Exxon Mobil records another near-record profit…Joint venture plans Houston biodiesel plant…Riviana Foods purchases Minute Rice brand from Kraft Foods Global…
Sky-high oil prices are helping Exxon Mobil to post another near-record profit. Exxon Mobil says it earned more than $10.3 billion in the second quarter. That’s the second-largest quarterly profit ever posted by a publicly traded U.S. company. The news comes as many drivers in the U.S. are paying $3 a gallon for gasoline, increasing the possibility of further backlash in Washington. The company isn’t alone. Royal Dutch Shell today said its second-quarter earnings jumped 40 percent to more than $7 billion, as oil prices offset production difficulties in Nigeria and the Gulf of Mexico. Exxon Mobil fared even better with the numbers covering the fourth quarter of last year, when it notched the record of $10.7 billion in earnings. Revenues for the quarter came to $99 billion.
A joint venture is creating biodiesel plants in Houston and New Orleans, according to the Houston Chronicle, producing biodiesel from soy or palm oil. Riverstone Holdings, The Carlyle Group and Houston-based Green Earth Fuels plan two facilities, with construction to begin later this year. Construction on one plant, near the Ship Channel, could begin as early as this month. Both facilities are expected to create 14 jobs at each location, with 50 to 150 people needed to construct the plants. Chevron announced in May that it was buying a 22 percent stake in Galveston Bay Biodiesel, which is building a plant on the island’s north side. And Nova Biofuels Oklahoma, a subsidiary of Houston-based Nova Energy Holding, has reached an agreement with ConAgra Trade Group to supply feedstock for its first biodiesel plant.
U.S. District Judge Melinda Harmon has given final approval to a $37.5 million settlement between former Enron employees and Northern Trust. That brings to $264.3 million collected on behalf of former employees who had 401(k) plans with company stock. The judge this week also approved about $23 million in legal fees and $874,902 in legal expenses, to be subtracted from the award. Northern Trust was the trustee of Enron employees’ 401(k) plan in 2001 when the company went into bankruptcy. Attorneys previously settled with former Enron officers and directors for $85 million and sold a settlement claim from Enron in bankruptcy court for $135 million. The only remaining defendants in the case are former CEO Jeff Skilling and the late Chairman Ken Lay.
Creditors of Yukos rejected its proposed recovery plan this week, clearing the last significant obstacle to the oil company’s liquidation. The bankruptcy supervisor said Yukos cannot pay its debts in the time allotted by law. Forcing the company into liquidation would be the last act in years of legal proceedings against Yukos that have saddled it with billions of dollars in back taxes, forced the sell off of its major production unit and brought about the jailing of founder Mikhail Khodorkovsky.
Some big airports last year narrowly avoided jet-fuel shortages last summer. In Baltimore, Dallas-based Southwest Airlines is spending upward of $30 million to build a new terminal, three storage tanks and a hydrant pumping system. Southwest Vice President Rob Murbin says the carrier and a few others are taking matters into their own hands. Murbin says it’s been hard to get oil companies interested in investing in infrastructure. Starting next month, a consortium of airlines operating out of San Francisco’s airport will lease 230.000 barrels of nearby storage from Shell Oil. Houston-based Kinder Morgan Energy Partners is spending $25 million to boost capacity of a 550-mile pipeline between Los Angeles and Las Vegas. The company recently completed a $210 million expansion of a pipeline that carries fuel from El Paso to Arizona.
The parent company of Houston-based Riviana Foods is purchasing the Minute Rice brand and assets from Kraft Foods Global for $280 million. Minute Rice is marketed in White Rice, Brown Rice, Boil-in-Bag and Premium Rice, with its principal brands Mahatma, Carolina and Success. Riviana processes, markets and distributes rice products in the United States. Madrid, Spain-based Ebro Puleva acquired Riviana in 2004 in a $380 million deal.
The government says new home sales were slowing last month. In further signs that the housing market is contracting, the supply of unsold new homes surged to a record high and prices were falling. The Commerce Department says June new home sales stood at a seasonally adjusted annual rate of 1.13 million units. New-home sales were down in all regions except for the west, which saw an eight percent increase. By contrast, sales were down more than 11 percent in the northeast. The median price of a new home stood at $321,000 in June. That means half were cheaper and half were more expensive. That’s up more than two percent from a year ago, and down one and a-half percent from May. Economist Michael Carliner with the National Association of Home Builders says the report is in keeping with expectations of an orderly cool-down in the housing market. He says the declines would become more pronounced if mortgage rates were to rise sharply. Carliner expects, instead, that mortgage rates should not change much in the coming months.
Mortgage rates dipped a bit this week on indications that economic growth is moderating. Freddie Mac says the 30-year fixed-rate mortgage averaged 6.72 percent, compared with 6.8 percent last week. The average for 15-year mortgages, which are popular for refinancing, dropped to 6.34 percent from 6.41 percent. A Freddie Mac chief economist says that in addition to signs of economic growth moderation, rates were influenced this week by the perception that inflation remains under control and speculation that the Fed may pause raising rates.
The Texas Employee Confidence Index reached a record high of 60.7 in June–up 2.3 percentage points from May and up 1.5 points from June 2005. The Texas Employment Report is a monthly survey conducted by Harris Interactive, showing that 28 percent of workers believe more jobs are available, with 81 percent believing it’s unlikely their jobs will be eliminated in the next year. Only 33 percent of workers plan to look for a new job in the next year. The index is compiled by Compass Bank and its university partners.
New numbers suggest the economy is hanging in there, despite the headwinds of high energy prices and rising interest rates. The Commerce Department says orders to U.S. factories for big-ticket manufactured goods surged in June at the fastest pace in three months. The 3.1-percent increase in durable goods was led by a rebound in demand for commercial aircraft. The volatile aircraft category had seen declines in the previous two months. It is a better-than-expected showing. In another report, the Labor Department says the number of Americans filing first-time claims for unemployment benefits fell by 7,000 last week. That puts the total at a seasonally-adjusted 298,000–a number generally indicating a firm job market.
President Bush’s top trade negotiator says she’s working on a way to revive global trade talks that collapsed over the weekend. Just don’t expect those talks to resume quickly. U.S. Trade Representative Susan Schwab says talks among the 149-nation world trade organization are in serious trouble, but she’s not giving up hope. The latest round of negotiations appears split over the unwillingness of the Bush administration to curb domestic farm subsidies, while the U.S. is pushing the EU to trim tariffs imposed on imports of farm goods. Schwab plans to push for restarting the talks at upcoming meetings of trade ministers in Asia, and also at a meeting Bush is expected to attend in November in Vietnam with Pacific Rim countries.
Texas has become the top producer of wind energy, according to the American Wind Energy Association, overtaking California. The state’s wind power capacity now stands at 2,370 megawatts–enough to power more than 600,000 average American homes. Overall, U.S. developers brought 822 megawatts on line in the first half of the year, making the country’s wind power capacity surge to 9,971 megawatts.
Enterprise Products Partners has signed a long-term agreement to provide natural gas transportation and storage services to Centerpoint Energy Resources, which serves the Houston area. The Houston-based pipeline operator will provide CenterPoint Energy with up to 14 billion cubic feet per year of natural gas service beginning in April 2007. This is Enterprise’s first entry into the Houston market. Enterprise plans to enhance its Texas intrastate pipeline system through a combination of pipeline and compression projects.
Sterling Bancshares is buying Kerrville-based Bank of the Hills, pending regulatory approval. The purchase price was not disclosed, but the deal will include a mix of stock and cash. Bank of the Hills was once owned by the Lyndon Johnson family.
HEB opens its largest store in the Houston area on Monday. The 125,000-square-foot store on Fry Road is designed to combine HEB food and drug stores with the Central Market concept. It will include new departments such as a cook and grill section, a cheese shop and a tortilla maker. More than 900 varieties of fruits and vegetables will be stocked, 80 varieties of fish and seafood, 2,000 bottle of wine and expanded organic offerings.
Gap is planning two Fourth & Towne locations in the Houston area this fall, selling women’s clothing. The first outlet is expected to open next month in the Galleria, followed by a store at Market Street in The Woodlands in October.
Dallas-based Blockbuster reports it swung to a second-quarter profit. The video rental chain primarily credits a gain from discontinued operations in Spain and a favorable resolution of multiyear income tax audits. The company earned $65.6 million in the recent quarter. That’s after losing $57.2 million in the year-ago period. The recent income figure is calculated after paying preferred dividends. Excluding items, Blockbuster lost $21.4 million in the recent quarter. Revenue fell five percent to $1.32 billion due to the closure of stores and lower margin retail sales. Wall Street expected $1.35 billion in revenue.
American Electric Power says second-quarter earnings fell 21 percent. The Columbus, Ohio-based electric utility partly blames mild Spring weather that suppressed power usage in much of the company’s 11-state service area–which includes Texas. Among the Texas cities it serves are Corpus Christi, Abilene, McAllen, Harlingen, San Angelo, Vernon, Victoria and Laredo. AEP also blames the earnings decline partly on the sale of its stake in a Texas nuclear plant that had provided revenue in 2005 and unplanned outages at a number of plants to address a safety issue. AEP has more than five million customers in its 11 states. Among the Texas cities it serves are Corpus Christi, Abilene, McAllen, Harlingen, San Angelo, Vernon, Victoria and Laredo. AEP reports a profit of $175 million for the quarter ended June 30th. Revenue rose 3.5 percent to $2.9 billion for the quarter. But AEP–which is one of the nation’s largest power generators–has boosted its full-year forecast.
More people are risking their lives to steal copper. And that’s prompted TXU Electricity Delivery to hire off-duty police officers and security personnel to protect the wire at some of its substations. TXU Electricity Delivery says it will replace stolen copper with a less valuable metal, install lighting, update security systems at facilities and partner with local law enforcement to catch metal thieves. A TXU spokeswoman says that they’re increasing their security in response to an exponential increase in the number of thefts. The spokeswoman says TXU lost $63,000 last year to copper theft, not including the cost of the accompanying power outages. The price of copper has more than doubled in the past year, reaching historic highs. Thieves around the country are stealing pipes, water spouts, radiators and electrical and telephone wiring to sell to scrap metal dealers. Scrap prices for some coppers have been nearly $3 a pound.
Japan’s Agriculture Ministry has formally approved he resumption of U.S. beef imports. That’s according to a ministry official speaking on condition of anonymity. Japan re-imposed a ban on imports of U.S. beef in January-only weeks after lifting an earlier ban–after inspectors found prohibited animal parts in a veal shipment from New York. Japanese inspectors recently toured 35 American plants to find out whether they meet Japanese guidelines the degenerative nerve disease in cattle.
Two oil rig maintenance workers remain hospitalized today after being injured when a natural gas rig exploded in the Oklahoma panhandle. The rig is owned by EOG Resources of Houston and was destroyed by the fire. Guymon Fire Chief Clark Purdy says the men are in a Lubbock hospital but their injuries don’t appear to be life-threatening. Their names haven’t been released. The two were part of a crew from Eagle Well Service of Liberal, Kansas working on the rig about five miles northeast of Guymon, Oklahoma when it caught fire Tuesday afternoon.