Refinery operations boost 4Q earnings for Exxon-Mobil and Chevron

Exxon Mobil Corp. and Chevron Corp., the largest U.S. energy producers, are boosting profits with oil refineries that some analysts and investors urged them to divest as recently as last year.

Earnings from processing crude into fuels such as gasoline and diesel more than made up for lagging returns from oil and natural gas exploration during the final three months of 2012, Exxon and Chevron reported today. Fuel refining helped propel fourth-quarter net income to a five-year high of almost $9.95 billion for Exxon and a record $7.25 billion for Chevron.

Exxon, the world's biggest refiner, and Chevron, operator of fuel plants from South Korea to Mississippi, have resisted the trend among peers such as Marathon Oil Corp. and ConocoPhillips of spinning off refineries to focus on oil drilling. The persistence is paying off: Exxon posted the second-highest annual profit in U.S. history last year, surpassed only by its own all-time high from 2008, according to data compiled by Bloomberg.

"Even though refining has long been seen by some as a drag on earnings, it has now been vindicated," said Ernie Cecilia, who helps manage $6.7 billion as chief investment officer at Bryn Mawr Trust Co. in Bryn Mawr, Pennsylvania. "We like integration."

Arjun Murti at Goldman Sachs Group Inc. was among analysts who questioned Exxon's dedication to the so-called integrated model during a presentation by Exxon Chief Executive Officer Rex Tillerson last March in New York. Tillerson defended the arrangement that joins refineries to chemical plants and oil production, saying it enables the company to capture the "highest value of each molecule."

Incremental Value

"There's no doubt in my mind that the integrated model adds incremental value to everything we do," Tillerson said during the event.

Exxon's full-year net income rose 9.3 percent to $44.88 billion, just $340 million shy of the U.S. profit record the company set in 2008 when it raked in $45.22 billion.

Chevron earned $26.2 billion in 2012, the second-highest result in company history, according to data compiled by Bloomberg. The year was 2.7 percent below Chevron's biggest-ever profit of $26.9 billion, posted in 2011, according to data compiled by Bloomberg.

Valero, Marathon

Exxon rose 1 cent to $89.98 at 12:35 p.m. in New York trading. Chevron increased 0.7 percent to $116.

Today's announcements by the giants of the U.S. energy industry capped a week in which refining companies that don't explore for crude or make chemicals disclosed outsized profits.

Valero Energy Corp., the world's biggest so-called independent refiner, on Jan. 29 posted a 20-fold increase in fourth-quarter net income as expanding supplies of crude from U.S. shale formations reduced input costs. The San Antonio-based company's shares surged 13 percent that day for the largest daily advance in 15 months.

Marathon Petroleum Corp., the Findlay, Ohio-based refiner spunoff by Marathon Oil in June 2011, reported a $755 million profit during the quarter after a $75 million loss a year earlier, according to a Jan. 30 statement.

U.S. refinery margins rose 46 percent during the October- to-December period, in part because rising production from North American shale pressured domestic oil prices. Crude futures traded in New York declined by 6.2 percent during the quarter to average $88.23 a barrel, bucking the international trend that saw the global benchmark rise 1 percent to average more than $110.

Four-fold Increase

Exxon's refineries earned $1.77 billion during the period, a four-fold increase from $425 million a year earlier. That profit growth occurred even as the Irving, Texas-based company lowered the amount of crude it processed by 7.9 percent to 4.837 million barrels a day compared to the same period of 2011.

The glowing refining result offset a 12 percent drop in Exxon's oil and gas earnings to $7.76 billion. Oil and gas output from the company's wells fell 5.2 percent to the equivalent of 4.293 million barrels of crude a day from 4.53 million a year earlier, according to today's statement.

Exxon's crude production, which is six times more valuable than gas on an energy-equivalent basis, fell 2.1 percent to 2.203 million barrels a day from 2.25 million during the year- earlier period. Chemical earnings climbed to $958 million from $543 million, according to the statement.

Chevron Results

Chevron said its refining unit returned to profit after recording a loss a year earlier. The San Ramon, California-based company's fuel plants earned $925 million during the period, compared with a $61 million loss in the fourth quarter of 2011.

Chevron processed 1.62 million barrels of crude and other feedstock a day at its plants around the world during the October-to-December period, a 3.3 percent increase from 1.57 million a year earlier, according to the statement. Processing rates at the company's U.S. refineries dropped 8 percent to 702,000 barrels a day from 763,000 a year earlier due to the lingering impact of an August fire that shut a crude unit at a California facility.

Chevron also benefited from a $1.4 billion gain attributed to a gas-field swap with Royal Dutch Shell Plc in Australia, according to a statement from the company today.

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California's population to grow 39% by 2060, report says

By Chris Megerian

January 31, 2013, 10:48 a.m.

California's population will reach nearly 52.7 million by 2060, according to a new state report. 

The projection, released by Gov. Jerry Brown's Department of Finance, said the state will cross the 50 million threshold by 2049.

The report showed 39% growth in the state's population. By comparison, if there was a state made only from the difference between the California's current population and its projected population in 2060, it would be the fifth-largest state in the nation. 

California's demographics are also in for a major shift, according to the report: For the first time since California became a state, Latinos will be a plurality in early 2014. By 2060, they will be nearly half of the state's population. 

Although the state's Asian population is also growing, it will only be a little more than 13% of the state's population, the report said.

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Beyonce to finally face media in New Orleans

NEW ORLEANS (AP) — Beyonce is expected to face the media Thursday as she previews her halftime performance at the Super Bowl. But the focus will likely be on her performance at that other big event earlier this month.

The superstar hasn't spoken publicly since it was alleged that she lip-synched her rendition of "The Star-Spangled Banner" at President Barack Obama's inauguration last week. Her critically praised performance came under scrutiny less than a day later when a representative from the U.S. Marine Band said she wasn't singing live and the band's accompanying performance was taped. Shortly after, the group backed off its initial statement and said no one could tell if she was singing live or not.

It's expected that the halftime performance will be a main focus of her afternoon press conference, even though she'd likely rather concentrate on questions about her set list for Sunday and her upcoming HBO documentary, "Life Is but a Dream." The documentary is being shown for the media just before Beyonce speaks and takes questions, as expected.

There has been plenty of speculation about Beyonce's Super Bowl performance, including reports there would be a Destiny's Child reunion with Michelle Williams and Kelly Rowland (Williams has shot down such speculation). Some are also curious about whether her husband, Jay-Z, will join her onstage, as they often do for each other's shows.

Beyonce has teased photos and video of herself preparing for the show, which will perhaps be the biggest audience of her career. Last year, Madonna's halftime performance was the most-watched Super Bowl halftime performance ever, with an average of 114 million viewers. It garnered more viewers than the game itself, which was the most-watched U.S. TV event in history.

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Follow Nekesa Mumbi Moody at http://www.twitter.com

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During Trial, New Details Emerge on DuPuy Hip

When Johnson & Johnson announced the appointment in 2011 of an executive to head the troubled orthopedics division whose badly flawed artificial hip had been recalled, the company billed the move as a fresh start.

But that same executive, it turns out, had supervised the implant’s introduction in the United States and had been told by a top company consultant three years before the device was recalled that it was faulty.

In addition, the executive also held a senior marketing position at a time when Johnson & Johnson decided not to tell officials outside the United States that American regulators had refused to allow sale of a version of the artificial hip in this country.

The details about the involvement of the executive, Andrew Ekdahl, with the all-metal hip implant emerged Wednesday in Los Angeles Superior Court during the trial of a patient lawsuit against the DePuy Orthopaedics division of Johnson & Johnson. More than 10,000 lawsuits have been filed against DePuy in connection with the device — the Articular Surface Replacement, or A.S.R. — and the Los Angeles case is the first to go to trial.

The information about the depth of Mr. Ekdahl’s involvement with the implant may raise questions about DePuy’s ability to put the A.S.R. episode behind it.

Asked in an e-mail why the company had promoted Mr. Ekdahl, a DePuy spokeswoman, Lorie Gawreluk, said the company “seeks the most accomplished and competent people for the job.”

On Wednesday, portions of Mr. Ekdahl’s videotaped testimony were shown to jurors in the Los Angeles case. Other top DePuy marketing executives who played roles in the A.S.R. development are expected to testify in coming days. Mr. Ekdahl, when pressed in the taped questioning on whether DePuy had recalled the A.S.R. because it was unsafe, repeatedly responded that the company had recalled it “because it did not meet the clinical standards we wanted in the marketplace.”

Before the device’s recall in mid-2010, Mr. Ekdahl and those executives all publicly asserted that the device was performing extremely well. But internal documents that have become public as a result of litigation conflict with such statements.

In late 2008, for example, a surgeon who served as one of DePuy’s top consultants told Mr. Ekdahl and two other DePuy marketing officials that he was concerned about the cup component of the A.S.R. and believed it should be “redesigned.” At the time, DePuy was aggressively promoting the device in the United States as a breakthrough and it was being implanted into thousands of patients.

“My thoughts would be that DePuy should at least de-emphasize the A.S.R. cup while the clinical results are studied,” that consultant, Dr. William Griffin, wrote.

A spokesman for Dr. Griffin said he was not available for comment.

The A.S.R., whose cup and ball components were both made of metal, was first sold by DePuy in 2003 outside the United States for use in an alternative hip replacement procedure called resurfacing. Two years later, DePuy started selling another version of the A.S.R. for use here in standard hip replacement that used the same cup component as the resurfacing device. Only the standard A.S.R. was sold in the United States; both versions were sold outside the country.

Before the device recall in mid-2010, about 93,000 patients worldwide received an A.S.R., about a third of them in this country. Internal DePuy projections estimate that it will fail in 40 percent of those patients within five years; a rate eight times higher than for many other hip devices.

Mr. Ekdahl testified via tape Wednesday that he had been placed in charge of the 2005 introduction of the standard version of the A.S.R. in this country. Within three years, he and other DePuy executives were receiving reports that the device was failing prematurely at higher than expected rates, apparently because of problems related to the cup’s design, documents disclosed during the trial indicate.

Along with other DePuy executives, he also participated in a meeting that resulted in a proposal to redesign the A.S.R. cup. But that plan was dropped, apparently because sales of the implant had not justified the expense, DePuy documents indicate.

In the face of growing complaints from surgeons about the A.S.R., DePuy officials maintained that the problems were related to how surgeons were implanting the cup, not from any design flaw. But in early 2009, a DePuy executive wrote to Mr. Ekdahl and other marketing officials that the early failures of the A.S.R. resurfacing device and the A.S.R. traditional implant, known as the XL, were most likely design-related.

“The issue seen with A.S.R. and XL today, over five years post-launch, are most likely linked to the inherent design of the product and that is something we should recognize,” that executive, Raphael Pascaud wrote in March 2009.

Last year, The New York Times reported that DePuy executives decided in 2009 to phase out the A.S.R. and sell existing inventories weeks after the Food and Drug Administration asked the company for more safety data about the implant.

The F.D.A. also told the company at that time that it was rejecting its efforts to sell the resurfacing version of the device in the United States because of concerns about “high concentration of metal ions” in the blood of patients who received it.

DePuy never disclosed the F.D.A. ruling to regulators in other countries where it was still marketing the resurfacing version of the implant.

During a part of that period, Mr. Ekdahl was overseeing sales in Europe and other regions for DePuy. When The Times article appeared last year, he issued a statement, saying that any implication that the F.D.A. had determined there were safety issues with the A.S.R. was “simply untrue.” “This was purely a business decision,” Mr. Ekdahl stated at that time.

This article has been revised to reflect the following correction:

Correction: January 30, 2013

The headline on an earlier version of this article described the start of the DePuy trial incorrectly. It began last week, not Wednesday. The error was repeated in an earlier summary.

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Twitter says it's working to fix problem with accessing the site

If you're having trouble tweeting Thursday, you aren't alone.

Twitter has been either inaccessible, slow or not performing properly for some users Thursday morning.

The San Francisco-based social network acknowledged the problems around 7:30 a.m. PST, saying, "Some users may be experiencing issues accessing Twitter."

10 tech companies to watch in 2013

The company's Status website also said that the company's engineers were working to resolve the problem.

[Updated 10:45 a.m. PST Jan. 31: Twitter says it has resolved the issues that affected its Web and mobile users from 7 a.m. to 9:50 a.m. PST.

"We apologize to users who were affected by this, and we’re working to ensure that similar issues do not occur," the company said.]

Users of the popular network took to Facebook to ask others about Twitter's problems and mocked the site when it began to work properly for some of them.

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Retired barber charged in fatal shooting of Newport Beach doctor

By Nicole Santa Cruz

January 30, 2013, 10:43 a.m.

Prosecutors have filed charges against a 75-year-old man who is accused of murdering his urologist during an appointment in Newport Beach.

Stanwood Fred Elkus of Lake Elsinore has been charged with one felony count of special circumstances murder by lying in wait and a sentencing enhancement for the personal use of a firearm causing death, according to the Orange County district attorney’s office.

Prosecutors say Elkus, a retired barber, arrived for an appointment at his doctor’s office Monday afternoon and waited in an exam room until Ronald Gilbert entered.

Elkus is accused of shooting Gilbert several times in the upper body, according to prosecutors and police.

Other doctors heard the shots and attempted to revive Gilbert, prosecutors said. Elkus gave his gun to a staff member in the office and was arrested without incident, they said.

Elkus, who is being held at the Orange County jail on no bail, was expected in court Wednesday.

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The Z10 is a good first step, but BlackBerry still has to fix its app problem

BlackBerry, a.k.a., the Company Formerly Known as RIM, made good with its first two BlackBerry 10 smartphones on Wednesday. While the new devices are far from perfect, they will at the very least make long-suffering BlackBerry fans very happy and should provide a needed boost to a company in desperate need of growth. That said, BlackBerry still has a major problem that it will have to fix if it ever hopes to lure Android and iOS users away from their devices — it needs to improve the quality of apps that are available on its platform.

[More from BGR: BlackBerry Z10 review]

BlackBerry has done its best to spin its app situation as a positive, touting the roughly 70,000 apps that will be available for BlackBerry 10 at its launch. This number sounds impressive until you realize that the vast majority of these apps are ported from Android or from the BlackBerry Playbook. Even worse for the company, earlier reviews have indicated that many of these apps don’t at all function well, especially since a good portion of them were ported over from Android 2.3 Gingerbread or earlier.

[More from BGR: BlackBerry Q10 preview]

This is obviously not a sustainable situation for BlackBerry in the long term, and to the company’s credit it did announce some very important apps that are being developed directly for the BlackBerry 10 platform, including Skype, WhatsApp and the Angry Birds franchise. But there is a glaring absence that should give pause to anyone feeling optimistic about the platform’s ability to attract top developers in the future: Instagram.

Yes, Instagram is just one app, but it’s also one of the most popular in the world and it’s owned by Facebook (FB), the social networking giant that BlackBerry supposedly has a close partnership with. If BlackBerry can’t convince one of its close partners to develop an app that’s ready in time for its big platform launch, then it really calls into question how much clout the company will have with smaller developers that may not have the resources to build for more than two platforms.

And BlackBerry’s ability to attract the smaller developers is crucial to its future success because we’ve all seen mobile apps that come out of nowhere on iOS and Android and suddenly take the world by storm. If BlackBerry is constantly rushing around trying to get upstart app developers to make native BlackBerry 10 apps months after those developers have hit it big on other platforms, it will put the company at a perpetual disadvantage. This is a problem that BlackBerry desperately needs to fix by the time its next smartphones roll out.

This article was originally published on BGR.com

Gadgets News Headlines – Yahoo! News

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'Entourage' crew to make leap to big-screen

LOS ANGELES (AP) — Vincent Chase and his entourage are jumping from the small screen to the big-screen.

Warner Bros. confirmed Wednesday that a film version of HBO's hit series "Entourage" is in the works.

Series creator Doug Ellin is writing and directing the film, which does not yet have a production start date or release date. The studio also has not finalized the cast.

"Entourage" ran for eight seasons and followed the Hollywood exploits of hot young actor Vince (Adrian Grenier) and his inner circle, including Kevin Connolly as his manager, Kevin Dillon as his half brother, Jerry Ferrara as an old neighborhood friend and Jeremy Piven as his slick super-agent.

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The Consumer: The Drug-Dose Gender Gap

Most sleeping pills are designed to knock you out for eight hours. When the Food and Drug Administration was evaluating a new short-acting pill for people to take when they wake up in the middle of the night, agency scientists wanted to know how much of the drug would still be in users’ systems come morning.

Blood tests uncovered a gender gap: Men metabolized the drug, Intermezzo, faster than women. Ultimately the F.D.A. approved a 3.5 milligram pill for men, and a 1.75 milligram pill for women.

The active ingredient in Intermezzo, zolpidem, is used in many other sleeping aids, including Ambien. But it wasn’t until earlier this month that the F.D.A. reduced doses of Ambien for women by half.

Sleeping pills are hardly the only medications that may have unexpected, even dangerous, effects in women. Studies have shown that women respond differently than men to many drugs, from aspirin to anesthesia. Researchers are only beginning to understand the scope of the issue, but many believe that as a result, women experience a disproportionate share of adverse, often more severe, side effects.

“This is not just about Ambien — that’s just the tip of the iceberg,” said Dr. Janine Clayton, director for the Office of Research on Women’s Health at the National Institutes of Health. “There are a lot of sex differences for a lot of drugs, some of which are well known and some that are not well recognized.”

Until 1993, women of childbearing age were routinely excluded from trials of new drugs. When the F.D.A. lifted the ban that year, agency researchers noted that because landmark studies on aspirin in heart disease and stroke had not included women, the scientific community was left “with doubts about whether aspirin was, in fact, effective in women for these indications.”

Because so many drugs were tested mostly or exclusively in men, scientists may know little of their effects on women until they reach the market. A Government Accountability Office study found that 8 of 10 drugs removed from the market from 1997 through 2000 posed greater health risks to women.

For example, Seldane, an antihistamine, and the gastrointestinal drug Propulsid both triggered a potentially fatal heart arrhythmia more often in women than in men. Many drugs still on the market cause this arrhythmia more often in women, including antibiotics, antipsychotics, anti-malarial drugs and cholesterol-lowering drugs, Dr. Clayton said. Women also tend to use more medications than men.

The sex differences cut both ways. Some drugs, like the high blood pressure drug Verapamil and the antibiotic erythromycin, appear to be more effective in women. On the other hand, women tend to wake up from anesthesia faster than men and are more likely to experience side effects from anesthetic drugs, according to the Society for Women’s Health Research.

Women also react differently to alcohol, tobacco and cocaine, studies have found.

It’s not just because women tend to be smaller than men. Women metabolize drugs differently because they have a higher percentage of body fat and experience hormonal fluctuations and the monthly menstrual cycle. “Some drugs are more water-based and like to hang out in the blood, and some like to hang out in the fat tissue,” said Wesley Lindsey, assistant professor of pharmacy practice at Auburn University, who is a co-author of a paper on sex-based differences in drug activity.

“If the drug is lipophilic” — attracted to fat cells — “it will move into those tissues and hang around for longer,” Dr. Lindsey added. “The body won’t clear it as quickly, and you’ll see effects longer.”

There are also sex differences in liver metabolism, kidney function and certain gastric enzymes. Oral contraceptives, menopause and post-menopausal hormone treatment further complicate the picture. Some studies suggest, for example, that when estrogen levels are low, women may need higher doses of drugs called angiotensin receptor blockers to lower blood pressure, because they have higher levels of proteins that cause the blood vessels to constrict, said Kathryn Sandberg, director of the Center for the Study of Sex Differences in Health, Aging and Disease at Georgetown.

Many researchers say data on these sex differences must be gathered at the very beginning of a drug’s development — even before trials on human subjects begin.

“The path to a new drug starts with the basic science — you study an animal model of the disease, and that’s where you discover a drug target,” Dr. Sandberg said. “But 90 percent of researchers are still studying male animal models of the disease.”

There have been improvements. In an interview, Dr. Robert Temple, with the Center for Drug Evaluation and Research at the F.D.A., said the agency’s new guidelines in 1993 called for studies of sex differences at the earliest stages of drug development, as well as for analysis of clinical trial data by sex.

He said early research on an irritable bowel syndrome drug, alosetron (Lotronex), suggested it would not be effective in men. As a result, only women were included in clinical trials, and it was approved only for women. (Its use is restricted now because of serious side effects.)

But some scientists say drug metabolism studies with only 10 or 15 subjects are too small to pick up sex differences. Even though more women participate in clinical trials than in the past, they are still underrepresented in trials for heart and kidney disease, according to one recent analysis, and even in cancer trials.

“The big problem is we’re not quite sure how much difference this makes,” Dr. Lindsey said. “We just don’t have a good handle on it.”

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Readers may submit comments or questions for The Consumer by e-mail to consumer@nytimes.com.

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Federal Reserve holds steady on interest rates and stimulus effort

By Jim Puzzanghera

January 30, 2013, 11:54 a.m.

WASHINGTON -- With economic growth slowing in recent months, the Federal Reserve said Thursday it would keep short-term interest rates near zero and continue its latest bond-buying stimulus program.

Following a two-day meeting, Fed policymakers said recent information "suggests that growth in economic activity paused in recent months, in large part because of weather-related disruptions and other transitory factors."

Those disruptions included the Midwest drought and Superstorm Sandy.

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Photo: Federal Reserve Chairman Ben S. Bernanke

The statement from the Federal Open Market Committee, the central bank's policymaking arm, came after the Commerce Department unexpectedly reported the economy contracted at a 0.1% annual rate in the fourth quarter of last year.

It was the first time the economy shrank since the end of the great recession in 2009.

But most economists said the slowdown was an anomaly caused in part because of concerns about the fiscal cliff. They predicted the economy would grow about 2% in the first quarter of this year.

The closely watched wording of the Federal Open Market Committee's statement was a bit more pessimistic than after the last meeting in December. At that point, the Fed said economic activity and employment were expanding at a "moderate pace in recent months, apart from weather-related disruptions."

In September, the Fed launched its third round of bond buying to try to stimulate economic growth and reduce unemployment.

The central bank began an open-ended program to buy $85 billion in bonds a month to hold down long-term interest rates and boost business spending,

The Fed also said it anticipated short-term interest rates would remain near zero until the unemployment rate dropped to at least 6.5%, as long as inflation remained in check.

The unemployment rate was 7.8% in December and economists project it remained the same this month. The Labor Department will release the January jobs report Friday.

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