Exxon Mobil rides record oil prices to almost $11-billion in profit
MICHAEL ERMAN, Reuters
NEW YORK — Exxon Mobil Corp Thursday posted a $10.89-billion (U.S.) first-quarter profit but the results still disappointed investors as weak production and low refining margins took some steam out of profits from record-high crude prices.
Despite missing estimates, Exxon's earnings were up 17 per cent year over year and the second-highest quarterly profit in U.S. history.
Benchmark U.S. oil prices averaged a record of nearly $98 a barrel during the quarter, up about 70 per cent from a year earlier.
Exxon posted record earnings of $40.6-billion in 2007, with revenue higher than the gross domestic profit of Turkey, the world's 17th largest economy. If oil prices stay above or around $100 for the remainder of 2008, the company could beat that mark.
Profits were tempered as margins to produce gasoline have plummeted, with refiners struggling to push through higher crude costs to customers. First-quarter gasoline prices rose only 33 per cent year over year in the United States – less than half crude's rise.
The world's largest publicly traded company posted a per-share figure for the first quarter of $2.03 a share, up from net income of $9.28-billion, or $1.62 a share, in the same period last year. However, analysts on average had expected the company to earn $2.11 a share in the first quarter of this year, according to Reuters Estimates.
Revenue in the quarter rose to $116.85-billion from $87.22-billion last year.
Earnings from the company's exploration and production segment were up 45 per cent to $8.79-billion while its refining profits dropped 39 per cent to $1.17-billion.
Oil and gas production fell 5.6 per cent in the quarter. The company said this segment was hurt by production-sharing contracts that give host countries a larger share of oil and gas produced as commodity prices rise as well as the decline of older fields and the loss of operations that were nationalized by Venezuela last year.
“The question is going to come and you always have to ask it every year: Are they seeing any acceleration in mature field declines? Because slowly the majors are beginning to see this to some degree,” said James Halloran, energy analyst with National City Private Client Group in Cleveland.
Mr. Halloran said he was concerned because very little of the volume shortfall appears to be one-time items like maintenance.
European oil majors BP and Royal Dutch Shell earlier this week posted big first-quarter earnings gains as the crude oil surge was an even bigger boon for the companies than expected.
Exxon's record profits have made the company a target for sharp criticism from many politicians.
Sen. Hillary Clinton (D-NY), a presidential candidate, earlier this week said Exxon “made out like bandits” with their $40-billion profit in 2007. “Middle-class families are paying too much and oil companies are not paying their fair share,” she said.
Shares of Exxon were off $3.62, or 3.9 per cent, to $89.45 in early trading on the New York Stock Exchange. They are down less than 1 per cent this year, underperforming the Chicago Board Options Exchange's oil index, which is up more than 2 per cent over the same period.
And they complain they don't make enough?
)
) posts are not a bad place to start.