Exxon Mobil 1Q Profit Up 17 Percent
Posted on: Friday, 2 May 2008, 09:00 CDT
Soaring oil and gas prices produced another huge profit for Exxon Mobil Corp. in the first quarter: $10.9 billion, which was 17 percent more than a year ago but not quite as much as the oil giant raked in during last year's fourth quarter.
But it wasn't enough for Wall Street.
The company's shares declined as the Irving-based company's profit of $2.03 a share fell short of financial analysts' consensus estimate of $2.13. Exxon's stock (ticker: XOM) fell 3.6 percent, closing at $89.70, on a day when most energy companies also lost ground as crude-oil and natural gas prices slid
In a conference call with reporters, Exxon spokesman Ken Cohen said the company sold its crude oil for an average of $93 a barrel in the quarter, up from about $55 a year earlier. It sold natural gas for an average of $9.13 per 1,000 cubic feet, up from $6.70 a year earlier. Revenues rose 34 percent in the quarter, reaching $116.9 billion.
"Higher crude-oil and natural gas realizations, driven by record worldwide crude-oil prices, were partly offset by lower refining and chemical margins, lower production volumes and higher operating costs," Rex Tillerson, Exxon Mobil's chairman, said in a release. The company's production of crude oil and natural gas liquids slipped nearly 10 percent in the quarter, which was not offset by a 1.3 percent gain in natural gas production. Overall, production was down 5.6 percent compared with a year ago.
Cohen said the production decline was partly driven by Exxon Mobil's pacts with foreign governments, called production-sharing contracts. Those deals dictate that as the price of crude oil or natural gas rises, the government's share of production increases.
He said about 20 percent of Exxon Mobil's production is tied to such agreements, with varying terms, and they accounted for a reduction of about 80,000 barrels a day in the company's reported production. Venezuela's expropriation of the company's properties in that nation last year accounted for an additional 33,000 barrels a day of lost production, company executives said.
After adjusting for those factors, the company said, its production in the first quarter was down about 3 percent, and new production from West Africa was expected to come online in the year's second half.
Spokesman Henry Hubble also noted Thursday that a strike against the company by oil-industry workers in Nigeria, which began April 24, was settled and production was expected to resume soon. Exxon produces about 800,000 barrels of day in Nigeria.
Tillerson said Exxon Mobil boosted its capital spending 30 percent, to $5.5 billion in the quarter. That included $4.1 billion on exploration and production, including $591 million in the U.S., and $1.4 billion on refining and petrochemicals, including $450 million in the U.S.
But the company also said it spent $8 billion during the quarter to buy back its shares, a move that was criticized Thursday by Rep. Edward Markey, D-Mass. He said he will introduce legislation imposing a 10 percent fee on stock buybacks by the nation's five largest oil companies.
"Big Oil is spending their profits to prop up their stock price rather than on discovering and delivering alternatives to $4 gas," Markey said in a prepared statement.
"We fully fund all the attractive investment opportunities we have" before considering whether to repurchase shares, Cohen said. He said the company expects to bring about a dozen new projects to market in 2008.
Exxon Mobil joins a parade of major oil companies announcing higher profits in the first quarter. Royal Dutch Shell earlier this week reported a 25 percent jump, to $9.1 billion, and BP Plc.'s earnings soared 63 percent to $7.6 billion. Last week, ConocoPhillips said earnings rose 16 percent to $4.1 billion. Chevron Corp., the second-largest U.S. oil company, is expected to report earnings today.
In the fourth quarter of 2007, Exxon Mobil recorded the highest quarterly profit ever -- $11.7 billion.
EXXON MOBIL BY THE NUMBERS
$10.9 billion in profit (Jan.-March)
$116.9 billion in sales
$93 Average price of a barrel of oil sold by Exxon in the first quarter.
$55 Average price for the same period in 2007.
$5.5 billion Amount the company
will spend this quarter to develop new oil
Source: Fort Worth Star-Telegram
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