investment in the industry. The Paris-based International Energy Agency, an adviser to 26 industrialized countries, will tomorrow release estimates for growth in oil and gas demand through the next two decades.

Not Peaked Yet

Van der Veer said at an Energy Institute luncheon in London last week that the peak of the oil and gas industry lies beyond the year 2030, adding that Shell views oil price of $20 a barrel as ``conservative,'' and that in years to come average prices will be ``a lot lower than the $50 we see today.''

Crude oil in New York averaged $43.89 a barrel in the third quarter, up 45 percent from $30.21 in the year-earlier period. Natural gas prices climbed 14 percent in the U.S. and surged 55 percent in Britain, Western Europe's largest gas market.

BP is first to report earnings tomorrow, at 7 a.m. London Time. Houston-based Marathon Oil Corp. reports later in the day.

Houston-based ConocoPhillips, Norway's Statoil ASA and New York-based Amerada Hess Corp. will release earnings on Oct. 27, followed the next day by Exxon Mobil, headquartered in Irving, Texas, and Shell, which is based in London and The Hague. San Ramon, California-based ChevronTexaco reports on Oct. 29.

Share prices for those companies have all risen at least 19 percent this year, except for Shell, which has lagged behind, gaining 0.9 percent, because of a Jan. 9 announcement that the company had overstated its reserves for years.

``It's going to be another good quarter,'' said Jonathan Copus, an oil analyst at Investec Henderson Crosthwaite in London. ``There will be very strong earnings because of the rise in the oil price, though people will be looking closely at the underlying production figures.''

Hurricane Ivan caused the loss of 22.6 million barrels of oil in the five weeks since it swept through the Gulf of Mexico, leaving damaged U.S. offshore rigs and pipelines. While some companies benefited from a surge in refining profit margins, others suffered, including ChevronTexaco, which shut its Pascagoula, Mississippi, refinery for two weeks.

Hurricane Losses

BP and Shell, Europe's two largest oil companies, may miss their 2004 targets for oil and gas output, because of hurricane- related losses, Deutsche Bank analyst J.J. Traynor said. BP is aiming for production of 4 million barrels a day in 2004, and Shell between 3.7 million to 3.8 million barrels a day.

``Both are suffering from unplanned downtime, and both could struggle now to hit these targets,'' Traynor, who was ranked the third-best analyst in Europe in the 2003 Thomson Extel survey, said in an Oct. 19 note. He has a ``hold'' rating on both companies.

BP and Exxon Mobil shares have gained 20 percent this year. The extent of the 2004 oil-price rally has made some analysts wary of a slide in stock prices should oil prices decline.

``Even a modest fall in crude could lead the sector to weaken,'' JPMorgan Chase & Co. analyst Gordon Gray said in a report. ``Market concerns over potential winter supply tend to push prices higher in August-October, but towards the end of the year, the market is already beginning to focus on the spring.''

Exxon's Profit

Exxon Mobil, the world's largest publicly traded oil company, is expected to report a 60 percent jump in third-quarter earnings per share, to 87.5 cents, according to the average estimate from 20 analysts in a Thomson Financial survey, equal to $5.7 billion based on the number of shares outstanding in June. That may help Exxon Mobil beat its full-year record of $21.5 billion from 2003.

BP's third-quarter earnings probably rose to $4.3 billion, excluding some items, and Shell's to $4.45 billion, according to Deutsche Bank. A year ago, BP reported profit of $2.14 billion, excluding the effect of holding oil inventories. Shell had earnings of $2.6 billion, also excluding inventory-related gains.

ChevronTexaco is expected to report third-quarter net income of $1.37 a share, according to the Thomson survey, up from $1.01 a year earlier.

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Stephen Voss in London  sev@bloomberg.net

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Tim Coulter at  tcoulter@bloomberg.net

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