November 23, 2024
Business

Exxon Mobil sales top $100B 3rd-quarter profits nearly $10B

DALLAS – Exxon Mobil Corp. rewrote the corporate record books Thursday as the oil company’s third-quarter earnings soared to almost $10 billion and it became the first public company ever with quarterly sales topping $100 billion. Anglo-Dutch competitor Royal Dutch Shell PLC wasn’t far behind, posting a profit of $9 billion for the quarter.

Those results led Democrats in Congress to demand a new windfall profits tax. “Big oil behemoths are making out like bandits, while the average American family is getting killed by high gas prices, and soon-to-be record heating oil prices,” Sen. Chuck Schumer, D-N.Y., said in a statement.

Sen. Olympia Snowe, R-Maine, praised Majority Leader Bill Frist, R-Tenn., for ordering a Senate committee hearing on energy prices. “At a time when the American people are struggling to pay their energy bills and the residents of my own state of Maine will be hard-pressed to pay their home heating costs this winter, it is deeply concerning and, frankly, outrageous that oil companies are boasting record-breaking profits,” she said.

But Energy Secretary Samuel Bodman said President Bush opposes such a move and is instead considering a wide range of proposals to help cushion consumers, including the creation of an emergency reserve of gasoline and other refined products.

Thursday’s outsized earnings are a result of surging oil and natural gas prices that pushed pump prices to record territory after Hurricane Katrina. They come on the heels of similar eye-popping gains reported this week by BP PLC, ConocoPhillips Inc. and Marathon Oil Corp. Chevron Corp. reports its earnings on Friday.

Some Republican members of Congress called on the industry to invest in ways that will increase production so that consumers get a break at the pumps or when they pay their heating bills. But analysts said telling the industry how to spend its money was unfair, if not futile.

“Exxon is a good corporate citizen but it does not work for the welfare of the country,” said oil analyst Fadel Gheit at Oppenheimer & Co. in New York.

Exxon Chairman and Chief Executive Lee R. Raymond did not mention the record results in the company’s earnings release. Instead, he noted that the world’s largest publicly traded oil company “acted responsibly in pricing at our company-operated service stations, and we also encouraged our independent retailers and distributors to do the same.”

Henry Hubble, Exxon’s vice president of investor relations, did note on a conference call the company’s record profit, which rose 75 percent in the quarter to $9.92 billion from $5.68 billion a year ago. He said the gains “reflect the strong commodity prices and our fundamental business model that is disciplined, straightforward and focused on generating value while managing risk.”

The previous oil-industry earnings record was Exxon’s 2004 fourth-quarter profit of $8.42 billion. Third-quarter revenue jumped to $100.72 billion from $76.38 billion in the prior-year period.

To put its performance into perspective, Exxon’s revenue for the three-month period was greater than the annual gross domestic product of some of the largest oil producing nations, including the United Arab Emirates and Kuwait – even though it lost considerable production because of a string of hurricanes that battered the U.S. Gulf Coast.

Robert Kaufmann, a professor at Boston University’s Center for Energy and Environmental Studies, says production will return to pre-hurricane levels and hurricane-related losses will disappear in future earnings reports, but profits will remain high.

“A lot of the capacity was being built when oil was trading at $20 to $30 a barrel range, so by definition those fields are much more profitable,” he said. “Nobody should be surprised by this.”

Despite the profit surge, Exxon’s performance fell short of analysts’ expectations and its shares fell 60 cents to $55.60 in trading Thursday on the New York Stock Exchange, while U.S.-traded Class A shares of Shell rose $1.15, or 1.9 percent, to $60.65 on the NYSE.

With oil futures above $60 a barrel for much of the third quarter, Exxon’s profits from petroleum exploration and production increased by $1.8 billion to $5.7 billion. Soaring prices for gasoline, diesel and jet fuel lifted refining and marketing profits by $727 million to $2.13 billion.

However, income at the company’s chemicals unit declined by $537 million to $472 million, a reflection of the higher prices for raw materials.

Exxon said hurricanes slashed U.S. production volumes by 5 percent from a year ago, while global daily production slipped to 2.45 million barrels of oil equivalent from 2.51 million barrels. By the end of the year, it will cost the company about $100 million after taxes, the company estimated.

At Shell, third-quarter net income grew 68 percent to $9.03 billion from $5.37 billion a year earlier. Revenue at the London-based company, which has extensive operations in the United States, rose 8 percent to $76.44 billion.

“We are capturing the benefits of high oil and gas prices and refining margins,” Shell Chief Financial Officer Peter Voser said, referring to the profit margin on each barrel of crude that is refined into gasoline, diesel and jet fuel.

Shells profits from exploration and production increased by $2.6 billion to $5 billion in spite of an 11 percent decline in oil and natural-gas output. Its refining and marketing profit climbed by $201 million to $1.7 billion. Its chemicals business saw profits decline by $251 million to $321 million.

Shell said hurricane damage would cost it about $350 million, although much of the expense would be covered by insurance.

Also on Thursday, Marathon said third-quarter profit more than tripled to $770 million, up from $222 million a year earlier. Most of the profit came from its oil and natural-gas production unit. However, the results fell short of Wall Street’s aggressive estimates and Marathon’s stock slumped $3.80, or 6.2 percent, to $57.28 on the NYSE.


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