Thursday, October 28, 2010

Exxon Mobil 3Q income jumps 55 percent

NEW YORK – Exxon Mobil Corp.'s third-quarter income jumped 55 percent thanks to higher oil prices and increased production.

The world's largest publicly traded oil company on Thursday reported earnings of $7.35 billion, or $1.44 per share. That compares with $4.73 billion, or 98 cents per share, in the year-ago period. Revenue increased 15.8 percent to $95.3 billion.

Oil companies have seen profits jump as crude prices increased 12 percent year-over-year, and prices should continue to rise. The International Energy Agency forecasts that world oil consumption will grow next year to 88.2 million barrels a day.

Earlier Thursday. Royal Dutch Shell PLC said quarterly profits climbed by 6.5 percent to $3.46 billion with higher oil prices mitigating charges in its refining business. ConocoPhillips reported Wednesday that its income more than doubled for the third straight quarter, earning $3.06 billion for the July-September period.

Selling crude for more money has helped offset unexpected drilling expenses and a drop in Gulf of Mexico production that some companies are starting to see following BP's giant oil spill earlier this year.

The U.S. shut down deepwater exploration for several months after the April explosion on the Deepwater Horizon rig, and regulators set tough new rules that nearly halted drilling activity in the Gulf.

David Rosenthal, Exxon Mobil vice president of investor relations, said the company continues to review the new regulations, though it plans to move forward with a project in the Gulf.

"We plan to submit in the near term our next permit application to get that drill under way," Rosenthal told analysts in a conference call.

In July, Exxon took the lead in organizing a $1 billion containment network that will eventually be used to respond to future spills in the Gulf.

Exxon, based in Irving, Texas, posted higher profits for most of its businesses; including oil production and exploration, refining and U.S. chemicals. It also cranked up oil production year-over-year, and its refineries made more fuel. The company continued to plow billions of dollars into expanding production and exploration, increasing spending 55 percent to $7.6 billion in the third quarter.

The acquisition of XTO Energy helped Exxon increase natural-gas production by 50 percent year-over-year.

Higher natural gas prices boosted profits in the third quarter, but prices have slid recently, and oil executives are concerned about more price declines. The U.S. already has a hefty surplus, and consumption isn't expected to increase much next year, according to the Energy Information Administration.

The EIA said Thursday that natural gas reserves continued to grow and are 9.1 percent above the five-year average.

While companies like ConocoPhillips have said they plan to idle some natural gas wells and wait for prices to bounce back, Exxon said it hasn't changed its plans. The XTO acquisition earlier this year made Exxon the largest natural gas company in the U.S. with rights to numerous underground shale deposits.

Argus Research analyst Phil Weiss said it costs less to drill for natural gas in shale than elsewhere, so Exxon can still turn a profit from its wells, although it might be a small one.

Exxon's profit was less than the $7.56 billion it earned in the second quarter as it paid higher corporate and financing costs and its chemicals business posted lower profits. Two years ago, Exxon set the all-time record for profits by a U.S. corporation with $14.8 billion in the third quarter of 2008.

Exxon shares rose 62 cents to $66.29 in afternoon trading.

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