Oil company chiefs defend profits at Senate hearing…Appeals court asking prosecutors and defendants whether Arthur Andersen should be retried…Retailers start holiday promotions and hire seasonal help earlier than usual…
The chiefs of five major oil companies today defended the industry’s huge profits before a U.S. Senate hearing. They stressed that petroleum earnings “go up and down” from year to year. ExxonMobil Chairman and CEO Lee Raymond warned against punitive measures, like a windfall profits tax. Raymond said he recognizes that high gasoline prices have put a strain on Americans’ household budgets, but he says profits are in line with other industries when compared to the industry’s enormous revenues. Exxon Mobil is the world’s largest privately owned oil company, earning nearly $10 billion in the third quarter. Raymond was joined at the witness table by the chief executives of Chevron, ConocoPhillips, BP America and Shell Oil USA. ConocoPhillips Chairman James Mulva says he is “ready to open our records” to dispute allegations of price gouging.
The Houston-based company earned $3.8 billion in the third quarter–an 80 percent increase over a year earlier–but he says that represents only a 7.7 percent profit margin. John Hofmeister with Shell Oil USA went over his company’s figures.
But Senators said people are hurting from high energy costs and suspect price gouging. Senate Energy Committee Chairman Pete Domenici bluntly asked ”are you rigging the prices?” Senator Barbara Boxer, meanwhile, highlighted the executives’ multi-million dollar bonuses. She told executives their ”sacrifice appears to be nothing,” while working Americans ”struggle” to pay for gas and winter heating bills.
An appeals court is seeking input on whether former big five accounting firm Arthur Andersen should be retried in an Enron case. The U.S. Supreme Court in June overturned the company’s 2002 conviction for destroying Enron-related documents. Enron filed for bankruptcy protection after its stock collapsed in 2001. The Fifth U.S. Circuit Court of Appeals wants prosecutors and Andersen’s lawyers to submit arguments on whether the case should return to a judge in Houston for retrial–or acquittal. Andersen plans to seek acquittal. Prosecutors must respond in January. Andersen was convicted in mid-2002 of destroying Enron-related audit documents to thwart investigators before the scandal-choked energy company crashed. The high court this year overturned the conviction–saying the jury instructions were vague.
A review committee recommends paying professionals who performed work for Enron during the company’s bankruptcy period more than $689 million. The suggestions yesterday by the Enron Fee Committee are advisory. Final approval must come from U.S. Bankruptcy Judge Arthur Gonzalez in New York–possibly at a December hearing. The money would pay for work done by accountants, lawyers, economic specialists and others from December 2001 to July 2004. It covers investment advice, regular company business such as legal work on contracts and real estate transactions. It also includes attorney representation of Enron employees called to testify in Congress. Experts say Enron’s bankruptcy was among the most complex, but not the biggest in U.S. history.
Retailers have been starting their holiday promotions sooner than ever, and many have been hiring seasonal help earlier, according to the Houston Chronicle. The Web site snagajob.com says one large craft store chain hosted its job fair three weeks earlier than usual and a large department store chain began looking for seasonal clerks and stockers in September. The Target on San Felipe started interviewing job applicants in September, 30 days earlier than usual. Best Buy began hiring in September to have most seasonal employees on hand by early November. National retail consulting and investment banking firm Davidowitz & Associates says retailers planned their early start four to five months ago, after watching Wal-Mart stumble last Christmas by not offering enough promotions or bargains.
Halliburton is receiving praise from Army Secretary Francis Harvey, after his visits with troops in Iraq, Afghanistan and Kuwait. Harvey says the company’s competency is exemplified by the award fees, as well as by the remarks of soldiers who like Halliburton’s food services. The company’s KBR unit operates dining facilities, laundry and transport of war supplies. The Army has placed $12.3 billion in orders through October, and paid the company $10.3 billion.
Houston Exploration will focus its operations on all-onshore natural gas production after profits took a hit from Hurricanes Katrina and Rita. CEO William Hargett says officials are transforming Houston Exploration into an onshore business with a longer reserve life. He says that means a stable and more predictable production profile with an ample drilling inventory for future growth. Katrina swamped New Orleans and other Gulf points in late August. Rita made landfall September 24th in Southeast Texas. Houston Exploration recently announced its third quarter report. Earnings had fallen 80 percent from the same period in 2004–to $8.1 million. Operations in the Gulf of Mexico accounted for 40 percent of the company’s production.
Increased exploration and soaring energy prices have raised demand for rigs, according to Houston-based offshore oil and natural gas drilling company Transocean. Transocean says its third-quarter net income gained ten percent to $170.4 million from $154.9 million a year earlier. Revenue rose 17 percent to $762.6 million from $651.8 million. Houston-based drilling contractor Pride International reports third quarter net earnings and income of $68.2 million on revenue of $538.8 million, compared to a net loss of $18.2 million on revenue of $436.4 million in the year-ago period. And Swift Energy reports record-high revenue, despite decreased production in the wake of the hurricanes. The Houston-based company posted $27.5 million in net income–a 95 percent increase over the $14.1 million posted this time last year.
Third-quarter results for Landry’s Restaurants narrowly missed Wall Street expectations–despite sales losses from Hurricanes Katrina and Rita. Houston-based Landry’s operates Joe’s Crab Shack, Chart House and the Saltgrass Steak House chains. Katrina made landfall in late August and slammed parts of the Gulf. Rita came ashore September 24th near Sabine Pass. For the quarter that ended September 30th, Landry’s reported net income of $16 million. That’s down from year-ago earnings of $20.8 million. Landry’s reports Katrina and Rita resulted in lost sales of up to $5.6 million. Fifty-eight Landry’s-affiliated restaurants were temporarily closed by the storms.
Fort Bend County-based Leaman Building Materials is selling its Home Lumber division to San Francisco-based Building Materials Holding subsidiary BMC West. BMC West owns a millwork operation in the Houston market serving professional contractors and builders. Home Lumber provides building materials and millwork from its three Houston locations. Leaman Building Materials also operates Allied Concrete, Branch Concrete Pumping and Leaman Management divisions.
IT security software firm BindView Development is holding a shareholders meeting on December 8th for voting on its previously-announced merger with Symantec. The meeting will be at BindView’s corporate officers on San Felipe. In early October, California-based software maker Symantec announced plans to buy BindView for $209 million.
A cost-cutting restructuring at Pepsico’s Frito-Lay snack foods division will cost as many as 250 people their jobs. Frito-Lay says the cuts will be made mostly in its Plano headquarters and other U.S. offices and that the affected staffers will be notified early next month. Pepsico’s chairman says the belt-tightening is an effort to deal with continued cost pressures next year. Some of those costs, worsened by recent hurricanes, include higher prices for fuel for trucks delivering goods and packaging–such as plastic bottles–made with petroleum by-products.
The La Quinta hotel chain today announced it’s agreed to be acquired by Equity Firm Blackstone Group. The deal is worth about $2.8 billion in cash. Irving-based La Quinta operates or franchises 600 hotels under the La Quinta, Baymont and Woodfield brand names. As part of the deal, Blackstone will assume La Quinta’s $810 million in debt and 212 million of cash. La Quinta’s directors unanimously approved the transaction and have recommended shareholders accept the offer. The acquisition is slated to close in the first quarter.
Gilley’s Rodeo Arena is being torn down this week in Pasadena. The 13-and-a-half acre site is being cleared to make way for a middle school, after the land was acquired through a tax default. The structure is being torn down by Kingwood-based Inland Environment. The company’s owner is keeping a Gilley’s sign, but other signs and bull gates bearing the club’s name will be sold online.