Sector falls with crude prices, broad market.
Weaker crude oil prices, a 100-point early drop in the broad stock market and a mixed bag of earnings reports sent energy stocks skidding lower Tuesday.
Early trades saw the Amex Oil Index (XOI : 1,442.04, -33.12, -2.2% ) fall 1.9% to 1,447 points. The Amex Natural Gas Index (XNG : 512.46, -11.15, -2.1% ) pounded Monday by sharply lower gas prices, dropped another 2.3% to 512 points, and the Philadelphia Oil Service ($OSX : 283.05, -2.28, -0.8% ) dropped 1.3% to 282.
Crude for September delivery fell $1.42 to $73.47 a barrel in New York, extending Monday's retreat as the market continues to weigh OPEC comments that its members are considering raising output levels to take some of the upward pressure off oil prices. Views that the summer gasoline season has peaked and that supplies are likely to swing higher also weighed on prices.
Occidental Petroleum (OXY : 60.16, -1.21, -2.0% ) reported a strong second quarter, with its $1.68 per-share profit beating the $1.10 expected by Wall Street. The results got a 50-cent per-share boost from asset sales. Occidental said sales for the quarter slipped 1.3% to $4.41 billion. Nevertheless, that was more than the $3.84 billion analysts had been looking for.
Occidental shares were off 1.9% at $60.23. Other big movers in the oil group included Sunoco Inc. (SUN : 72.40, -3.13, -4.1% ) , which was leading percentage decliners on a 4.5% slide to $72.14. Valero Energy Corp. (VLO : 70.62, -2.03, -2.8% ) was also off, dropping 2.8% to $70.61 a share.
Meanwhile, oil field service companies Smith International (SII : 61.99, -2.70, -4.2% ) and BJ Services Co. (BJS :27.36, -0.96, -3.4% ) posted quarterly results that were more-or-less in line with expectations. Smith International said second-quarter profit rose nearly 29% to $153.1 million, or 76 cents a share, from $118.8 million, or 59 cents, a year earlier. Revenue was up nearly 22% at $2.11 billion. The per-share results and revenue numbers matched estimates by analysts polled by Thomson Financial.
BJ Services reported fiscal third-quarter net income fell 21% to $168.3 million, or 57 cents a share, from $212.9 million, or 67 cents, a year ago. Sales rose 35% to $1.15 billion. Analysts had expected earnings of 56 cents a share.
BJ Services said that a general slowdown in Canadian operations had pressured earnings in the quarter, a problem many companies of the industry's oil field service companies are facing. The spring thaw was slower than normal, hampering drilling operations in remote areas. But U.S. and overseas operations remained solid, prompting the company to forecast overall earnings growth in its fiscal fourth quarter of 60 cents to 62 cents a share.
Shares of BJ Services were last trading 1.1% lower at $27.92 while Smith International was down 4.1% at $62.01, making it the biggest decliner in the oil service group.
by Jim Jelter
by Jim Jelter