The Bobcat Nation

Exxon Profit Soars on High Prices
Monday, January 30, 2006

STORIES
•Exxon Shrugs Off Buyout Bid•Exxon Mobil Posts Highest US Corporate Profit Ever at $9.9B•Exxon Mobil Settles With U.S, to Spend $571M on Refineries•Exxon Mobil Profit Surges but Gas, Oil Output Drops•Exxon, Saudi Aramco in $3.5B China Refinery Deal •Exxon Ordered to Pay Gas Stations Up to $1.3B•Exxon Mobil Profit Jumps but Misses Forecasts •ExxonMobil Becomes World's Most Valuable Company •Exxon Subpoenaed on Role in UN Oil-For-Food Program•Exxon Chief: Energy Independence Impossible
IRVING, Texas — Exxon Mobil Corp. (XOM) posted record profits for any U.S. company on Monday — $10.71 billion for the fourth quarter and $36.13 billion for the year — as the world's biggest publicly traded oil company benefited from high oil and gas prices and demand for refined products. The results exceeded Wall Street expectations and Exxon shares rose nearly 3 percent.

The company's earnings amounted to $1.71 per share for the October-December quarter, up 27 percent from $8.42 billion, or $1.30 per share, in the year ago quarter. The result topped the then-record quarterly profit of $9.92 billion Exxon posted in the third quarter of 2005.

Exxon's profit for the year was also the largest annual reported net income in U.S. history, according to Howard Silverblatt, a stock market analyst for Standard & Poor's. He said the previous high was Exxon's $25.3 billion profit in 2004.

Exxon's results lifted the combined 2005 profits for the country's three largest integrated oil companies to more than $63 billion.

ConocoPhillips said last Wednesday that its fourth-quarter earnings rose 51 percent to $3.68 billion, while annual income climbed 66 percent to $13.53 billion. Two days later, Chevron Corp. (CVX) said its fourth-quarter earnings rose 20 percent to $4.14 billion, while annual income jumped 6 percent to $14.1 billion.

The oil industry's stellar results renewed talk among some politicians for a windfall profit tax that would push companies to invest more in new production and refining capacity.

Sen. Babara Boxer, a California Democrat who sharply criticized oil executives appearing before Congress in November, struck again on Friday. She called on the Bush Administration and the Federal Trade Commission to "put an end to gouging," then suggested that FTC stood for "Friend to Chevron."

But John Felmy, chief economist for the American Petroleum Institute, a Washington-based trade group, said Monday that the political rhetoric was "not a case based on fact."

"We invested somewhere in the order of $86 billion last year," Felmy said. "Then we have to treat investors appropriately otherwise we'd have the Eliott Spitzers of the world coming after us."

The results for Exxon's latest quarter included a $390 million gain related to a litigation settlement. Excluding special items, earnings were $10.32 billion, or $1.65 per share. The result topped Wall Street's expectations. Analysts surveyed by Thomson Financial predicted earnings of $1.44 per share.

Exxon shares rose $1.87 to $63.16 on the New York Stock Exchange.

Quarterly revenue ballooned to $99.66 billion from $83.37 billion a year ago but came in shy of the $100.72 billion Exxon posted in the third quarter, which was the first time a U.S. public company generated more than $100 billion in sales in a single quarter.

By segment, exploration and production earnings rose sharply to $7.04 billion, up $2.15 billion from the 2004 quarter, reflecting higher crude oil and natural gas prices. Production decreased by 1 percent due to the lingering effects of hurricanes Katrina and Rita, which battered the Gulf Coast in August and September.

The company's refining and marketing segment reported $2.39 billion in earnings, as higher refining and marketing margins helped offset the residual effects of the hurricanes.

Exxon's chemicals business saw earnings, excluding special items, decline by $413 million to $835 million, as higher materials costs squeezed margins.

For the full year, net income surged to $5.71 per share from $3.89 per share in 2004. Annual revenue grew to $371 billion from $298.04 billion.

To put that into perspective, Exxon's revenue for the year exceeded Saudi Arabia's estimated 2005 gross domestic product of $340.5 billion, according to statistics maintained by the Central Intelligence Agency.

Stevicat wrote:I remember from my excellent economics education at MSU that this is classic supply and demand. When the supply goes down and demand remains the same, the price will naturally go up to reach equilibrium. If supply goes down, demand remains the same, and the price is forced to be kept the same, there will be shortages. In other words, the gas stations will be out of gas but it will be a low price on the sign.

You saw prices go up when the hurricanes disrupted our supply and you saw prices go down when the supply caught up.

Bay Area Cat wrote:And another reason we should be investing more in alternative energy sources -- to reduce demand.

Alberta's oilsands could become the single biggest contributor to the world's supply within 10 years, says a report released Wednesday by CIBC World Markets.

That would mean a global shift in oil dominance from Saudi Arabia and the Middle East to Canada.

bobcatgrad2005 wrote:I'd like to see alternative energy sources get more research and development, especially if it could benefit Montana (ie: biodiesel).

However, I wonder how the execs. at Ford feel when they are going to have to cut something like 6,000 jobs because people are buying fewer gas guzzling SUVs and trucks?

ChiOCat wrote:

bobcatgrad2005 wrote:I'd like to see alternative energy sources get more research and development, especially if it could benefit Montana (ie: biodiesel).

However, I wonder how the execs. at Ford feel when they are going to have to cut something like 6,000 jobs because people are buying fewer gas guzzling SUVs and trucks?

I hope they are thinking "geee, we should keep on building bigger and bigger so we can go out of buisness"

Grizlaw wrote:I'm not sure the new technology is really all that far away, folks. According to this article, 70% of the vehicles sold in Brazil are currently designed to run on either gasoline or sugar-based ethanol, and 33% of the fuel sold in Brazil is currently ethanol. If Brazil can do it, why can't the U.S.?

http://www.mg.co.za/articlePage.aspx?ar ... _business/

(I read a similar article in the WSJ about a week ago, but it's not available online, so this was the best I could do...)

ChiOCat wrote:--GL are you just trying to keep me thinking of Brazillian food? I'm sure you know there is none available here.

Re/Max Griz wrote:Wow - Republicans bitching about oil companies. Those guys helped get many of your favorite Senators and Congresspeople elected, the president too.

You should all be happy you're paying so much for oil since your elected leaders always give those companies tax breaks, tax dollars, and even let them get away with LYING to congress.

God Bless America.