April 17, 2024

BP’s $4.2 Billion Profit Beats Forecasts

LONDON — BP reported first-quarter profit of $4.2 billion on Tuesday, after adjustment for inventory changes and one-off items, handily beating analysts’ forecasts.

Even though profit was 11 percent lower than the same quarter last year, Peter Hutton, an analyst at RBC Capital Markets in London, called the report “a very positive set of results.” Shares in BP rose more than 3 percent in London trading after the earnings announcement.

Mr. Hutton said BP had earned 30 percent more than analysts’ forecasts thanks to start-ups in Angola and Norway and better performance in Trinidad. Mr. Hutton also said costs had been lower than expected.

The chief executive, Robert W. Dudley, said in a statement that “these strong first-quarter results demonstrate the progress BP is making.”

The main disappointment in the quarter was an 18 percent year-on-year fall in production in the United States, probably reflecting the company’s continued struggles to bring back its core deepwater production in the Gulf of Mexico after the blowout disaster of 2010.

BP is a much smaller company than it was before the disaster, which killed 11 people and spilled millions of barrels of oil. Since the start of 2010, BP has sold about $65 billion in assets to pay spill costs and reshape the company. Production in the first quarter, 2.3 million barrels a day, was down about 5 percent compared with the first quarter of 2012 and roughly half the output of ExxonMobil. In 2009, BP’s production was 4 million barrels per day, comparable to Exxon Mobil’s.

The big difference comes from the sale of BP’s 50 percent stake in its Russian affiliate, TNK-BP, to Rosneft for $12.5 billion in cash and $14 billion in shares of Rosneft, which is majority owned by the Russian government. BP’s stake in Rosneft, which rose to 19.75 percent in the transaction, will bring its overall output back over three million barrels per day, the company says.

BP has begun a share buyback worth $8 billion, acquiring shares worth $834 million since Friday, the company said. Mr. Dudley, trying to create a more focused and profitable company, has also trimmed BP’s holdings extensively, even in the Gulf of Mexico.

BP said its production outside Russia would be lower in the second quarter because of maintenance work in the Gulf of Mexico and the North Sea.

BP is drilling extensively in the Gulf of Mexico to bring key properties there to optimal levels. Production has plunged at some of these because of the industrywide moratorium after the oil spill. BP announced this month that it would not go ahead with a second phase of a major Gulf of Mexico field, Mad Dog, because of industry cost inflation.

BP was unable to do the drilling that was needed to maintain production at existing fields like Thunderhorse or to develop new fields like Tiber, which the company found a few months before the blowout. More than any other company, BP is dependent on the Gulf of Mexico for high-margin oil.

BP still faces huge uncertainties over how high the damages from the spill could go. On April 17, a federal judge in New Orleans ended the first phase of a trial to determine, among other matters, whether BP or other parties were grossly negligent in the series of events that led up to the spill. The second phase, focusing on the amount of oil spilled, is to begin in September. What the judge eventually rules could make a difference of tens of billions of dollars in penalties.

In the meantime, the flow of lawsuits continues. BP says it has been among the companies named as defendants in more than 2,200 suits filed in federal and state courts since March 6.

Article source: http://www.nytimes.com/2013/05/01/business/global/bps-4-2-billion-profit-beats-forecasts.html?partner=rss&emc=rss

Chevron Profit Down 4.5 Percent on Lower Oil Prices

Chevron, the second largest U.S. oil company, has delivered better profit margins than the other energy majors in recent years because a big part of its production mix is oil, which has been fetching high prices. Rivals, like Exxon Mobil, produce more natural gas in the U.S, where gas prices have been low.

But crude prices fell across the globe in the first three months of this year as Europe remained mired in recession and growth in China slowed. That reduced Chevron’s revenue and profit.

Chevron, based in San Ramon, Calif., reported Friday that net income fell to $6.18 billion, or $3.18 per share, on revenue of $56.82 billion. Last year the company earned $6.47 billion, or $3.27 per share, on revenue of $60.71 billion.

The profit exceeded analysts’ average forecast of $3.09 per share. Shares rose $1.53, or 1.3 percent, to close at $120.04 Friday.

Chevron did manage to boost production, although just slightly. Output of oil and gas rose to 2.65 million barrels per day from 2.63 million barrels per day in last year’s quarter.

But Chevron’s average sale price for a barrel of oil slipped to $94 from $102 last year in the U.S., and to $102 from $110 abroad. Natural gas prices edged up around the world, but not enough to offset the decline in oil prices.

Chevron hopes to increase production by 25 percent to 3.3 million barrels per day by 2017. The company is developing 50 projects that will each cost it $250 million or more, and 16 that will cost at least $1 billion each.

Production at Chevron’s bigger rival Exxon Mobil has been slipping, but Exxon produced 4.4 million barrels per day in the first quarter, two-thirds more than Chevron.

Chevron’s has been partly constrained by the shutdown shut production at an offshore Brazil platform after two spills last year. Earlier this month, Brazilian regulators gave Chevron permission to restart production.

Pat Yarrington, Chevron’s chief financial officer, told investors Friday that the operation in Brazil’s Frade field would restart in the second quarter, but that it would ramp up slowly and contribute only about 5,000 barrels per day this year.

Yarrington said a liquefied natural gas project in Angola will also begin operating in the second quarter and will add 20,000 barrels per day in production this year, then 60,000 barrels per day next year.

Performance at Chevron’s refining operations slipped because of maintenance and upgrades at refineries in El Segundo, Calif. and Pascagoula, Miss. and continued repairs at its Richmond Calif. refinery in the wake of an August fire.

Refinery output fell 38 percent to 576,000 barrels per day.

“It was just a very heavy first quarter maintenance schedule this year,” Yarrington said. She said output will be “substantially back” in the second quarter.

Yarrington said the El Segundo and Pascagoula refineries are operating at normal levels again. The Richmond refinery has begun taking in crude and is expected to restart in the second quarter.

Brian Youngberg, an analyst at Edward Jones, said Chevron’s disappointing U.S. refining results were the only “hiccup” in an otherwise solid quarter.

Follow Jonathan Fahey on Twitter at http://twitter.com/JonathanFahey .

Article source: http://www.nytimes.com/aponline/2013/04/26/business/ap-us-earns-chevron.html?partner=rss&emc=rss

Strategies: Apple Stock Isn’t a Bellwether, Even if It’s Big

THE rise of Apple shares over the last few years was meteoric. Their fall over last few days has been traumatic. But these gyrations may not matter much to the overall stock market.

They will matter, of course, if you lost money as Apple dropped from $702 in September to $439.88 on Friday. And the company’s struggles may be of more than passing interest even if you never intend to own any of its shares.

Apple remains a colossus, even if Exxon Mobil surpassed it as the most valuable publicly traded company in the world on Friday, exactly one year after iPhone sales propelled Apple to the top spot. Still, all of those iPhones, iPads and other gadgets make Apple matter in many households.

But the company’s influence on the stock market is another question. Aside from the drag that Apple’s decline has imposed on indexes that include it, its recent travails haven’t affected other stocks very much, and they don’t provide much information about the market as a whole. That’s the view of Paul Hickey, co-founder of the Bespoke Investment Group, who has some statistics to support it.

“The company just isn’t the market bellwether,” he said.

In good times and bad, Apple has largely gone its own way, and the rest of the market hasn’t followed its lead. Apple isn’t nearly as influential as, say, I.B.M., which appears to be the true market bellwether, Mr. Hickey contends.

I.B.M. is the market leader — the stock that other stocks follow — based on Bespoke’s calculations, which are boiled down into one statistic. That is the likelihood that a stock’s return on the day after its quarterly earnings report matches the direction of the Standard Poor’s 500-stock index over the next five weeks.

Over the last decade, for example, the rise or fall of I.B.M. stock on the day after the company reports earnings has matched the S. P. 500’s direction 75 percent of the time. That’s the highest percentage for any stock in the index over that period. The comparable figure for Apple is only 37.5 percent.

If those tendencies continue — and that’s a big “if” — bulls have reason to cheer. Both companies issued earnings reports last week, and they received very different reactions in the market. After the close of trading on Tuesday, I.B.M. reported rising profits on a modest decline in revenue, and the market reaction was strikingly positive. I.B.M. shares rose 4.4 percent on Wednesday. If I.B.M. is the market bellwether, it implies that over the next five weeks, the overall market is likely to rise.

Apple, on the other hand, reported earnings after hours on Wednesday, and the market reaction was brutal. Apple’s guidance for 2013 disappointed analysts — its profit was flat although its revenue grew — and its shares fell more than 12 percent on Thursday. But Apple isn’t a bellwether, Mr. Hickey says. Its earnings reports and its returns the next day have not matched the market’s subsequent five-week direction with any regularity.

Looking at the short term, Apple shares have often moved quite independently of the rest of the market, too. On Thursday, for example, the S. P. 500 was flat for the day despite the steep drop of Apple, which accounts for more than 3 percent of the index. The Dow Jones industrial average, in which I.B.M. has the greatest weight, at more than 11 percent, doesn’t include Apple at all, and it rose slightly for the day. On Wednesday, by contrast, both indexes rose, along with I.B.M. and Apple shares.

Why should the market’s one-day reaction to I.B.M.’s earnings have anything to do with market returns over the next five weeks? Mr. Hickey speculates that I.B.M., which provides sophisticated, integrated digital solutions to business problems, now derives revenue from many of the world’s big companies and accurately reflects the prospects of corporate America. “When I.B.M. is doing well, a lot of the corporations in America are doing well,” he says.

But it’s quite possible that the apparent connection between I.B.M.’s earnings and the overall market direction is nothing more than an anomaly, and may not continue.

That’s the assessment of Burton G. Malkiel, the Princeton economist and author of “A Random Walk Down Wall Street,” the investment book now in its 10th edition. He has found that, for the most part, the stock market does not follow predictable patterns.

“If it did,” Professor Malkiel says, “money managers would be able to beat the market regularly, but the vast majority of them can’t.”

Article source: http://www.nytimes.com/2013/01/27/your-money/apple-stock-isnt-a-bellwether-even-if-its-big.html?partner=rss&emc=rss

DealBook: JPMorgan’s Board Uses a Pay Cut as a Message

The headquarters of JPMorgan Chase in midtown Manhattan.John Moore/Getty ImagesThe headquarters of JPMorgan Chase in Midtown Manhattan.

Shortly after the markets closed on Tuesday afternoon, an emissary from JPMorgan Chase’s board of directors walked two flights down to the 48th-floor corner office of the bank’s chief executive, Jamie Dimon, to deliver a stark message. The board had voted to slash Mr. Dimon’s annual compensation for 2012 by half.

At first blush, the move appeared to be a stinging rebuke of Mr. Dimon for his failures of leadership that contributed to the bank’s multibillion-dollar trading loss last year.

But the pay cut was actually a message from the board to regulators and worried investors that it was a strong watchdog over the nation’s largest bank, according to several people with knowledge of the matter.

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After facing criticism for its lax oversight, the board wanted to assert its position as a check on top management, according to the people, who declined to be named because the discussions were not public.

Mr. Dimon, who was the highest paid chief executive at a large bank in 2011, was unfazed when he heard the news. On Wednesday, Mr. Dimon said the board “had a tough job” in assessing how to reduce his total compensation for the year. He called the trading episode an “embarrassing mistake” and said, “I respect their decision.”

The decision came after back-to-back board meetings earlier this week where the head of the board’s compensation committee, Lee R. Raymond, the former chief executive of Exxon Mobil who is known for his no-nonsense style, made a compelling pitch to his fellow directors. The group, Mr. Raymond argued, needed to take swift, decisive action.

While a few members were initially skittish about the depths of the proposed cuts, the board voted unanimously to reduce Mr. Dimon’s pay to $11.5 million from $23.1 million a year earlier, according to the people. The directors also voted to release the results of internal investigations into the trading losses, which largely fault other top executives for the problems.

The extent of the cut took some JPMorgan executives by surprise when news of the compensation was disclosed on Wednesday along with the bank’s earnings, which surged to an annual record of $21.3 billion.

“Mr. Dimon bears ultimate responsibility for the failures that led to losses,” the board said in a statement. It added that upon learning the extent of the losses, he “responded forcefully.”

Still, the trading losses, which have swelled to more than $6 billion, have cast a long shadow over the board and management of the bank. Many of JPMorgan’s hallmarks that Mr. Dimon has trumpeted, from its deft management of risk to a deep bench of executive talent, have been partially undercut by the trading fiasco and ensuing upheaval.

Despite the board’s move on pay, some federal regulators are skeptical that the directors have prowess to adequately police risk, according to several current and former regulators with knowledge of the matter. Mr. Dimon, 56, who successfully steered the bank through the turbulence of the 2008 financial crisis relatively unscathed, still maintains a tight grip on the bank.

Some federal regulators worry that the board, which largely exonerated themselves in their internal investigation of the losses, cannot sufficiently push back against the hard-charging Mr. Dimon. Others, the regulators said, are concerned that the directors lack the financial acumen to rein in risky activities.

At the time of the losses, the board’s risk committee had three members, a smaller group than many of its major Wall Street rivals. Also troubling, the regulators said, the three included executives with little banking experience: the president of the American Museum of Natural History, Ellen V. Futter, and David M. Cote, the chief executive of the manufacturer Honeywell. Since the losses were disclosed, Timothy P. Flynn, formerly the chairman of the auditing firm KPMG, joined the risk committee.

Joseph Evangelisti, a JPMorgan spokesman, said, “This is the same board that brought us through the worst financial crisis in our history with flying colors.”

Since revealing the trading losses in May from a soured bet on complex credit derivatives, Mr. Dimon has exerted his powerful influence over the shape and direction of the bank. He has reshuffled the upper echelons of its management, claiming the jobs of some of his most trusted lieutenants. Two notable casualties are Douglas L. Braunstein, who ceded his role as chief financial officer in November, and Barry L. Zubrow, a former chief risk officer, who resigned as head of regulatory affairs late last year. Mr. Braunstein is a vice chairman reporting to Mr. Dimon.

Adding to the turmoil at the top of the bank, Ina R. Drew resigned as head of the chief investment office shortly after the trading losses were announced. Her precipitous fall was followed this year by the departure of James E. Staley, once considered a potential heir to Mr. Dimon.

To replace them, Mr. Dimon has elevated a group of younger executives, most of whom are in their 40s. Some bank analysts and executives at JPMorgan worry that the group does not yet have the institutional knowledge or experience of their more seasoned predecessors, according to several people with knowledge of the matter.

At a conference in San Francisco earlier this month, Mr. Dimon called the current group of executives “the strongest leadership team we have ever had in place.” He mixed his praise, however, with a sharp criticism of others at the bank in the aftermath of the trading losses. “Instead of helping, they were running around with their head chopped off,” he said. Some “acted like children” and wondered “What does this mean for me personally? How’s my reputation?”

At the same time, Mr. Dimon has emerged relatively unscathed. While critical of Mr. Dimon, an internal report, led by Michael J. Cavanagh, a head of the corporate and investment bank, leveled its most scathing attacks on the executives who directly oversaw the London traders who made increasingly outsize wagers in the bank’s chief investment office. “Responsibility for the flaws that allowed the losses to occur lies primarily with C.I.O. management,” the report, which was released on Wednesday, said. Also ensnared are Mr. Zubrow and Mr. Braunstein.

The cuts target Mr. Dimon’s bonus compensation. While his salary remained the same from a year earlier at $1.5 million, his bonus was whittled down to $10 million, paid out in restricted stock.

Still, Mr. Dimon has accumulated much wealth in his years at the bank. He owns bank shares valued at $263 million.

Ben Protess contributed reporting.

Article source: http://dealbook.nytimes.com/2013/01/16/morgans-board-uses-a-pay-cut-as-a-message/?partner=rss&emc=rss

Business Briefing | Company News: Exxon and Salazar in Settlement on Offshore Leases

Opinion »

Editorial: Waiting for Recovery

Without government support, even modest job gains cannot be sustained.

Article source: http://feeds.nytimes.com/click.phdo?i=866a02aa9d6792fdc3407ff27e0b3617

Square Feet | The 30-Minute Interview: Mark Varian

The company was founded in 1886.

Interview conducted and condensed by Vivian Marino

Q John Gallin Son started 125 years ago this year. How are you celebrating the anniversary?

A It’s a great milestone. This firm has made it through several wars, the Great Depression, the great recession — you name it.

We’ve been having small gatherings with special clients. For our 120th year we did a rather big splash, but we didn’t feel that the atmosphere out there was one that would really benefit from another event. It’s been tough for the construction industry.

Q Has business picked up at all?

A We had a rough year last year. This year is considerably better — our fiscal year ends this month.

Q How many projects are you working on?

A We’re probably handling 30 to 35 projects. We do everything from the $1,000 job to multimillion-dollar jobs. The size of the job this year has definitely increased.

Q Who are some of your current clients?

A Well, we do ongoing work with Wells Fargo here in New York, on their corporate side. We’re still doing work for Ann Taylor — who over the years is probably our biggest client — at the corporate headquarters at 7 Times Square. We just did a 200,000-square-foot demolition for Mitsui Fudosan at 1251 Avenue of the Americas, the Exxon Building.

Q Is most of your work in New York City?

A Most of our work is on Manhattan Island. We prefer to walk to our jobs.

Q Are you still doing many office prebuilts ?

A We’re continuing to do a lot of prebuilts. That used to be a trend that would only happen in a down real estate market, but it seems to be continuing, and they’re higher-end. Most of the major building owners in the city are spending good money and putting in great materials.

Q Are there any trends in building materials and designs?

A As the market improves, we start to see more use of stone floors or woodwork, and a lot of glass and metal — the expensive elements of interior construction. They want that look, and they want that sustainability, and if they’re going to be there for 10 years they want it to last.

The next generation coming in doesn’t want the old-fashioned office; they want the open space. We’re also doing a lot of window wall installations.

Q Why has the company focused on interiors?

A Ninety-five percent of our work is interior. We usually work directly for a tenant, or we’ll work for the building owner.

After World War II, when suddenly office space had to be created for the returning G.I.’s, major companies built out office after office knowing they had to put these guys back to work. And it was at the same time that air-conditioning was introduced. So all the old building stock had to be upgraded.

Q How many family members are working at the firm?

A At the moment, eight. There are four principals, which are three brothers and myself; and we have a project manager; a couple of administrative folks; and the woman who operates our plan desk. We’re fourth- and fifth-generation.

Q The company has always been headed by a family member; your mom was a Gallin. Is there someone waiting in the wings to take over after you retire?

A Everybody’s a half Gallin in the Gallin family, even though they have the name.

We haven’t decided who would take over. The other principals are considerably younger; it will be their determination.

Q Have you had to deal with any family clashes in the business?

A Certainly, and they probably do bite a little deeper than a typical professional conflict, but they’re few and far between.

People always ask, why work in a family business? Well, we’re never really able to choose exactly who we’re going to work for or with, or have work for you. But when it’s a family member and blood is involved, and there’s a certain commitment and understanding of a culture, it just makes it a lot more enriching.

Q You didn’t start out in the construction business — you were actually trained as a Shakespearean actor.

A I spent 10 years in the theater, all in regional theater.

Q Why did you leave it?

A I needed money.

Article source: http://feeds.nytimes.com/click.phdo?i=827b68eeaf81fa617fecc67543b003e5

Dow Edges Up After Positive Sign on Jobs

A strong report on jobs sent Wall Street slightly higher on Thursday even as the stalemate continued in Washington over the debt ceiling.

The government reported that first-time applications for state unemployment benefits fell to the lowest level in four months, a sign that employers were laying off fewer workers. The Labor Department said applications fell to a seasonally adjusted 398,000.

The positive news on jobs sent the Dow Jones industrial average up 21.80 points, or 0.18 percent, to 12,324.35, after a 198-point decline on Wednesday. The Standard Poor’s 500-stock index rose 1.48 points, or 0.11 percent, to 1,306.37. The Nasdaq, which lost 2.7 percent on Wednesday, gained 0.83 point, to 2,765.62.

Stocks have been falling since Friday as an Aug. 2 deadline approaches for raising the borrowing limit for the United States government.

On Thursday, House Republicans prepared a vote on a new plan to avoid a debt default. That legislation faced steep opposition from Senate Democrats, and the White House has threatened to veto the proposal.

With the deadline for a deal just five days away, investors are becoming more fearful that the government may lose its triple-A credit rating. That would raise interest rates and slow down an economy that is still recovering from the worst recession in decades.

After the Dow’s sharp fall Wednesday, its biggest one-day drop since early June, it was on track for its worst weekly decline since August 2010. The Dow was also about 4 percent below the 2011 high it reached on April 29.

Earnings results have been a relative bright spot. DuPont rose in premarket trading after the company said second-quarter earnings had increased 5 percent on higher revenue. The company also raised its earnings outlook for the year.

But Exxon Mobil, the largest publicly traded oil company, declined after as earnings fell below analysts’ estimates.

Bond prices rose, pushing yields lower. The yield on the 10-year Treasury note fell to 2.95 percent from 2.97 percent late on Wednesday.

Article source: http://feeds.nytimes.com/click.phdo?i=7ba07b896d3d3be61df8e2e68585c482