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Exxon Shatters Profit Record

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By JOHN PORRETTO

The Associated Press

Published: January 31, 2009

HOUSTON - The extraordinary profit for Exxon Mobil may be over for now, but opportunities abound even in a year that is expected to be miserable for the entire oil and gas industry.

The largest publicly traded oil company on Friday reported a profit of $45.2 billion for 2008, breaking the record it set for a U.S. company, even as its fourth-quarter earnings fell 33 percent from a year ago.

The huge full-year profit wasn't a surprise given crude's unprecedented rise during the first half of 2008, peaking near $150 a barrel in July. Prices since then have fallen roughly 70 percent amid a deepening global recession.

Triple-digit price swings have taken a toll.

ConocoPhillips, for example, is cutting jobs and spending after posting a massive fourth-quarter loss. Royal Dutch Shell had a big loss, too, but it hopes to ride out the downturn with flat spending and few, if any, layoffs.

Exxon, though, is sitting on $31 billion in cash and can spend as it sees fit. Some analysts have predicted Exxon will get even bigger by snapping up smaller competitors or looking for joint ventures.

The timing is ideal because assets based on the price of oil have grown relatively cheap. Also, large producers such as Exxon Mobil are finding it increasingly difficult to secure new sources of fossil fuels the old-fashioned way - exploring and drilling for them.

"If something comes along that they think is priced right and would help them on the production side, I think they'd take a look at it," said Brian Youngberg, an energy analyst with Edward Jones.

The company did not escape 2008 unscathed, with oil prices plunging 60 percent in the final three months of the year.

Net income dropped to $7.8 billion, or $1.55 a share, in the October-December period, the slimmest quarterly profit since 2005. The company earned $11.7 billion, or $2.13 a share, during the same period in 2007.
Quarterly revenue fell 27 percent to $84.7 billion.

Still, the per-share and revenue results topped Wall Street forecasts. On average, analysts expected the company to earn $1.45 a share in the latest quarter on revenue of $69.1 billion, according to Thomson Reuters.

For all of 2008, Exxon's profit amounted to $8.69 a share. In 2007, it earned $40.6 billion, or $7.28 a share.

Shares fell 52 cents to close at $76.48 Friday. They have traded in a range of $56.51 to $96.12 in the past year.

After several quarters of record profit, producers large and small are getting nailed by lower prices.

Chevron Corp. said Friday it earned $4.9 billion in the fourth quarter - though revenue plunged 26 percent - with oil prices in sharp decline. The second-largest U.S. oil company said it earned $2.44 per share in the three months ended Dec. 31, compared with $4.88 billion, or $2.32 per share, in the quarter a year ago. Thomson Reuters said analysts it surveyed expected earnings of $1.81 per share.

For the full year, Chevron made $23.93 billion, or $11.67 per share, compared with $18.69 billion, or $8.77 per share, in 2007. Its shares fell 10 cents to close at $70.52. Their 52-week range is $55.50 to $104.63.

ConocoPhillips, the third-biggest U.S. oil company, kicked off earnings for the oil majors on a sour note Wednesday by posting an enormous fourth-quarter loss. In addition to lower crude and gas prices, the company was hit by $34 billion in asset write-downs linked to the economic downturn.

In the spring of 2008, executives of Exxon and the other majors - BP, Shell, Chevron and ConocoPhillips - were pressed by members of Congress to explain soaring fuel prices amid huge profit and why they were not investing more to develop renewable energy sources.

They are getting no sympathy now that prices have fallen.

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