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Exxon Mobil 1Q Profit Up 10 Percent - ASHARQ AL-AWSAT English Archive
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NEW YORK (AP) -Oil giant Exxon Mobil Corp. kicked off 2007 with a 10 percent rise in profits, its best-ever first quarter, as higher margins on refining and chemical operations offset lower prices for crude oil and natural gas.

Exxon Mobil, the world’s largest publicly traded oil company, said Thursday it earned $9.3 billion in the January-March period, beating Wall Street expectations, even as revenue slipped and fell well short of analysts’ forecasts.

The Irving, Texas-based company was the third major oil company to report earnings in as many days. BP PLC, Europe’s second-largest oil company, on Tuesday reported a 17 percent drop in first-quarter earnings on lower oil prices and declining production. On Wednesday, ConocoPhillips said its first-quarter profit rose 7.7 percent as a result of asset sales that offset lower year-over-year commodity prices.

Also Thursday, Valero Energy Corp., the nation’s largest independent oil refiner, said its first-quarter profit jumped 35 percent on the back of stronger gasoline and distillate margins.

The market price for crude oil was off more than $5 a barrel in the first quarter versus a year ago. The comparable price for natural gas also was down.

Still, given the rise in gasoline prices at the pump in recent weeks, oil majors like Exxon Mobil and BP were getting little sympathy from U.S. consumers for not earning as much as they could have if market prices for their products had been higher to start 2007.

“They’re hurting me all the way around,” Bill LoGerfo of Staten Island said Thursday as he paid $3.27 a gallon for premium unleaded to fill up his car at a BP station in Manhattan. Regular unleaded was selling for $3.03 a gallon.

“I’m in the construction business, so it makes it more expensive to get materials shipped to me,” LoGerfo said. “These prices really trickle down to the little guy.”

In response to the new round of oil profits, Sen. Bob Casey, D-Pa., introduced legislation Thursday that he hopes will curtail rising gas prices. Casey’s bill would impose a windfall profits tax and close certain tax loopholes for big oil companies and use the money for research into biofuels and other related projects.

Investors, however, pushed Exxon Mobil shares up 63 cents to close at $80.55 on the New York Stock Exchange after sending them to a new 52-week high of $80.86. They’ve traded as low as $56.64 in the past year.

Exxon Mobil’s profit amounted to $1.62 per share, up from $8.4 billion, or $1.37 per share, a year ago. Analysts polled by Thomson Financial were looking for a profit of $1.52 per share.

Revenue fell to $87.2 billion from $88.9 billion a year earlier, well below the $100 billion analysts had forecast.

Last year, the company posted the largest annual profit by a U.S. company — $39.5 billion. That result topped the previous record, also by Exxon Mobil, of $36.13 billion set in 2005.

Last month, Exxon Mobil said it will spend some of that money on more than 20 new global projects in the next three years, investments expected to add 1 million oil-equivalent barrels a day to its volumes at peak production.

The company said it spent $4.3 billion on capital and exploration projects in the first quarter and plans to spend roughly $20 billion this year on such projects.

“In the first quarter, Exxon Mobil continued to actively invest, bringing additional crude oil, finished products and natural gas to market,” Chairman and Chief Executive Rex Tillerson said in a statement.

Exxon Mobil said earnings from its exploration and production arm fell to $6.04 billion from $6.38 billion a year ago, primarily reflecting lower oil and natural gas prices and decreased demand for natural gas in Europe.

The company said oil production in the first three months of 2007 was slightly higher than a year ago, helped in part by increased production from projects in West Africa, Russia and the Middle East.

Natural gas production, however, was off from last year, hampered by mature field declines and lower European demand related to weather.

On the refining and marketing side of the business, Exxon Mobil’s earnings rose to $1.9 billion from $1.3 billion to start 2006, lifted by improved margins and more efficient refining operations.

A company’s refining margin is the difference between what it costs to refine crude oil and what the company makes selling refined products, such as gasoline and jet fuel.

Exxon Mobil said it also saw improved margins at its chemicals business, where earnings rose to $1.2 billion from nearly $1 billion a year ago.

In a conference call with analysts, Henry Hubble, vice president of investor relations, said Exxon Mobil is working toward turning over operational control of a joint venture project in Venezuela to its partner, Petroleos de Venezuela SA, Venezuela’s government-controlled oil company. Earlier this year, Venezuelan President Hugo Chavez ordered the takeover of oil projects run by foreign oil companies in the oil-rich Orinoco River region.

“Those negotiations are continuing and will be for sometime,” Hubble said. He declined to speculate whether Exxon Mobil would continue to do business in Venezuela after such discussions are finished.

BP, Chevron Corp., ConocoPhillips, France’s Total SA and Norway’s Statoil ASA also have projects in the country.

San Antonio-based Valero’s profit rose to a first-quarter record $1.14 billion, or $1.86 per share, from $848 million, or $1.32 per share, a year ago. Analysts forecast $1.81 a share, according to Thomson Financial.

Revenue declined to $19.7 billion from $20.93 billion. Analysts were looking for $22.96 billion in revenues.

Valero shares rose $1.42, or 2 percent, to close at $71.74 on the NYSE after setting a new 52-week high of $73.10.

Asharq Al-Awsat

Asharq Al-Awsat

Asharq Al-Awsat is the world’s premier pan-Arab daily newspaper, printed simultaneously each day on four continents in 14 cities. Launched in London in 1978, Asharq Al-Awsat has established itself as the decisive publication on pan-Arab and international affairs, offering its readers in-depth analysis and exclusive editorials, as well as the most comprehensive coverage of the entire Arab world.

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