Monday, January 30, 2006

Exxon Mobil Corp., the world’s largest publicly traded oil company, reported a record quarterly profit of $10.7 billion yesterday, capping the most profitable year in U.S. corporate history.

The results pushed up Exxon’s profit for the year to a record $36.13 billion — bigger than the economies of 125 of the 184 countries ranked by the World Bank.

The results exceeded Wall Street expectations, and Exxon shares rose, but some lawmakers expressed outrage at the industry’s latest profit surge, renewing calls for a windfall profits tax and increased investment in alternative fuels.

Exxon’s profit for the year was the largest annual reported net income in U.S. history, said Howard Silverblatt, a senior index analyst for Standard & Poor’s. He said the previous high was Exxon’s $25.3 billion profit in 2004.

“What do you expect when you combine record oil and gas prices and strong operations everywhere else?” asked analyst Fadel Gheit at Oppenheimer & Co. “Unless prices collapse, earnings in 2006 will make 2005 look like a cakewalk.”

Annual revenue grew to $371 billion from $298.04 billion — exceeding Saudi Arabia’s estimated 2005 gross domestic product of $340.5 billion, according to statistics maintained by the CIA.

Exxon Mobil probably will dethrone Wal-Mart Stores Inc. from atop the Fortune 500 when it is released this spring. Wal-Mart, whose fiscal year runs through January, had $290.29 billion in revenue through December.

The company benefited from high oil and natural-gas prices and solid demand for refined products. Its average sale price for crude oil in the U.S. during the quarter was $52.23 a barrel, compared with $38.85 a year earlier. It sold natural gas in the U.S., on average, for $11.34 per 1,000 cubic feet, compared with $6.61 a year earlier.

Experts said there wasn’t much that could be done in the short term to lower the price of gasoline, which has been climbing and now hovers around $2.34 per gallon nationwide, $2.41 in the Washington area.

“As long as demand stays high, people will have to pay more,” said David E. Dismukes, an energy economist and associate director of Louisiana State University’s Center for Energy Studies.

“Exxon is the most efficient operator in a market characterized by rampant demand and lagging supply growth,” Derek Vogler, who helps manage $11 billion, including Exxon Mobil shares, at Country Trust Bank in Bloomington, Ill., told Bloomberg News recently.

Exxon’s vice president of investor relations, Henry Hubble, said that while strong commodity prices clearly helped drive the record earnings, the company deserved credit for its ability to complete projects on time while keeping costs in check.

“We continue to identify world-class projects, post industry-leading returns, and are well-placed for continued growth,” Mr. Hubble told analysts. “Our record results show a disciplined approach, and we continue to deliver superior value to our shareholders.”

Quarterly revenue ballooned to $99.66 billion from $83.37 billion a year ago but came in shy of the $100.72 billion Exxon posted in the third quarter, which was the first time a U.S. public company generated more than $100 billion in sales in a single quarter.

Exxon’s results lifted the combined 2005 profits for the country’s three largest integrated oil companies to more than $63 billion.

ConocoPhillips said Wednesday that its fourth-quarter earnings rose 51 percent to $3.68 billion, while annual income climbed 66 percent to $13.53 billion. Two days later, Chevron Corp. said its fourth-quarter earnings rose 20 percent to $4.14 billion, while annual income jumped 6 percent to $14.1 billion.

The oil industry’s stellar results have renewed talk for a windfall profit tax that would push companies to invest more in new production and refining capacity.

Sen. Charles E. Schumer, New York Democrat who proposed an extra tax on oil-company profits in November, said yesterday that “the federal government has a responsibility to make sure that these companies continue to innovate instead of just profiting from the status quo.”

But John Felmy, chief economist for the American Petroleum Institute, a Washington trade group, said yesterday that the political rhetoric was “not a case based on fact.”

“We invested somewhere in the order of $86 billion last year,” Mr. Felmy said. “Then we have to treat investors appropriately; otherwise, we’d have the Eliot Spitzers of the world coming after us,” referring to the New York attorney general.

Analysts said they are not worried about any fallout from political pressure.

“I hope the capitalist system would promote and applaud the hard work of companies that have been smart and lucky to achieve good earnings for shareholders,” said Tina Vital, another analyst for S&P.

Exxon shares rose $1.82, or almost 3 percent, to close at $63.11 on the New York Stock Exchange. That is near the upper end of its 52-week trading range of $51.35 to $65.96.

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