Oil Profits Shatter Records

HOUSTON — Exxon Mobil Corp. reported second-quarter earnings of $11.68 billion Thursday, the biggest profit from operations ever by any U.S. corporation, but the results were well short of Wall Street expectations and its shares slumped 3 percent.

The world's largest publicly traded oil company said net income for the April-June period came to $2.22 a share, up from $10.26 billion, or $1.83 a share, a year ago.

Revenue rose 40 percent to $138.1 billion from $98.4 billion in the year-earlier quarter.

Excluding an after-tax charge of $290 million related to an Exxon Valdez court settlement, earnings amounted to $11.97 billion, or $2.27 per share.

Analysts on average expected Exxon Mobil to earn $2.52 a share on revenue of $144 billion, according to a survey by Thomson Financial. The estimates typically exclude one-time items.

The record-setting results were largely expected, given that crude prices in the second quarter were nearly double what they were a year ago. Natural gas prices were significantly higher too.

But investors expected even bigger profits Thursday, especially after Europe's Royal Dutch Shell reported a 33 percent jump in second-quarter earnings to $11.6 billion, which fell just shy of Exxon's own record earnings from 2007.

Exxon Mobil shares fell $2.64, or 3.13 percent, to $81.74 in afternoon trading.

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Setting U.S. profit records has become commonplace for Irving-based Exxon Mobil. The $11.68 billion topped its own U.S. record of $11.66 billion, posted in the fourth quarter of last year. Right behind that was the $10.9 billion it reported to start 2008.

In fact, if one-time gains like bankruptcy settlements and spinoffs are stripped away from other companies, Exxon Mobil owns the record for the top 10 most-profitable quarters for a U.S. company, as well as the largest annual profit.

United Airlines' UAL Corp. reported first-quarter profits of $22.9 billion in 2006, but that reflected a bankruptcy settlement, not true profit. The airline would have posted a $306 million loss if those gains were stripped out.

Ford Motor Corp. reported profits of $17.6 billion in the first quarter of 1998, but that included a $16 billion, one-time gain from the spinoff of Associates First Capital.

Exxon Mobil, which produces 3 percent of the world's oil, got its biggest boost from its exploration and production arm, where earnings rose 68 percent to $10.01 billion from $5.95 billion a year ago. The main driver was record crude prices, partially offset by lower sales volumes and higher operating costs.

Once again, Exxon Mobil's results revealed a troubling trend at the heart of its business.

Production on an oil-equivalent basis fell 8 percent from a year ago _ a significant blow for a company that generates more than two-thirds of its earnings from oil and gas production. That follows an opening quarter of 2008 when the company said overall production fell 5.6 percent from a year ago.

Excluding last year's loss of its Venezuelan assets, a labor strike in Nigeria and lower volumes because of production-sharing contracts, Exxon said production was down about 3 percent in the most-recent quarter.

Like its competitors, Exxon Mobil said it took a beating from lower global refining margins. Earnings from refining and marketing fell 54 percent in the quarter to $1.55 billion.

For the first six months of 2008, Exxon Mobil said it earned $22.57 billion, or $4.25 a share, from $19.54 billion, or $3.45 a share, in the first half of 2007. Revenue rose to $254.9 billion from $185.5 billion.

Comments

[hu.man]

Oil is and has been sharply up in recent months on speculation of widening conflict in the Middle East which could result in disruption of supplies to the world energy markets. Yes, there is more demand also in the market but as all analysts have pointed out, the demand increase does not justify the spike in the price.

The Iranian nuclear crisis coupled with the Israeli saber rattling is the significant contributer to the price instability. When Saddam invaded Kuwait in 91, there was also a spike in oil prices. Look at the chart below:

http://www.inflationdata.com/inflation/images/charts/Oil/Inflation_Adj_Oil_Prices_Chart.htm

[hu.man]

Continued from previous post

One can correctly surmise that since 9/11 and the subsequent Iraq war, we are seeing a continual upswing in crude oil prices upward which reflects the increasing instability in the vital oil rich region of the world. The oil companies, even though they benefit tremendously from the price spikes, are not necessarily happy about the instability. They are not laughing all the way to the bank more so than stashing their gains in the event they have to tap into when going gets really rough in that region.

Oil companies need to survive in order to continue supplying the world with energy and playing their role in the global economic order. They need to buffer against significant losses they can incur if things go really sour. The question to ask Bush administration purveyors is: "Why then, as they claim the overall situation is improving in Iraq and region, are the markets so volatile and the energy prices are soaring which are really giving the exactly the opposite message?" Bush folks have totally and equivocally failed to deliver on their promises of bringing peace and stability even measured by their own market economics metrics.

[hu.man]

Continued from previous post

One can correctly surmise that since 9/11 and the subsequent Iraq war, we are seeing a continual upswing in crude oil prices upward which reflects the increasing instability in the vital oil rich region of the world. The oil companies, even though they benefit tremendously from the price spikes, are not necessarily happy about the instability. They are not laughing all the way to the bank more so than stashing their gains in the event they have to tap into when going gets really rough in that region.

Oil companies need to survive in order to continue supplying the world with energy and playing their role in the global economic order. They need to buffer against significant losses they can incur if things go really sour. The question to ask Bush administration purveyors is: "Why then, as they claim the overall situation is improving in Iraq and region, are the markets so volatile and the energy prices are soaring which are really giving the exactly the opposite message?" Bush folks have totally and equivocally failed to deliver on their promises of bringing peace and stability even measured by their own market economics metrics.

[DesertLight]

O's answer to this problem: Get a tune up and put air in your tires.

[ThunderclapNewman]

That's a lie.

But that is a good way to maximize your personal gas mileage.

[NoBo08]

You finally admit that O is a liar!

There may be hope for you yet. Nah....

[EarthToZoey]

Haha. :P

You know, little things like that can make a huge difference if enough people are motivated to do so. You heard about UPS shaving huge amounts of money off their $200 million gas bill by eliminating left-turns when possible? That alone took 28 million miles off its routes and resulted in saving three million gallons of gas. And, as a bonus, they reduced CO2 emissions by 31,000 metric tons. Pretty cool, huh?

[NoBo08]

So we ban all left turns. It's a start.

[lornejl]

And your answer is to let the air out of the tires ?

[Ramirez]

The answer is get a tune up, check the air in the tires, and drill for more domestic oil.

[neocon666]

McCain's answer: drill for oil offshore, which won't reach the market for at least 5 years, and a "gas tax holiday", which no economist has endorsed, and would only result in a 20 cent drop in prices, not to mention the laying off of highway maintenace workers.

Actually, Obama's strategy is just to close the "Enron Loophole" that resulted from Bush and Cheney allowing ENRON to write America's energy policy, giving us the $4 a gallon oil which Exxon enjoys today (I assume no one else does).

If ignorance isn't strength: why are there republicans?

[kdublya]

Bwahaha,

Love the Teen Angst mantra: Why bother, everything sucks.

"Desertlight spoke in... class today."

[swooge]

It's funny that a corporations only loyalty is to making a profit and their bottom line and yet no one mentios this fact. No matter what the cost to anyone or anything the bottom line is their personal god. Got a company that produces something that kills people slowly or destroys the planet? Throw some money at the problem and make it go away. Got caught raping and pillaging the public? FIle bankruptcy and let the government clean up your dirty deed. Make indecently huge profits at the expense of the country that allows you the ability make a profit? Hire journalists and government employees to protect your interests. Someone wake up to the fact that government spends billions of dollars protecting your interests? Pay for a study about how a welfare mother got an extra $40 one month and what a crime it is.

This is what the Repooplicons worship. They pay lipservice to capitalism. When it serves their purpose, like when they're in financial trouble, socialism is just fine. Bail us out please. Privatize the profits, socialize the losses.

This is what needs to change. Words like regulation, oversite and environmental laws have been made to be dirty words in our greedy country. Let's change that. Profit is a good thing. Profit at the expense of the good of the country is unacceptable.

[holeybuybull]

How is this possible? According to big oil's lobbying/a­dvertising entity, 100% of their income is spent on bringing the oil to market and future exploration. That leaves 0.00% for profit. Must be rove/enron math.

[mjt218]

Some of the oil companies shoot this spin: "We're investing as much money in developing new assets as we are making in profit." It's a smoke screen to try and say that they're investing all of their profits which is not true. On their balance sheets the profits come after all their capital investments are subtracted from their revenues. They are spending a ridiculous amount of money, but they're not investing all of their profits.

Exxon for one is not matching profit dollars with investment. Their expected capital expenditures this year are on the order of $25Billion, and they'll make close to $45Billion. Exxon's with the top of the Fortune 500 because they are one of the biggest public companies in the world. When they go after new developments they swing a huge axe and have a ton of overhead they bring in with them. As a result, they can't go after small projects or small developments. They have to go after billion dollar investments for new development areas. Since there's a shortage of new development opportunities out there right now of that size that are stable (threat of nationalization across the world is causing this) Exxon has been investing a large portion of their profits in stock buy-backs.

In short, they don't want to be stupid and stretch themselves too thin or make any investments that are riskier than necessary. They also probably don't see prices sustaining at these levels either.

[BillyShears]

Hey- I just bought lettuce at my grocery store for $20 a head- I'm told its so expensive to grow these days. But wait a second -my grocery store boasted the biggest profits in US history...­..but is it supply and demand? Is it the lettuce speculators who are driving up the price on lettuce seeds? I've turned on the TV for answers and all the talking heads in the MSM are so confused. I know - I can't seem to connect the dots either.

[delvis]

Exxon like the Bush administration have a few common partners. Condi Rice had an Exxon tanker named for her. James Baker,an Exxon attorney advised Boosh on the surge and then theres Cheney and the Halliburton thing. The Supreme Court ruling on the Exxon Valdez that limits punitive damages was a pure case of legislating from the bench. Exxon owns this government and like this government some people , me included, don't want anything to do with either.

[noamjunior]

Condi's tanker is owned by Chevron

[Ramirez]

It was renamed the Altair Voyager in May 2001.

[SFkid]

They get richer because they are virtually our dealers and we are the oil addicts. Alternative fuels NOW! India makes a car that runs on air pressure..­. http://www.popularmechanics.com/automotive/new_cars/4217016.html

[NoBo08]

I wonder why George Soros doesn't invest some of his billions in this? Hmmm

[comacoma]

Why do you think he hasn't? Or are you just assuming..­..

[ThunderclapNewman]

How do you know he doesn't?

I would imagine that a man as smart as Soros---or Warren Buffett, to name another liberal billionaire---would have diversified investments across a broad spectrum of choices.

You only mentioned it so you could make one of your feeble insults.

You really are sad and pathetic.

[Destin]

Why didn't Richard "Dick" Cheney, or Rupert Murdoch, or Bill Gates, or even George Bush??
I mean, what's the point of mentioning George Soros when he has no power to do anything?

[Thron]

I know someone who knows are to build a machine that can make high priced oil for Americans only.
The parts are easy to find right here in America.
You need people, all kind of working people with cars. Freeways. Suvs and old drinking engines.
And to operate it you need republicans, conservatives, even Christians crusaders for their faith in the system, it makes the machine stronger and last longer.
Voila! WHAT? It's been made!

[AshevilleVoice]

Oil profits soar and the war in Iraq is working: 2 headlines on the same day.

"Those who are saying that the Bush Administration has failed in Iraq or that we are not winning the war apparently do not understand that a policy must be judged according to its goals."
Solari Real Channel blog

Wake up, America!

[TheEmptinessOfTruthiness]

"Winning the war?"

You mean the cakewalk, the one that was to take 3 days, 3 weeks or 3 months tops? The one for which Mission Accomplished was decleared??

Judge "the war" by that policy objective. How's it grade?

[swooge]

The war was over years ago. This is an occupation. You cannot win an occupation, only stay or leave.

What are the goals of the Bush adminstration concerning Iraq. Legacy? Oil? Armageddon? Who knows for sure? Maybe all three. What is sure is that this is costing the US trillions of dollars, thousands of people and is dividing the country with little to show.

[YellowPanties]

Goal 1: get American oil companies into Iraq and in control of their oil.
Goal 2: bankrupt the "beast" that allows for any social programs, i.e., social gov't
Goal 3: widen the gap between rich and poor until it becomes a vast chasm
Goal 4: use America's surplus of labor and money for disposable war materiel, just as lampooned in "1984."
Goal 5: dismantle every safeguard and regulatory agency charged with protecting the public's interests. Result: Enron, GlobalCrossing, 3Com, Bear Sterns, mortgage crisis, salmonella poisoning in food, and on and on...

Mission accomplerished! Praise Jebus!

[Pierpier]

JOHN VOIGT:


OIL COMPANIES ARE SOWING SOCIALIST SEEDS INTO YOUNG PEOPLE

NOT BARACK OBAMA

[YellowPanties]

No wonder Angelina never speaks to him!

[studlyguy]

Well what I find amazing Wall Street is disappointed in the profit margin,the big casino was expecting more of profit margin they've made billions in profit and Wall Street was not satisfied ,we need to stop this corporate Wall Street greed their the part of the problem ,oil companies have screwed us to benefit their best budddies B u s h Regime,we Americans need to stand up and say enough of this greed and Americans fight back the fascism in America.

[lornejl]

It is a zero sum game, the more they take from us, the less we have, can anyone dispute ?

[BourbonDemocrat]

Basic economics will tell you that the economy is emphatically not a zero-sum gain. If this were true, then 6 billion of us would be fighting over the resources held by a handful of hunter-gatherers thousands of years ago.

The idea that, if someone else takes "a bigger slice of the pie'" then that means less pie for the rest of us, is false, certainly in the long run. Economic growth creates whole new pies. It may not be distributed as perfectly and equitable as you would like, but it is still the case (this is not meant as an excuse for the status-quo of corporate welfare, crony capitalism, war-for-oil, etc., just pointing out the facts)

[swooge]

Ah yes, the old "economic growth will never stop" argument. It's kind of like the "oil will never dry up" argument.

The economy is based on two things. Goods and services. You either provide goods for consuming or provide services that are needed. Both are dependent on one thing: natural resources. Resources like coal, oil, lumber, and metals are all of a finite quantity. Everything else is based on the need for these materials: whether directly, like car manufacturing, or tangently, like energy to run your computer.

Energy is only the first resource to start drying up. Nations and companies will be fighting over these resources.

Even a resource like people will eventually start drying up. When you don't have the resources to feed them.

[Destin]

You make some sense, but the bigger slice of the pie needs to be shown the bigger picture too. ;) What you contend is false, is very well happening right now. Majority of the world's oil, is held by only 6 of the world's oil companies. Representing mostly, the US, EU, Russia and China. ;) Those are the "Big Four" of the present day, replacing the outdated US/UK/France/Russia that emerged post-WWII. Everyone else has the market dictated to them. Much the same on a lesser scale here in the USA. I don't have a billion dollars to start up my own oil company. And no sooner if I did, I'd likely be bought out by one of the Big Oil companies. It takes money, to make money, lol.

Or here's one way to think about it.... something a friend at work used to talk about all the time. If everyone is so broke, how did everything get here?? I ask people how they are doing financially, and most everyone is broke. Even big companies say they are broke or losing money. But how does everything get built if there's no money? How do people buy stuff if they are broke? Where did everything come from?

I think I have a partial answer to his mentality. It's credit. As in loans, credit cards, mortgages, etc. Borrowing against the future to provide for the present in one big gamble you'll pay it off. Kinda like the Govt. ;)

[EarthToZoey]

I believe you are right, Bourbon. I'm all for a competitive market with *some* regulation. There is nothing wrong with being wealthy (it's the dangling carrot that drives innovation, in many respects). I do think we, as a society, have an objective moral responsibility to provide some necessities to certain disaffected peoples. And when the market makes a down turn and large swaths of the country are suffering, there is nothing wrong with the government creating programs or providing incentive packages that will put Americans to work and start the pistons pumping again.

[Destin]

I won't dispute, but I'll use one of the most brilliant quotes of mankind to affirm it..... ;)

"You only have power over people as long as you don't take everything from them. But when you've robbed a man of everything, he's no longer in your power - he's free again."
--- Alexander Solzhenitsyn

And that's kinda what it oils down to, i mean, boils down to. Power. Over both the consumer and the market. While dangling just enough feel-good stuff, to keep us in their power.

[JohnFromCensornati]

I never seen an oil company employee point a gun at anyone while he's pumping gas.
We passively *give* it to them and vote for more of the same.

[YellowPanties]

The guns are pointed in places like Sierra Leone, Ghana, Nigeria and more. The guns are not here in the US, but they have done plenty of shooting and killing for oil around the world.

Read some history, it might make you sound less stupid!

[1sparrow]

i just watched a movie from 1976 called "the big bus". its a comedy about the first nuclear powered bus. fast forward 17 min.s into the movie. catch the dialog from the antagonist. we are living a 70's "B" movie nightmare.

[gifu]

I feel ill.......­...

[BourbonDemocrat]

Ah, yes! The quarterly Two Minutes Hate of Exxon on the HuffPost, for having the gall to profit off insanely high oil prices.

If people are truly concerned about high oil prices and Exxon's profits, perhaps they should look at the Federal Reserve destroying the value of our currency, and the chaos and violence that our government causes in the Middle East. But I suppose it's a lot easier just to blame the companies that bring us the gasoline that fuels our cars (and our entire civilization), and wait just a few more months for Obama to make it all better.

[swooge]

WOW!! You're right. No one has said a word about devaluation of our currency or the quagmire that is the middle east.

You've solved our problems and obscene profiteering at the expense of the country is not one of them.

Thank you.

heh...

ps. stop drinking bourbon.

[noamjunior]

if you dont work for the oil companies, you are a total ignoramus

[Destin]

The value of our currency is down due to our mortgaging our country's future on a gamble of a war for oil in Iraq, at the request of the big oil boys.

It's all related.

[YellowPanties]

Sure, they're totally unrelated. Exxon is just like the corner grocer, no different. What a load of BOLLOCKS.