Higher prices both in the United States and abroad doubled Texaco Inc.'s first-quarter earnings from results of last year's first three months, the company reported yesterday.
After-tax profits reached $600.6 million ($2.21 a share) in the quarter on sales of $13.2 billion. In addition, the company said, it also had an extraordinary after-tax gain of $402.3 million from the sale of its share of Belridge Oil Co. to Shell Oil Co. that pushed its total earnings past $1 billion. Sales were $13.2 billion compared with $8.4 billion in the 1979 first quarter.
Meanwhile, Standard Oil Co. of Indiana posted a $64.5 percent gain in first-quarter earnings. Texaco is the nation's third-largest oil producer, while Indiana Standard is the sixth-largest.
Indiana Standard earned $576 million ($3.91 a share) in the first quarter versus $350 million ($2.39) a year earlier. Revenues rose 47.7 percent to $6.5 billion from $4.4 billion.
John E. Swearingen, Indiana Standrd chairman, said the company's foreign petroleum operations and its worldwide chemical and mineral businesses accounted for 86 percent of the first-quarter earnings increase.
Texaco Chairman Maurice F. Granville, who announced the results at the company's annual meeting here, said "these increased earnings represent a continuation of the improvement that was demonstrated during the second half of last year.
"But I should also caution that we face uncertain conditions, and we should not assume that the rates of increase in our earnings over the past three quarters can be expected to continue," Granville said.
Net income from operations in the United States rose 86.8 percent from $137.1 million in the first three months of last year to $256.1 million this year, the company said. Foreign earnings jumped even more, up 106.5 percent from the $166.8 million to $344.5 million. Overall, the first-quarter earnings were up 97.6 percent.
As most major oil companies have been doing, Granville moved to turn aside expected criticism of the enormous increase in profits by stressing Texaco's spending on oil and gas exploration efforts. Other major oil companies are expected to report similarly large increases in earnings later this week.
"The greater availability of funds generated by our earnings has made it possible to increase our 1980 budget for capital and exploratory expenditures to $2.3 billion compared with the $1.6 billion we invested in 1979," he said. "We plan to use the major portion of these additional funds to increase exploration and production here in the United States."
Texaco President John K. McKinley said the company was in compliance with the Carter administration's voluntary price guidelines however large the earnings increase may have been.
McKinley defended the increase in profits, saying "we have $24 billion in assets. If you said the company was worth just its assets and you sold them, you could invest the money in Treasury bills and make more than we did."
The first-quarter earnings represented a 10.1 percent return on those assets, the company's report noted.
The $600.6 million profit for the first quarter would have been $72.4 million higher except for any accounting change in which the cost of periodic repairs and maintenance of tankers and refineries was put on an accrual basis. That is, instead of counting such costs as they are incurred, the company now will accumulate them in advance. A Texaco official said the change will permit "a better matching of costs and revenues."
Both Granville and McKinley praised recent actions by Saudi Arabia in the face of what the former called "unsettled conditions." Texaco is one of the four major American oil companies in partnership with the Saudis in Aramco, the Arabian American Oil. Co.
"Saudi Arabia so far has continued to produce and sell large volumes of crude oil," Granville said. "Its pricing policies have been pointed towards restraint and have aimed at dampening the more aggressive price increases of some of the other oil-producing countries.
"Thus, in the face of a very difficult political situation, we feel that Saudi Arabia has continued to act as responsibility and in the best interests of the Free World," he declared.
Recently the Saudis have threatened to cut production by one million barrels a day to 8.5 million, if the United States resumes filing its strategic petroleum reserve.