Huge profit just a prelude for Exxon Mobil
DALLAS – Exxon Mobil Corp. posted the fifth highest quarterly profit for any public company in history on Thursday, and with oil prices above $70 a barrel it could still be the company’s weakest quarter for the year. Exxon Mobil’s first quarter was lower than its record fourth quarter, when the world’s largest oil company reported the highest profits ever for any publicly traded company. And the earnings, which rose 7 percent to more than $8 billion, still fell short of analysts’ estimates. But in what is sure to spur the growing furor over outsized energy industry earnings, Exxon Mobil’s massive profits may further increase in 2006 as the company benefits from rising crude-oil prices and production, analysts say. “This is only the beginning,” said Fadel Gheit, analyst for Oppenheimer & Co. “Let me tell you, it gets better after that. Oil prices will add huge amounts to earnings, at least a billion dollars.” In January, Exxon posted the highest quarterly profits of any public company in history: $10.71 billion for the fourth quarter of 2005 and $36.13 billion for the full year. Howard Silverblatt, a senior index analyst for Standard & Poor’s, said Exxon’s latest profit figure places fifth historically among all public companies’ quarterly earnings. Exxon also holds the first, second and fourth spots; Royal Dutch Shell PLC has the third spot. In the first quarter, net income rose to $8.4 billion, or $1.37 per share, from $7.86 billion, or $1.22 per share, a year earlier. Roughly three-quarters of that profit came from the company’s upstream division, which produces oil and natural gas. Analysts polled by Thomson Financial had expected a higher profit of $1.47 per share for the latest quarter. Analysts and company executives identified two major factors in the company’s coming up a dime short: higher taxes on oil and gas produced abroad and reduced income from its refining business, which spent heavily on maintenance in the aftermath of last year’s hurricanes.160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! AD Quality Auto 360p 720p 1080p Top articles1/5READ MOREOregon Ducks football players get stuck on Disney ride during Rose Bowl eventThe earnings report comes amid consumer outcry in the United States about soaring gasoline prices, which average $2.91 a gallon nationwide, 68 cents higher than a year ago. It also lands as Washington lawmakers are looking to appease consumers with various proposals to make big oil companies pay more taxes or provide consumers with some other relief. But everyone acknowledges that little can be done in the short term to bring down prices. “If we had a silver bullet, we would be proposing it to Washington right now,” said Ken Cohen, the company’s vice president of public affairs. Exxon Mobil is investing a growing portion of its profits in new oil and gas production, he said, and is sympathetic to the added energy-price burden on consumers. Still, he said consumers and members of Congress need to “take a deep pause and a deep breath” because market forces will eventually bring supply and demand back into balance. He said Congress could help matters in the longer term by removing barriers to domestic drilling. The increasing public scrutiny of Exxon comes less than a month after the news that the company handed its former chairman and chief executive officer, Lee Raymond, a retirement package that adds up to $400 million when all pension payoffs and stock options are included. The huge compensation sparked headlines across the country and calls in Washington to justify it.