Rising oil prices power enormous Exxon profits
Highest quarterly amount in U.S.Go To Original
Exxon Mobil Corp. broke its own record for the highest quarterly profit for a U.S. company on Thursday, joining other major oil companies in posting stronger earnings on the back of sky-high oil prices.
The average price of a barrel of oil was slightly less than $125 US during the quarter, nearly double last year, which also increased earnings at Royal Dutch Shell, Eni and Repsol, three of Europe's largest oil companies.
Exxon's second-quarter net income rose 14 per cent to $11.68 billion US, or $2.22 a share, in the quarter. Excluding one-time items, Exxon earned $2.27 a share, more than a quarter below analysts' expectations.
The enormous profits drew criticism from politicians because of the high gasoline prices being paid by consumers.
U.S. presidential candidate Barack Obama termed Exxon's earnings "outrageous" and called for an end to the "tyranny of oil."
"We are making very large profits, I know that," Shell chief executive Jeroen van der Veer told reporters on a conference call. "But we are making very large investments," he said, referring to investments in exploration and production.
Shell, the world's second-largest non-government controlled oil company by market value, reported a five-per-cent rise in second-quarter earnings to $7.9 billion, and said that excluding one-time items, it beat analysts' forecasts.
Despite billions of dollars in capital spending in the quarter, oil and gas production were sluggish.
That, along with weak profit margins from refining, restrained the companies' earnings somewhat.
Western oil companies' output has fallen in recent years and oil producing countries now prefer to award their richest fields to their own national oil companies.
"The problem is that all these companies have no place to go to drill and no place to put their money," said Oppenheimer & Co analyst Fadel Gheit. "Access to resources is closing very, very fast."
Still, the companies' oil and gas exploration and production units were the main profit divers because of high oil prices.
Exxon's oil and gas production fell eight per cent from a year earlier, mostly because of the loss of assets taken over by Venezuela and a labour strike in Nigeria.
EARNING THE BIG BUCKS
Exxon Mobil Corp. pulled in $11.68 billion in profits in the second quarter, the highest quarterly income ever recorded by a U.S. company.
HERE ARE A FEW FACTS ABOUT THE COMPANY'S RECORD HAUL:
- Exxon earned more than $128 million a day, or nearly $1,500 every second during the quarter. The company said that was after it paid $4,100 a second in taxes and $14,700 a second in expenses to run the business.
- Exxon's quarterly earnings were slightly larger than the annual gross domestic product of Afghanistan, which was $11.63 billion in 2007, according to the World Bank.
- With Exxon's quarterly profit, one could potentially buy Gap Inc., Ford or Starbucks, which have market capitalizations of $11.67 billion, $10.76 billion and $10.69 billion, respectively, according to Reuters data.
- $11.68 billion could buy roughly 179,692 new Cadillac Escalades, or 15.57 billion individual Snickers chocolate bars.
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