Oil Settles at a Record High

Oil futures rose to a new record trading price over $84 a barrel and settled at a new record as well, on concerns that supplies are not adequate to meet fourth-quarter demand.

Light, sweet crude for November delivery rose 61 cents to settle at a record $83.69 a barrel on the New York Mercantile Exchange after rising as high as $84.05, also a record. Despite the gains, oil is still below inflation-adjusted highs hit in early 1980. Depending on the adjustment, a $38 barrel of oil in 1980 would be worth $96 to $101 or more today.

November gasoline rose 1.85 cents to settle at $2.0851 a gallon, and heating oil futures fell 0.09 cent to settle at $2.2464 on the Nymex.

Natural gas for November rose 9.8 cents to settle at $6.974 per 1,000 cubic feet.

Restructuring Plans Send BP Shares Soaring

Plans for massive restructuring sent BP shares to a new high, as the oil giant's stock rose $3.73 to $75.55 in higher-than-average volume.

Chief Executive Tony Hayward outlined a plan on Thursday intended to simplify BP's organizational structure, boost revenue and cut its head office work force by about 25 percent.

BP's shares and operational performance have lagged peers in recent years, amid a host of safety and operational failures, compounded by the abrupt departure of former CEO John Browne.

The company lost about $5 billion in revenue over the last 30 months due to shutdowns at refineries caused by a deadly explosion, fires, production delays and other setbacks, according to Oppenheimer & Co. analyst Fadel Gheit.

"BP has lagged its peers for the last two years by about 20 percent, and that is because of fears of mishaps and misfortune that plagued the operations," Gheit said in an interview Friday.

Most analysts expect disappointing results from BP in the third quarter, after Hayward warned of "dreadful" performance last month. However, analysts anticipate improvements next year as its repaired Texas City and Whiting refineries return to full capacity and production begins at new sites.

Analysts polled by Thomson Financial expect, on average, earnings of $1.45 per share for BP, compared with $2.12 per share for Chevron Corp., $2.02 for Royal Dutch Shell PLC and $1.75 for Exxon Mobil Corp.

More Rigs Working in the U.S.

The number of rigs actively exploring for oil and natural gas in the U.S. was up this week by 12 to 1,767.

Of the rigs running nationwide, 1,442 were exploring for natural gas and 319 for oil, Houston-based Baker Hughes Inc. reported Friday. Six were listed as miscellaneous.

A year ago, the rig count stood at 1,728.

Of the major oil- and gas-producing states, Texas gained four rigs, California added three, Colorado, Oklahoma and Wyoming all added two and Alaska gained one. Louisiana lost eight rigs, and New Mexico was unchanged.

Baker Hughes has tracked rig counts since 1944. The tally peaked at 4,530 in 1981, during the height of the oil boom. The industry posted several record lows in 1999, bottoming out at 488.

Investors Missing the Boat for Deepwater Drillers?

RBC Capital Markets analyst Kurt Hallead thinks investors may not fully appreciate the potential of deepwater drillers, especially Transocean (RIG) and Diamond Offshore (DO).

He thinks both companies will average 30 percent earnings per share growth through the end of the decade. "Additionally, RIG and DO are being priced at levels last seen in 1998 when oil was $10 per barrel and below 2001-2003 when the deepwater drilling industry was at a cycle low," he wrote in a note to investors.

"These two companies account for 40 percent of the market with Transocean at 28 percent and Diamond Offshore at 12 percent. In short, RIG and DO provide 'critical path' equipment needed by oil companies to increase shareholder value through reserve additions and organic production growth." Transocean shares rose 22 cents to $115.50 in afternoon trading, while Diamond Offshore gained 35 cents at $116.65. Both stocks have risen from about $80 a share at the beginning of the year.

Xcel Integrating Nuclear Operations

Xcel Energy Inc. plans to integrate nuclear operations from a one-time a joint venture into its energy supply unit, the electricity company said.

Xcel will transfer operating licenses for its Prairie Island and Monticello nuclear plants from Nuclear Management Co. to Northern States Power Co.-Minnesota, an Xcel-owned utility.

Xcel had been one of several companies with stakes in Nuclear Management at its formation in 1999. After We Energies, a Wisconsin Energy Corp. utility, sold Point Beach Nuclear Plant to FPL Group Inc. on Oct. 1, Xcel was left as the sole member.

The company expects the license transfers to occur next year, pending approvals from the Nuclear Regulatory Commission. Nuclear Management employees will become Xcel employees and headquarters will relocate from Hudson, Wis., to Xcel offices in Minneapolis and St. Paul, Minn.

--Compiled by AP Business Writer Greg Stec. Questions or comments can be directed to gstec@ap.org.