Exxon Mobil First-Quarter Profit Rises as Oil Demand Fuels Price Increases

Exxon Mobil Corp. (XOM), the world’s largest company by market value, posted its biggest first- quarter profit increase in eight years as surging energy demand and supply concerns pushed crude prices to a 30-month high.

First-quarter net income rose 69 percent to $10.7 billion, or $2.14 a share, from $6.3 billion, or $1.33, a year earlier, Irving, Texas-based Exxon said today in a statement. Per-share profit was 10 cents higher than the average of five analysts’ estimates compiled by Bloomberg.

Exxon’s profit from selling oil and natural-gas rose 49 percent to $8.7 billion as Brent oil futures, the benchmark price for two-thirds of the world’s crude, averaged more than $105 a barrel. Soaring demand for fuels to run trains, trucks, cars and airplanes coincided with civil unrest that disrupted exports from Libya, home to Africa’s largest reserves.

Sales rose 26 percent to $114 billion. Three-fourths of Exxon’s sales come from outside the U.S.

In China, the world’s second-largest consumer of oil and gas after the U.S., demand for oil-based fuels such as diesel rose 11 percent during the first three months of this year, almost seven times the U.S.’s 1.6 percent growth rate, according to the International Energy Agency. Brazilian and Indian demand expanded by 5 percent and 3.8 percent, respectively.

Refining Improves

Exxon fell 80 cents to 86.98 at 9:30 a.m. in New York Stock Exchange composite trading. The stock has 10 buy ratings from analysts, 12 holds and one sell.

The company’s refining business earned $1.1 billion. In Exxon’s chemicals division, net income rose 21 percent to $1.52 billion, according to the statement.

Exxon raised oil and gas production 10 percent to the equivalent of 4.82 million barrels a day during the quarter as new projects such as the West Qurna 1 field in Iraq came online.

Exxon plans to spend $34 billion this year on capital projects such as new oil wells, pipeline repairs and refinery upgrades. Chief Executive Officer Rex Tillerson told analysts last month that he is targeting a 4 percent increase in oil and natural gas production this year.

“For Exxon and many of the integrateds, the growth is international,” said Eliecer Palacios, energy sector specialist at Maxim Group, a boutique investment bank. “Increased capital expenditures are necessary to continue adding reserves.”

Replacing Production

The company’s discoveries and acquisitions last year were enough to replace 209 percent of the crude and gas pumped from wells, boosting proved reserves to the equivalent of 24.8 billion barrels, which exceeded the crude reserves of nations such as Algeria or Mexico.

Exxon, which traces its roots to the 1880s and John D. Rockefeller’s Standard Oil Trust, has exploration prospects from Greenland to Madagascar to Vietnam.

Oil production in Libya dwindled to 390,000 barrels a day in March, a 75 percent drop from the end of 2010, according to Bloomberg estimates, as a rebellion against Muammar Qaddafi prompted foreign energy companies to evacuate staff and the country’s cities were put under siege.

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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