Exxon shatters profit records

[regfootball]

http://money.cnn.com/2008/02/01/news/compa...=rss_topstories

Exxon shatters profit records

Oil giant makes corporate history by booking $11.7 billion in quarterly profit; earns $1,300 a second in 2007.

By David Ellis, CNNMoney.com staff writer

February 1 2008: 10:03 AM EST

NEW YORK (CNNMoney.com) -- Exxon Mobil made history on Friday by reporting the highest quarterly and annual profits ever for a U.S. company, boosted in large part by soaring crude prices.

Exxon, the world's largest publicly traded oil company, said fourth-quarter net income rose 14% to $11.66 billion, or $2.13 per share. That's up from $10.25 billion, or $1.76 per share, in the year-ago period.

That topped Exxon's previous quarterly profit record of $10.7 billion, set in the fourth quarter of 2005, which also was a record for a U.S. corporation.

"Exxon can put out some amazing numbers and this is one of those cases," said Jason Gammel, senior analyst at Macquarie Securities in New York.

Exxon also set an annual profit record by earning $40.61 billion last year - or nearly $1,300 per second in 2007. That exceeded its previous record of $39.5 billion in 2006. In the fourth quarter, revenue rose 29.5% from a year ago to $116.64 billion.

Analysts were looking for the company to report quarterly profit of $10.36 billion on revenue of $114.9 billion, according to earnings tracker Thomson Financial.

Despite topping Wall Street's estimates, Exxon (XOM, Fortune 500) shares slipped in morning trading.

Exxon attributed its impressive results to strong performance across its divisions, but a large part of the profit surge was underpinned by climbing oil prices.

Crude prices skyrocketed nearly 60% last year. The surge helped prices break through the $100 a barrel mark for the first time ever early last month. Since crossing that milestone, prices have eased to around $91 a barrel.

Natural gas prices also jumped last year, albeit marginally. But costs have also increased for the oil companies, which is why profits haven't risen as rapidly as crude prices.

Big oil companies that both pump oil and refine crude into gasoline have to spend more for crude but are unable to pass on all the extra cost to consumers, which eats in to gasoline profit margins.

The average price for a gallon of regular gasoline hit an all-time high of $3.227 in May, according to the motorist organization AAA. The high prices were blamed on strong demand and a series of accidents that shut down refineries in the U.S. Slack demand for gasoline in the latter half of last year kept gas prices from rising as much as crude prices.

Exxon's earnings are likely to draw fire from consumer rights groups, who contend the oil industry is deliberately restricting supply and profiting on the back of U.S. motorists. They have previously called for a windfall profit tax on oil firms and have proposed breaking up the big oil companies created during the 1990s merger wave.

Exxon isn't the only oil giant to report impressive earnings. No. 2 Chevron (CVX, Fortune 500) also reported a jump in quarterly profit on Friday. Conoco (COP, Fortune 500), the nation's third largest oil company, trounced profit estimates by nearly 25% when it reported last week.

[CARBIZ]

This makes me laugh because around here all the gas stations have a cute pie chart that breaks down the costs at the pump: refinery, shipping, crude, taxes, etc. to show that the government is to blame for the high cost of gasoline at the pumps. They show, like, a 3 % retail profit. Of course, they also neglect to mention that since they (the oil companies) control the refineries, how much profit are they showing at that level?

[Intrepidation]

I hope they all choke on their filthy money and rot.

[pow]

How many cellulosic ethanol plants can you get from $11.7 billion?

[Satty]

How many new oil deposits can be found for $11.7 billion? How many refineries can be built for that money? A large portion of any companies profit is going back into the company, the thing with oil is that it takes years for increased production to positively effect consumers. That is, if the supply increases at a faster rate than demand, if demand increases at a faster rate, then production increases just catch supply up with demand.

Its not entirely big oil's fault that gas prices are so high (thats what all the bitching boils down to) you can blame a good portion of it on local governments. Different areas require different fuel blends be sold, sometimes its county-by-county or even city-by-city, the additives and whatnot aren't consistent because of regulations. That means the gas has to be produced separately and shipped separately, thats costly. Yes, their execs do make a f@#k-ton of money, but they also have a lot of $h! to deal with, and if the company flourishes under their leadership, why are they not entitled to a portion of that?

[Drew Dowdell]

because that money has not been used to increase refinery production or build new refineries.....

in fact... the oil companies have been closing smaller refineries thereby reducing supply

[Camino LS6]

How many cellulosic ethanol plants can you get from $11.7 billion?

If they want to avoid being branded the devil incarnate, they had better invest heavily in alternative fuels. Like, yesterday.

[regfootball]

at least reduce their profits and send it to the states for money to fix and build roads

[2QuickZ's]

How many new oil deposits can be found for $11.7 billion? How many refineries can be built for that money? A large portion of any companies profit is going back into the company, the thing with oil is that it takes years for increased production to positively effect consumers. That is, if the supply increases at a faster rate than demand, if demand increases at a faster rate, then production increases just catch supply up with demand.

Wow! They sure got you to drink the Kool-Aid. The only problem with that logic is that profits are calculated AFTER expenses. That means they made $11.7 billion in profit after accounting for the money they reinvested in the company during that quarter. Whenever they post a big profit like that, the excuse machine always starts up and the first thing they want to point to is the risk involved. My response to that is "When is the last time one of the big oil companies failed to make a profit?" I could research it but I'm too lazy.

Still, I probably won't be popular for saying this but I think gas prices are right around where they should be. I just think it's too bad that so much profit is being made by the oil companies. I'd rather see the governments get it in tax dollars so they can improve the roads (at least here in Michigan where the road ways suck). The government would just find a way to piss it away anyway.

[ZL-1]

Wow! They sure got you to drink the Kool-Aid. The only problem with that logic is that profits are calculated AFTER expenses. That means they made $11.7 billion in profit after accounting for the money they reinvested in the company during that quarter.

I think Satty meant retained earnings. Also, not all expenses are investment into the company and because of accruals/deferrals, cash expenses and costs are sure to be different amounts. That's why you have a P&L and a Cash Flow Statement.

[CARBIZ]

As with all Corporations, oil companies are in it for the $$$. The only part that pisses me off is the amount of free money both our governments give these leaches. The Mackenzie Oil Pipeline is on hold once again, threatening national security in the U.S., because oil companies weren't getting enough 'guarantees' and free hand-outs from the Canadian government.

F$#K, Exxon has MORE money than the Canadian government!

[2QuickZ's]

I think Satty meant retained earnings. Also, not all expenses are investment into the company and because of accruals/deferrals, cash expenses and costs are sure to be different amounts. That's why you have a P&L and a Cash Flow Statement.

I forgot to put the smiley after my Kool-Aid comment. It's so hard to convey sarcasm on a message board. I think my statement came across more direct than I meant it to.

I guess the fun part of reporting financials is that nothing is black and white. Or at least it doesn't seem like it to me because I am not into accounting. I know I over simplified things but the simple fact is, big oil is not hurting and never have been that I am aware of so to say it is a high risk industry (their typical excuse for big profits) is amusing. I guess if ethanol production ever advances to the point where it displaces a significant amount of oil usage, or if hydrogen fuel cells ever take off, or if battery technology ever comes along far enough to enable 300 mile plug in electric vehicles, or if..... so on, so forth, maybe it will get a little riskier?!?! Any or all of those things will take decades to happen, minimum.

As others have said, they are in the business to make money so as much as we don't like they type of profits they make off of us, they really shouldn't need to make excuses. They could simply say they are maximizing shareholder value!

[FUTURE_OF_GM]

Legalized robbery.

Our country is basically being held hostage by oil companies.

I really hope they catch hell for this. It wouldn't bother me if it wasn't "record profit" each time we hear about it. I think Exxon surpassed every mark this time didn't they? To become the biggest profit ever recorded.

Edited February 3, 2008 by FUTURE_OF_GM

[loki]

because that money has not been used to increase refinery production or build new refineries.....

in fact... the oil companies have been closing smaller refineries thereby reducing supply

probably, but my boss's son works for marathon and helped them figure a way to have less down time in one part of the process...but marathon also had like at least a week down across all their refineries here.