Exxon Mobil’s profits disappoints investors

Source: Energy Digital

Date :01/05/2008 07:06:33

Exxon Mobil Corporation on Thursday reported a $10.89 billon first-quarter profit but left investors cold due to weak production and low refining margins.

The numbers - which represent the second-highest quarterly profit in U.S. history - were also below estimates.

Despite record-high crude prices, slow production and low refining margins cut into anticipated profits. U.S. oil prices averaged close to $98 per barrel during the quarter, climbing by nearly 70 percent from the same period in 2007.

Exxon, the world’s largest publicly-traded company, posted a per-share figure of $2.03 a share for the first quarter – eight cents less than the number expected by analysts. While earnings from the company's exploration and production segment were up 45 percent to $8.79 billion, refining profits dropped 39 percent to $1.17 billion as oil and gas production fell 5.6 percent in the quarter.

Key question

"The question is going to come and you always have to ask it every year: Are they seeing any acceleration in mature field declines? Because slowly the majors are beginning to see this to some degree," said James Halloran, energy analyst with National City Private Client Group in Cleveland.

Mr. Halloran said he was concerned because very little of the volume shortfall appears to be one-time items like maintenance.

Shares of Exxon were off $3.62, or 3.9 percent, to $89.45 in early trading on the New York Stock Exchange. They are down less than one percent this year, underperforming the Chicago Board Options Exchange's oil index, which is up more than two percent over the same period.

The company’s record earnings of $40.6 billion in 2007 were higher than the gross domestic profit of Turkey, the world's 17th largest economy.

May 01, 2008