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Exxon Mobil keeps pumping profits

Third quarter's $10.49B could yield windfall year.

By ASSOCIATED PRESS
Published October 27, 2006

DALLAS - Exxon Mobil's daily take-home pay from July to September came in at $114-million - give or take a few thousand.

The world's largest public oil company reported the second-largest quarterly profit ever for a publicly traded company Thursday: $10.49-billion.

The best may be yet to come, analysts said.

Unless the recent slide in energy prices continues, Exxon Mobil Corp. could be poised to deliver an even stronger performance through the remainder of this year. And because gas prices have dropped, those gargantuan earnings are unlikely to draw the ire of Congress or consumers, as they did earlier this year.

"The thing you've got to understand is this, everything that could work for Exxon this quarter did: high oil prices, lower down time and growth in production," said Fadel Gheit, an analyst with Oppenheimer & Co. "I would not rule out anything right now."

Another major international oil company, Royal Dutch Shell PLC, said Thursday that its third-quarter profit fell 34 percent, to $5.94-billion, even as revenue rose 10 percent, to $84.3-billion.

Several years of high crude oil prices have fueled record profits for the petroleum industry, even as they triggered complaints from consumers and Congress as gasoline pump prices surpassed $3 a gallon during the past two summers.

Although crude oil prices began to decline toward the end of the third quarter, the average market price for crude held close to $70 a barrel in the period after peaking above $78 per barrel in July. Oil futures prices have recently traded near $61 a barrel, and gasoline prices have dropped to a nationwide average of about $2.43 a gallon.

The largest quarterly performance already belongs to Exxon Mobil: a $10.71-billion profit in the fourth quarter of 2005.

The company may come close to matching or even beating that number next quarter, said Howard Silverblatt of Standard & Poor's Senior Index Analyst.

"Then in all likelihood they will be at that $40-billion mark for the year," he said.

That would put the company on track for the highest annual profit by a U.S. company. It holds that record at $36.1-billion last year.

Backlash expected

For the past year, Exxon's profits have attracted the indignation of lawmakers, but with gas prices down, Big Oil has taken a back seat to problems in Iraq and a troubled housing market.

Still, Exxon vice president of public affairs Kenneth Cohen concedes there could still be a public relations backlash from Thursday's announcement.

"The price people are paying at the pump is a reflection of supply and demand," Cohen said. "We are doing everything we can to bring more product on the market."

Cohen said about two-thirds of Exxon Mobil's profits come from oil and natural-gas production outside the United States, with rising production in Africa, the Middle East and Russia consistently offsetting declining output in the United States, Canada and Europe.

Exxon Mobil said it pumped 7 percent more oil and natural gas than it did during the same quarter a year earlier. At the beginning of the year, many analysts had forecast a 5 percent growth.

"The real story remains underlying growth in production, which remains key to share performance," wrote Citigroup analyst Doug Leggate.

Exxon Mobil said its net income amounted to $1.77 per share for the July-September period, up from $9.92-billion, or $1.58 per share, a year ago.

The results surpassed the expectations of Wall Street analysts, who expected $1.59 per share on average in the quarter.

Revenue fell to $99.59-billion from $100.72-billion a year ago, when hurricanes Katrina and Rita led to record oil prices.

Earlier this week, ConocoPhillips reported its profit rose 2 percent, to $3.88-billion, in the third quarter while another major oil company, BP PLC, said its earnings fell 3.6 percent, to $6.23-billion. A fifth major oil company, Chevron Corp., is expected to report its results today.

Exxon Mobil shares rose 61 cents to close at $71.62 on the New York Stock Exchange Thursday after rising to a 52-week high of $72.33 earlier in the session.

[Last modified October 27, 2006, 00:32:45]