Exxon profits hit record

DALLAS – Exxon Mobil Corp., the world’s largest publicly traded oil company, reported record third quarter profits and may be headed for all-time marks for annual revenue and earnings, thanks to higher prices for oil and natural gas.

The company said it earned $5.68 billion, or 88 cents per share, in the third quarter, compared with $3.65 billion, or 55 cents per share, a year earlier. The company said it would have earned $6.23 billion in the recent quarter after excluding a $550 million charge to cover the cost of a class-action lawsuit by gas station dealers.

Analysts surveyed by Thomson First Call had forecast 87 cents per share.

Revenue jumped to $76.38 billion from $58.84 billion.

It was, however, not a good day for oil stocks, as crude oil futures prices fell below $51 a barrel to their lowest close in three weeks. Shares of Exxon Mobil fell 34 cents, to $48.61, in trading Thursday on the New York Stock Exchange.

“It was a great (earnings) report, but the market is looking forward and the question is, is this as good as it gets? Those stocks are sensitive to the direction of oil prices,” said Lysle Brinker, an analyst at John S. Herold, a petroleum-industry consulting firm.

Exxon Mobil said profits from exploration and production jumped nearly one-third, to $3.93 billion, and earnings from refining and selling petroleum products rose by more than one-third, up $490 million to $1.40 billion.

Earnings from chemicals were a record $1 billion, nearly four times higher than a year earlier.

Exxon Mobil said production increased 1 percent from a year ago. The global oil giant cut back its spending on capital and exploration projects, however, to $3.63 billion from $3.84 billion a year earlier.

An Exxon Mobil spokesman, Tom Cirigliano, said the company still planned to spend $15 billion to $16 billion on exploration for all of 2004, about even with the $15.53 billion it spent last year.

“We’re still spending at a high level,” he said.

Brinker, the Herold analyst, said Exxon Mobil officials might increase exploration spending slightly due to high oil prices, “but they’re not going to go willy-nilly. They manage for the long term.”

Fadel Gheit, an analyst with Oppenheimer & Co., said he believed Exxon Mobil was deliberately and wisely holding back on spending because high oil prices have also raised the cost of drilling.

Gheit said Exxon Mobil was benefiting from the high price of oil – lately above $50 a barrel – but that a retreat to the range of $30 to $35 a barrel wouldn’t be a disaster either. Crude oil futures slid below $52 a barrel Thursday as supply concerns ahead of the Northern Hemisphere winter eased after an unexpectedly high rise in U.S. inventories.

Gheit added that the record profit of the chemicals business showed the breadth of Exxon Mobil’s strength.

Exxon Mobil had disclosed this month that it would take a $550 million charge against earnings to cover the costs of a lawsuit brought on behalf of about 10,000 station dealers, who say they were overcharged for gasoline for several years. The dealers won a $500 million verdict in 2001. This month, the U.S. Supreme Court agreed to hear part of the company’s appeal but allowed most of the verdict to stand.

For the first nine months of the year, Exxon Mobil’s earnings were a record $16.91 billion, or $2.59 per share, compared to $14.86 billion, or $2.22 per share, in the same period last year. Revenue rose to $214.67 billion from $180.79 billion.

At that pace, Irving, Texas-based Exxon Mobil appeared likely to surpass its all-time high for revenue – $246.74 billion – set last year.