Exxon profit tops $10 billion, capping record year
Mon Jan 30, 2006 02:17 PM ET
NEW YORK (Reuters) - Exxon Mobil Corp., the world's largest publicly traded oil company, reported a quarterly profit of $10.7 billion on Monday, rounding out the most profitable year in U.S. corporate history.
The results pushed up Exxon's profit for the year to a staggering $36.13 billion -- bigger than the economies of 125 of the 184 countries ranked by the World Bank. Profit rose 42 percent from 2004, largely due to soaring oil and gas prices.
The news immediately reignited calls for special taxes on large oil companies, who have come under fire for posting billions in profit while consumers struggle with high gasoline prices. Exxon was quick to say that such results would help it make long-term investments to meet energy demand.
The Irving, Texas company's fourth-quarter net income rose 27 percent, to $10.71 billion, or $1.71 a share, from $8.42 billion, or $1.30 a share, a year earlier. Revenue was just shy of $100 billion.
Excluding a special gain, the company earned $1.65 per share, handily beating the average forecast of $1.45 among analysts polled by Reuters Estimates.
"It's an exceptionally strong quarter -- they're the world's most profitable company," said Robert Lutts, president of Cabot Money Management, which has $350 million in assets under management, roughly 3 percent of it in Exxon stock. "It could raise eyebrows among some, but they're doing their job."
But that didn't impress politicians and consumer groups.
"Once again, Exxon Mobil has reaped the largest windfall in U.S. history at the expense of hard-working families," Wisconsin Gov. Jim Doyle said in a statement. "I hope that this news will finally convince the U.S. Congress to take action and force the oil companies to give consumers a refund."
Exxon is latest U.S. oil major to report a surge in quarterly profit, following Chevron Corp. and ConocoPhillips last week.
Exxon shares were up $2.14, or 3.5 percent, at $63.43 in afternoon trade on the New York Stock Exchange.
Crude oil prices rose about 40 percent last year, driven up by tensions in oil-producing countries like Iran and Nigeria, hurricanes in the Gulf of Mexico and tight supplies. They have been rising for four years, handing Big Oil a profit bonanza.
Natural gas prices have been on a similar tear, nearly doubling last year on the futures market thanks to supply disruptions and higher demand.
Fourth-quarter earnings at Exxon's exploration and production division rose 44 percent to $7.04 billion. Refining and marketing operations posted only a marginal rise in profit as the impact of Hurricanes Katrina and Rita, which slammed the U.S. Gulf Coast last year, offset a boost from higher refining and marketing margins. Chemical earnings were down sharply.
Exxon's results showed evidence of some of the problems plaguing large oil companies, which are struggling to raise output as they grapple with maturing fields and increasingly tougher access to vast reserves in regions like the Middle East and Russia.
Exxon said oil and gas production fell 1 percent in the fourth quarter. However, excluding the lingering effects of Katrina and Rita, as well as divestment and entitlement effects, production rose 2 percent.
Analysts expect the company to report higher production this year as new projects in Russia and Africa ramp up.
"Progress on tangible growth in oil and gas production has so far been slow and, combined with the inertia associated with its sheer scale, has led the shares to lag the performance of the smaller names," Citigroup said in a research note.
Exxon used a large chunk of its growing cash pile to buy back shares -- $5 billion in the fourth quarter, the same as in the third quarter. Also, it hiked its quarterly dividend last week.
Indeed, Exxon's total distributions to shareholders through dividends and share buybacks jumped 56 percent to $23.2 billion last year.
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