November 6, 2008 / 4:22 PM / 10 years ago

WRAPUP 2-Williams, El Paso, Petrohawk, Continental Q3 profits up

* Williams, El Paso, Spectra profits beat estimates * Williams, Continental trim capex

* Continental, Petrohawk earnings below Wall Street

* Fall in crude oil prices weighs on the stocks (Recasts; adds details, analyst comments, byline, updates share movement)

By Shradhha Sharma

BANGALORE, Nov 6 (Reuters) - Natural gas production and pipeline companies El Paso Corp EP.N and Williams Companies Inc’s (WMB.N) quarterly profits surged, but both warned the global economic crisis would hurt their outlook.

A 6 percent dip in U.S. light crude CLc1, after the Bank of England announced an unprecedented interest rate cut of 150 basis points also weighed on the stocks of these companies.

Shares of Williams fell as much as 10 percent, while El Paso stock dived nearly 18 percent.

Higher net realized average prices and strong growth in domestic natural gas production volumes helped William’s third-quarter net income jump 62 percent to $366 million. [ID:nWNAB8998]

El Paso, the only U.S. company to operate a coast-to-coast natural gas pipeline system, benefited from higher natural gas prices and a gain in the value of trading positions, which nearly tripled its net income, exceeding Wall Street expectations. [ID:nWNAB9046] [ID:nN06177631]

Higher commodity prices also helped profit surge at pipeline and energy service company Spectra Energy Corp (SE.N), whose net income rose 26 percent to $296 million, or 48 cents a share. [ID:nWNAB8903]

Independent oil and gas explorers Continental Resources Inc (CLR.N) and Petrohawk Energy Corp’s (HK.N) quarterly profits also jumped, helped by higher prices and production, but fell short of market expectations. [ID:nWNAB8856] [ID:nWNAB8863]

Shares of Spectra fell 5 percent, Continental dipped 18 percent and Petrohawk stock fell as much as 11 percent.


Quarterly profits at most energy companies have been boosted by record high oil prices, which touched a high of $147 a barrel in July and have tumbled since, but deepening fears of a demand-crushing global recession have forced many companies to trim their capital budgets and production outlook.

Williams CEO Steve Malcolm said the company was facing a much more challenging environment, with the global financial crisis and economic recession driving down energy prices.

Oklahoma-based Williams said it would cut its 2008 and 2009 capital expenditure outlook as it sees lower spending in exploration and production, due to lower energy prices, a slower economy and difficult financial markets.

The company also lowered its 2008 and 2009 consolidated segment profit outlook.

Earlier on Thursday, Williams said it might split off one or more of its businesses in an effort to raise its market value. [ID:nN06347270]

“WMB is mulling possible split-up and should have plan by early ‘09, but we see near-term difficulty on current credit and equity markets,” Standard & Poor’s oil and gas analyst Michael Kay said in a note to clients.

The analyst downgraded Williams to “hold” from “buy” and cut the price target to $20 from $25 on the stock.

On Wednesday, El Paso also cut its 2008 and 2009 capital expenditure, and expects 2009 exploration and production to be flat with 2008 volumes.

“We recognize the current capital market challenges....but we believe management may need to further reduce capex as 2009 progresses,” UBS analyst Ronald Barone said in a note to clients. Barone has a “buy” rating on El Paso’s stock.

Continental Resources also said it plans to reduce 2009 capital expenditures to minimize the need for external financing.

Petrohawk CEO Floyd Wilson said in a conference call that he hoped the credit markets would reorient themselves so that some of the company’s projects could get back underway. (Additional reporting by Matt Daily and Anna Driver in New York; Editing by Gopakumar Warrier and Deepak Kannan)

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