Sat, Aug 02, 2008 page10

• ExxonMobil profit hits record on oil price surge

  OVER A BARREL While the energy giant's numbers were likely to outrage consumers, shareholders would probably be disappointed that higher expectations weren't met

  • AFP
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  Surging oil prices helped US energy giant ExxonMobil to a 14 percent jump in quarterly net profit to US$11.68 billion in results on Thursday, short of most forecasts on Wall Street.

  The earnings set another record for ExxonMobil, which has been the world’s most profitable publicly traded firm and a magnet for criticism in Washington over policies toward big oil companies.
  
  

  Yet the earnings were shy of the consensus estimate on Wall Street. Second-quarter earnings amounted to US$2.27 per share excluding special items compared with an average forecast of US$2.52 per share.
  
  

  

  Gas prices are displayed at an Exxon Station in Miami, Florida, on Thursday.

  PHOTO: AFP

  Shares in the company slid 3.5 percent to US$81.46 in early trade.
  
  

  The profit “marks the company’s largest in history, so politicians and consumers are likely to express outrage in face of record gasoline prices,” said analyst Ryan McShane at Briefing.com. “At the same time, ExxonMobil shareholders are disappointed with the earnings.”
  
  

  Revenues climbed 40 percent from the same period a year ago to US$138 billion in the April to June period, lifted by record high crude oil prices.
  
  

  Chairman Rex Tillerson said record oil and gas prices “were partly offset by lower refining and chemical margins, lower production volumes and higher operating costs.”
  
  

  Oil production decreased 8 percent from the second quarter of last year, resulting from an expropriation in Venezuela, a strike in Nigeria and other factors.
  
  

  The company set aside US$290 million to cover maximum punitive damages set by the recent Supreme Court ruling in the Exxon Valdez oil spill case. Without that, the earnings would be US$11.97 billion.
  
  

  Shares in ExxonMobil gained 4.68 percent to close at US$80.43 in New York.
  
  

  The results come after a banner year for the company as crude oil prices soared on strong demand, particularly in China and India.
  
  

  ExxonMobil posted a profit last year of US$40.6 billion, the largest corporate annual profit in history. The company has been vilified for profiting from high energy costs that have battered consumers. But the industry argues that its profits are in line with those of other sectors and that oil and gas require massive investments.
  
  

  The campaign of Democratic presidential candidate Senator Barack Obama said the ExxonMobil results reflect too many giveaways to big oil firms as consumers suffer.
  
  

  “While big oil is making record profits, American families are paying record prices at the pump, and our economy is leaving working people behind,” Obama spokesman Bill Burton said. “For far too long, we’ve had an energy policy that has worked for the oil companies — Barack Obama is calling for an energy policy that works for the American people, and that’s a change that we can’t wait any longer to make.”
  
  

  In the most recent quarter, the Texas-based firm said the overwhelming share of its profits, US$10 billion, came from the upstream area of exploration and production. That was a 68 percent jump from a year ago.
  
  

  The downstream segment including refining and marketing saw a 54 percent drop in operating profit to US$1.558 billion.
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