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Dynegy burns big hole in Chevron pocket

Los Angeles, Nov. 1: ChevronTexaco Corp. on Thursday wrote off most of its investment in troubled Dynegy Inc., resulting in a $ 904 million net loss for the third quarter.

Like other oil companies, ChevronTexaco was also hit by lower earnings in fuel refining and retailing because the slow economy dampened sales and pricing during the quarter.

The loss, which amounts to 85 cents per share, compares to net income of $ 1.27 billion, or $ 1.19 per share, in the third quarter of 2001. Revenue rose to $ 25.5 billion from $ 25.4 billion.

Wall Street found the results disappointing, pushing down ChevronTexaco’s stock price by $ 3.77, or 5.28 per cent, to $ 67.63 on the New York Stock Exchange. The San Francisco-based oil company said operating earnings for the July-September quarter fell to $ 1.2 billion, or $ 1.17 per share, from $ 1.7 billion, or $ 1.61 per share, in the same period last year.

Operating earnings do not include the write-down of ChevronTexaco’s 26.5 per cent Dynegy stake and other charges, which totalled $ 2.1 billion in the latest quarter. Operating earnings fell short of analysts’ expectations, with Thomson First Call listing a consensus estimate of $ 1.30 per share.

Separately, Exxon Mobil Corp. and Royal Dutch/Shell Group reported lower earnings on Thursday. Industry leader Exxon Mobil of Irving, Texas, said net income fell 17 per cent to $ 2.6 billion, or 39 cents per share; Royal Dutch/Shell Group, based in London and Amsterdam, also reported a 17 per cent drop in net income to $ 2.2 billion after accounting for special items.

But ChevronTexaco has its own particular headaches, analysts said, pointing to the company’s investment in Houston-based Dynegy Inc. and continuing problems combining the operations of Chevron and Texaco since the two companies merged last year. Dynegy reported a $1.8 billion third-quarter loss Wednesday, primarily due to charges from the deteriorating energy trading business, which Dynegy is exiting.

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