Exxon Profit Rises as Energy Prices, Demand Climb
Exxon Profit Rises as Energy Prices, Demand Climb
Matt Nager/Bloomberg
Refining rebounded from a loss a year ago as demand for gasoline, diesel and jet fuel rose 3.5 percent.
Refining rebounded from a loss a year ago as demand for gasoline, diesel and jet fuel rose 3.5 percent. Photographer: Matt Nager/Bloomberg
Jan. 31 (Bloomberg) -- Jason Gammel, an analyst at Macquarie Capital, talks about the outlook for Exxon Mobil Corp. The world’s largest company posted its biggest quarterly profit in more than two years as energy demand boosted oil and fuel prices. Fourth-quarter net income rose to $9.25 billion, or $1.85 a share, from $6.1 billion, or $1.27, a year earlier. Gammel talks with Betty Liu on Bloomberg Television's "In the Loop." (Source: Bloomberg)
Exxon Mobil Corp., the world’s largest company, posted its biggest quarterly profit in more than two years as energy demand boosted oil and fuel prices.
Fourth-quarter net income rose to $9.25 billion, or $1.85 a share, from $6.1 billion, or $1.27, a year earlier, Irving, Texas-based Exxon said in a statement today. Per-share earnings were 25 cents more than the average estimate of six analysts surveyed by Bloomberg.
Oil and natural-gas output from Exxon’s wells rose 19 percent during the fourth quarter to the equivalent of 4.97 million barrels a day, the most in the 128-year history of the company. Refining rebounded from a loss a year ago as demand for gasoline, diesel and jet fuel rose 3.5 percent, widening margins from processing crude into fuels.
“They’re hitting their production growth at exactly the right time,” Jason D. Gammel, an analyst at Macquarie Capital Europe Ltd., said today during an interview on Bloomberg Television’s “In the Loop with Betty Liu.” “Their production is going to be up over 7 percent this year and when you’re doing that into the face of a rising commodity-price environment, the earnings and cash-flow effects are just magnified.”
Exxon rose $1.69, or 2.1 percent, to $80.68 at 4 p.m. in New York Stock Exchange composite trading, the biggest gain in eight weeks. The stock has 10 buy ratings from analysts, 13 holds and one sell.
Fourth-quarter sales climbed 17 percent to $105.2 billion. For the full year, Exxon’s revenue was $383.2 billion, a figure that exceeds the gross domestic product of Thailand, Denmark or Chile.
Share Buybacks
Spending on new oil platforms, liquefied gas plants, exploratory drilling and refinery repairs jumped 19 percent to $32.2 billion last year, the company said in the statement. Exxon plans to spend $5 billion to buy back its shares this quarter, after spending that amount on share repurchases in the fourth quarter.
“Their share repurchase program is back up to very high levels of activity” said Gammel, who has an “outperform” rating on Exxon’s stock. “That will enhance the earnings effects as well.”
Gammel said he expects the company to maintain the $5 billion quarterly buyback pace for the rest of this year.
Brent Vs. Nymex
Exxon benefited as Brent futures traded in London, the benchmark for two-thirds of the world’s oil, rose at a faster pace than New York-traded crude, said Pavel Molchanov, a Houston-based analyst at Raymond James & Associates Inc. who has a “market perform” rating on Exxon stock.
Brent crude averaged $87.45 a barrel during the quarter, a 16 percent increase from a year earlier, according to data compiled by Bloomberg. Oil futures traded on the New York Mercantile Exchange increased 12 percent to average $85.24. Brent topped $100 a barrel today for the first time since 2008.
“Exxon has a great deal of exposure to Europe and Africa, which tend to price oil off of Brent,” Molchanov said in a telephone interview.
Gas Production Increase
Exxon last year made its biggest acquisition since 1999, buying XTO Energy as part of Chief Executive Officer Rex Tillerson’s expansion of its natural-gas portfolio.
Exxon tripled gas production in the U.S. as a result of the XTO deal and other purchases, including Ellora Energy, a closely held operator in the Haynesville shale region. Gas accounted for 49 percent of Exxon’s global production during the last three months of 2010, up from 43 percent a year earlier.
The company, which traces its roots to John D. Rockefeller’s Standard Oil Trust of the 1880s, signed a $1 billion accord last week joining Russia’s OAO Rosneft to drill for crude in the Black Sea.
Chevron Corp., the second-largest U.S. energy company, on Jan. 28 said profit from the last three months of 2010 rose 72 percent to $5.3 billion, a record for the company’s fourth quarter.
ConocoPhillips, the third-biggest U.S. oil company, said on Jan. 26 that fourth-quarter profit rose 59 percent to $2.04 billion as chemical demand increased and higher oil prices offset a slump in output.
To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net.
To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net.
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