Oct. 30 (Bloomberg) -- Exxon Mobil Corp., the world's biggest oil company, said third-quarter profit jumped 58 percent, exceeding analyst estimates, as record crude prices made up for the largest drop in output in at least a decade.

Net income rose to $14.8 billion, or $2.86 a share, from $9.41 billion, or $1.70, a year earlier, the Irving, Texas-based company said today in a statement. Profit excluding one-time items, such as a gain on a pipeline sale, was an all-time high for any U.S. corporation and was 18 cents a share higher than the average of 13 analyst predictions compiled by Bloomberg.

Earnings from oil and gas wells alone were higher than the company's total profit a year earlier, even as output fell 8.2 percent, the most since at least 1997. After touching a record above $147 a barrel in July, crude prices tumbled $80 as demand for fuel grew at the slowest rate in 15 years.

``The picture is more complicated now,'' said Todd Petzel, who advises pension funds and endowments with $5.5 billion under management as chief investment officer at Offit Capital Advisors in New York. ``They're going to be under pressure to deliver on newer projects that have higher costs than their older assets.''

Exxon Mobil rose 40 cents to $75.05 in New York Stock Exchange composite trading. The stock has dropped 20 percent this year, heading for its worst decline since 1981.

Production Falls

Chief Executive Officer Rex Tillerson, who has led Exxon Mobil to nine of the 15 largest quarterly profits in U.S. history, hasn't been able to stem declines in production. Third- quarter crude and natural-gas output was equivalent to 3.6 million barrels of oil a day, the lowest since Exxon Corp. bought Mobil Corp. in 1999.

Revenue climbed 35 percent to $137.7 billion, Exxon Mobil said. Spending on drilling rigs, refinery expansions and new gas plants may jump to $30 billion annually in the next five years, a 20 percent increase from the company's March estimate, spokesman David Rosenthal told investors and analysts today on a conference call.

Oil and gas output, which will decline this year for the seventh time in a decade, will increase in 2009, in part because of a new liquefied-gas project in Qatar, Rosenthal said. He declined to give an estimate for how much production will rise.

Royal Dutch Shell Plc, Europe's largest oil company, today reported a 22 percent gain in third-quarter profit to $8.54 billion. London-based BP Plc said this week that its net income rose 83 percent to $8.05 billion, exceeding analyst estimates.

Chevron, ConocoPhillips

Chevron Corp., Exxon Mobil's biggest U.S. rival, is scheduled to report earnings tomorrow. Houston-based ConocoPhillips, the third-largest U.S. oil company, said last week that its profit jumped 41 percent to $5.19 billion. Marathon Oil Corp., the No. 4 U.S. oil company, said today that its profit doubled to $2.06 billion.

Tillerson spent $8 billion to buy back 107 million shares, 2.1 percent of Exxon Mobil's stock, during the third quarter. That was 17 percent more than the $6.85 billion spent to search for new oil fields and build new plants. Exxon Mobil is spending $68 million a day to drill wells, expand chemicals plants and build gas-import terminals.

Cash and cash equivalents dropped almost 6 percent in the third quarter to $36.7 billion from $39 billion at the end of June.

Profit from oil and gas sales climbed 74 percent to $11 billion, or about $5 million an hour. Refineries earned $3 billion, a 51 percent increase from a year earlier, as the company increased diesel production to capitalize on higher prices for the fuel used to run trucks and trains. Chemicals profit dropped 9.6 percent to $1.09 billion.

Exxon Mobil's ratio of market value to crude and gas reserves is the highest among the world's 10 largest oil companies, according to data compiled by Bloomberg. Exxon trades at about $16 per barrel of oil-equivalent reserves, 60 percent above the average for its peers.

To contact the reporter on this story: Joe Carroll in Houston at jcarroll8@bloomberg.net.

Last Updated: October 30, 2008 16:34 EDT