Exxon Mobil posts huge profit

NEW YORK - Exxon Mobil Corp on Thursday said earnings rose 6 per cent to US$10.5 billion ($16.1 billion), the second-largest quarterly operating profit ever by a US company, boosted by robust oil production, as crude prices hovered near record levels.

The better-than-expected third-quarter profit pushed the company's shares to an all-time high of US$72.33 on Thursday morning, before they dropped to US$71.31 in afternoon trading, a 0.4 per cent increase.

US oil prices hit a record high of US$78.40 a barrel early in the quarter and spent much of the period above US$70, before retreating to around US$60 as the summer driving season ended and geopolitical tensions eased. US crude is currently trading at around US$61 a barrel.

Production at the world's largest public company rose about 7 per cent to about 4 million barrels of oil equivalent per day.

"Anything over 3 per cent (production growth) is good, and anything over 5 per cent is outstanding," said Gene Pisasale, senior energy analyst at Mercantile Trust. "For a company like Exxon to perform at that level is really superb."

Net income for the third quarter rose to US$10.49 billion, or US$1.77 a share, from US$9.92 billion, or US$1.58 a share, a year before.

Analysts, on average, had forecast earnings of US$1.59 a share in the quarter, according to Reuters Estimates.

The profit came in slightly behind the record Exxon posted in the fourth quarter of 2005 and edged out the company's second-quarter earnings.

Exxon's earnings per share grew at a faster rate than the company's net profit due to its aggressive share buy-back programme.

Exxon Mobil Chief Executive Rex Tillerson said in a statement that earnings rose on higher realized prices for crude oil and natural gas, as well as improved marketing and chemical margins. Those gains were partly offset by lower refining margins, he said.

Exxon's worldwide crude sales realisations were US$65.14 per barrel, up US$7.12 from the third quarter of 2005.

Quarterly revenue dipped to US$99.59 billion from US$100.72 billion a year before.

The huge earnings were a red flag for critics of the company, who charge that Exxon was benefiting at the expense of American consumers.

"It seems like almost every quarter Exxon Mobil and the other big oil companies are shattering all previous profit records," Rep. Edward Markey, a Massachusetts Democrat, said in a statement.

"These companies are doing so not because they're creating any new product or being innovative, but because they control the supply of foreign oil that feeds America's addiction."

Exxon said earnings excluding special items at its exploration and production operations rose about 13 per cent to US$6.49 billion.

Earnings from the company's refining and marketing operations rose about 29 per cent to US$2.74 billion, as stronger marketing margins offset weak refining margins.

The company said it still expects capital spending of about US$20 billion in 2006.

Other oil majors also announced surging quarterly earnings this week. Royal Dutch Shell Plc said its underlying profit rose 21 per cent and BP Plc announced a 58 per cent rise, helped by asset sales. Earnings rose slightly at ConocoPhillips as production problems restrained the company's earnings growth.

But the pullback of oil prices from sky-high levels has led many investors and analysts to speculate that the days of record oil company profits are nearing their end.

Howard Weill energy analyst Gene Gillespie said analysts expects earnings from the oil industry to drop about 10 per cent in the fourth quarter.

"Exxon isn't immune from what's going on in the industry," Gillespie said. "If commodity prices continue to rise, they'll grow. If they don't, they won't."

Shares of Exxon Mobil are up about 27 per cent since the beginning of the year, ahead of the Chicago Board Options Exchange's oil index, which is up about 19 per cent in the same period.

- REUTERS