Big Oil's biggest quarter ever: $51.5B in all

HOUSTON — Oil giants Chevron Corp. and Total SA wrapped up a string of gargantuan, record-breaking earnings reports Friday, a stretch in which six of the major international oil companies topped $50 billion in combined profit for the first time.

While the profits of unparalleled size have brought withering criticism from Washington and disgust from consumers across the country, very few were surprised. Crude prices during the second quarter were nearly double what they were a year ago.

Chevron said Friday its second-quarter profit rose 11 percent to a record $5.98 billion.

Revenue rose significantly to $82.9 billion from $56.1 billion a year ago.

But results for the second-largest U.S. oil company missed Wall Street forecasts and shares fell.

Like its competitors, Chevron made the bulk of its money at its exploration and production arm, also known as the upstream, where income nearly doubled from a year ago to $7.25 billion.

Chevron said the average sales price for crude and natural gas liquids was $109 a barrel in the quarter, up from $57 a barrel in the year-earlier period.

In addition to Chevron, soaring commodity prices led to record quarters for Exxon Mobil Corp., ConocoPhillips, BP PLC and Royal Dutch Shell PLC. Exxon Mobil stood apart even from this crowd, logging the largest ever quarterly operating profit for a U.S. company. Barring companies that made huge profits on one-time gains like bankruptcy settlements and spin-offs, Exxon Mobil holds the top 10 records for biggest U.S. quarterly earnings.

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French energy company Total SA said Friday its profit climbed 38.7 percent in the second quarter to $7.38 billion. Quarterly sales rose 23 percent to $75.25 billion.

Altogether, the profits of the six companies jumped more than 40 percent in the second quarter to $51.5 billion, the first time big Western oil companies have ever reached that level.

Total's earnings were at the top end of analysts' expectations.

Unlike some other oil majors, Total reported production growth of 1.3 percent in the second quarter.

Also Friday, Norway's state-controlled StatoilHydro ASA reported a 37 percent rise in second-quarter net profits to $3.7 billion.

At Chevron, the company division that refines and sells gasoline actually swung to a loss of $734 million in the quarter after earning $1.3 billion a year ago. The culprit: those same crude prices that lifted upstream earnings.

Like its peers, Chevron doesn't produce enough oil on its own to feed its refineries, forcing it to buy some on the open market. And it wasn't able to raise the price of gasoline and other products fast enough to recover its own rising costs for oil.

Chevron also said that planned downtime at some refineries contributed to the loss.

"The higher cost of crude oil used in the refining process was not fully recovered in the price of gasoline and other refined products," said Chairman and CEO Dave O'Reilly. "As a result, our downstream operations incurred a loss in the second quarter, with most of the loss taking place in the United States."

Chevron said overall production in the quarter fell about 3 percent from a year ago, hurt in part by production-sharing contracts. However, on a conference call with analysts Friday, company officials said project startups will increase production in the second half of 2008 and the company should meet or exceed its full-year volume target.

Chevron shares slipped 71 cents in afternoon trading to $83.85. They've traded in a range of $76.40 to $104.63 in the past year.

Total shares fell 1.2 percent to 48.79 euros ($75.95) in Paris.

____

Associated Press Writer Angela Charlton in Paris contributed to this report.

Comments

[Honeywell]

If you or drive a super-size SUV, you have absolutely nothing to cry about. You are part of the problem - not the solution.

[Podewumun]

That's how my husband and I see it, Honeywell. We're on our second Prius now, having purchased our first one as soon as they were available here.

[Honeywell]

Only insecure, arrogant hypocrites would buy/drive those monstrous super-ugly SUVs like Suburban, Expedition. Many of them get 100% tax write off to take advantage of the law that was lobbied heavily by the American auto industry, in the effort to boost the sale of terrorists-choice vehicles. I take great pleasure watching those idiots paying over $100 to fill up their SUVs. But then again, these idiots are contributing to the hike of gasoline AND the increase in pollution.

[mairs]

Do you include non business pickup trucks, and Jeep Wranglers too? People think they're so alternative and cool when they drive an old Wrangler with their dawg in the back and a spare on the roof, yet it gets the same gas mileage as an SUV. It's all about "seemingness". If you seem liberal and cool, you are, even if you slurp up as much gas as anyone else.

[enlighteninglad]

This blanket statement is worthless and divisive. I own a handyman business and pull a trailer often. I own a Tahoe but if I don't carry ladders on the top one like you wouldn't know I have other equipment in the back yet you'll see me on the road and "judge" that I am part of the problem. You'd be wrong. I've cut down on the number of miles I drive so I'd be a part of the solution. Don't think so limitedly and don't be so judgemental.
The real problem is the stranglehold the oil companies have on the energy sector. They won't allow for alternatives until they can squeeze every last dollar out of oil. Also, the Enron loophole, I believe, was designed to allow them (the oil companies) to maintain control of the energy sector when we are FORCED to abandon oil and move to alternatives. They also want the offshore oil leases for the area so that if wind farms are made they would have to pay tribute to the oil companies.

[TLV]

Thanks for that mean rant. Buying them was once good for the economy. Now it's not?

[Honeywell]

What's wrong with this picture: they use our tax money to drill oil on public land and ocean. They then turn around and charge us an arm and a leg for each gallon of fuel at the pump. Then they got the corrupt politicians and parties to give them 'tax break'. People don't really have true freedom until they free themselves from their addiction to oil.

[enlighteninglad]

I can't run my business on peanuts.

[k6007]

I hear peanut oil works pretty well.

[mjt218]

What tax money are they using? Oil companies pay for leases. Lease sales in the Gulf of Mexico last spring brought in $3.2 Billion for the Department of the Interior.

[ymax]

Of the 90 million offshore acres the industry has leases to, mostly in the Gulf of Mexico, it is estimated that upwards of 70 million are not producing oil, according to both Democrats and oil-industry sources.

One Democrat staffer said if all these existing areas were being drilled, U.S. oil production could be boosted by nearly 5 million barrels a day, although the oil industry said that number is far too high and one government agency said it was impossible to estimate production.


This is from CNN-online June 23 2008

[greylox]

**If supply is so dire, why are we EXPORTING over a million barrels a day?

[lornejl]

If the filthy rich don't give us jobs, then they would just do it themselves, then where would we be ? Thank you filthy rich, thank you very much indeed.

[k6007]

Can you imagine, the board of directors, trying to turn out a fleet of automobiles, without their workers???

What a hoot!

[Podewumun]

I laugh evertime I imagine some rich snot having to unclog his own toilet! (My hubby is a retired plumber)

[mjt218]

It's pretty sad when you can't see that smart people should be paid well too. It's okay for A-Rod to sign a $200million plus contract, but it's not okay for an executive (who probably has more one of a kind skills than A-Rod) to get paid well too.

I work for an oil company. I think our CEO deserves every dollar he makes. He makes Billion dollar investment decisions on a weekly basis, has to be smart enough to handle an organization with tens of thousands of employees operating in 100's of countries, and has to go in front of the press to try and explain our business. I don't envy him one bit, and I'm sure going through it all has taken years off his life. I really don't think he's driven by greed. I think he's driven by the impact he can have and maybe by the position he can put his family in after he's done.

[Honeywell]

Addiction to oil has crippled common sense and human decency. Like the drug cartels, the big oil would do everything to keep people addicted.

[StephenJK]

Is it an addiction? Can you explain yourself here?

[dec8ur]

try to live without any oil products for a year, a month, heck even a week. though not impossible, it would be very hard because alot of consumer goods (televisions, phones,computers, and various knickknacks) are made from plastic, which is a derived from oil. our tranportation infractucture (cars, buses, gas stations, streets and highways) is based of an oil economy(the fact that oil was cheap near a fixed price). our logistics for delivering these cheap goods (trucks, planes, boats) use oil. so basically, unless your a hippie living in a commune, it is near impossible not to use oil. that my friend, is an addiction.

[Podewumun]

Shouldn't I raq be counted as an off shore oil lease?

[NicholeWebb]

No because it is decidedly on shore :) Offshore is distinctly in the oceans, my friend.

[greylox]

**I think Pode means "off OUR shore."

[Lion24]

Collectively, all US citizens should immediately form our own oil company to compete directly against Exxon, Chevron, Shell, BP, et al.

In addition, US citizens should also form our own airline, and our own telecom company -- to compete directly against existing airline and telecom companies.

[Destin]

You use the word "companies" when referring to these MONOPOLIES. Just thought I'd point that out.

[Lion24]

By deregulating these industries, Congress knowingly created these monopolies -- and at the same time demanded quid pro quo yearly -- and huge - "campaign" payments from the monopolies they created. It all worked -- for those involved.

Now we have a crisis of epic proportions.

[mjt218]

I can assure you that this is a competitive business. Let's just take lease sales in the Gulf of Mexico as an example.

Geologists and Geophysicists from all the companies you mention independently analyze data and make closed bids on individual lease blocks. As a result, an oil company could potentially leave tens of millions of dollars on the table.

For example, BP bid over $100 million for one block this year, and the next closest bidder was around $30 million.
http://www.gomr.mms.gov/homepg/lsesale/206/cgom206.html

As much as you guys may hate to admit it, this is an extremely COMPETITIVE industry. They partner on actual developments to reduce risk, but I can assure you that they keep each other at a distance. Each company has proprietary practices they use to gain a competitive advantage.

[enlighteninglad]

They shouldn't call them "earnings". They didn't "earn" a doubling of their profit. They didn't do anything for it at all. In fact, had they done something like increase supply with greater refining capacity their profit would go DOWN. Does anyone really think that the oil companies all by themselves are going to do anything that will DECREASE their profits? If you do you really ARE living in a dream world.

[Destin]

You are 100% correct, and now I know why you are called EnlighteningLad. ;)

[enlighteninglad]

Nicest compliment I ever got. Thanks.

[nclibertarian]

I have a question for all the obviously bright people here, How much of that 51 Billion will be paid in corporate income tax and end up in Washington?

Also, to say that oil companies pay individuals more than they spend in exploration, research and development is just comical. Just do an internet search, the truth is at your fingertips.

[feo]

Oil execs don't seem to realize that without automobiles, there would be no need for gasoline. Yet, they seem determined to kill the automobile business. Great long-term planning. And, of course, auto execs are every bit as bright.

[missjulz]

I just discovered the joys of car-lessness recently when my old beater died a month ago. Now that I've been on foot and using Public Transportation 100% of the time I am really enjoying it. It wouldn't work for everyone - people with kids for example, or who live in areas without an extensive Public Transit system. But it's working really nicely for me.

I actually feel liberated from big oil. Currently I have no plans to buy another car as I'm enjoying my (relative) freedom from big oil.

Of course, I still have to heat my apartment in the winter...d­arnit.

[k6007]

Feels wonderful. I've also parked my car.
As demand lessens, the price of gas will fall.
I'll never drive a car that gets less the 30 mpg, again.
It's selfish, and barbaric.

[windwalker1984]

Oil companies spend more on CEO compensation than oil exploration -- and Congress does nothing.

Oil companies have offshore leases ALREADY in place in many locations but are not pumping oil to keep supplies tight and profits up -- and Congress does nothing.


Oil commodities traders are putting down small margins of $$ to control huge futures contracts under rules set up under Phil Gramm's wife's tenure, which encourages too much speculation in oil futures and increases the high crude oil prices (some say as much as $50 per barrel or more) --- and Congress does nothing.

Now both presidential candidates are calling for more offshore drilling contracts, which the oil companies are pushing for, even though there's little benefit or oil but lots of environmental risks (especially off of FL due to hurricanes) -- and what are we going to do?

Let big oil control the politics and policy of the White House for 4 more years? Haven't they done enough damage in the past 8 years?

[darthdarcy]

You've got it right and here's one reason even Obama is obfuscating the issue and not bringing America's focus on the Speculators who are ripping us off Goldman Sachs and Morgan Stanley are at the top of those manipulating the oil Futures Market and also Obama's biggest bundler contributo­rs..

http://www.opensecrets.org/pres08/contrib.php?cycle=2008&cid=n00009638

[mjt218]

Your first two statements are completely false. All the big oil companies are spending around $20 Billion each on new exploration and production development this year. Even if you really think that there are 68 million acres of leases that oil companies are sitting on right now (which is not true), that's just a drop in the bucket compared to world oil supplies, just like ANWR is. If 70% of our oil comes from overseas, how much do you think Big Oil could possibly control the market with by sitting on a few million acres.

Check your assumptions . . .

[Destin]

I got an angle for you to look at.... there's been much talk in recent months about how all the world's oil supplies are at their peak, and that from now on, we're on the downhill slope until it all runs out.

That tells me one very important thing. Everywhere has already been explored, otherwise, how can they say that oil supplies that exist in the world, are at their peak??

And if they are talking about stockpile aspect of supplies, then that means they have an obscene amount of surplus.

Either way, it's not like we're gonna run out of oil tomorrow, nor will we have a shortage within the next 100 years either. So tell us again why big oil has to spend so much on exploration?? And why do they keep lying about shortage of oil when they readily admit that we have another good 150 more years of oil supplies left??

[Harrier]

When the money grants were given to big oil, the CEO all claimed they were surprised. But 5years later when people are asking o remove it, CEOs are up i arms saying it's theirs and they worked hard to lobby for it. If you look at what was give vs what profits they earned, its easy to get mad. Think more of what that could have done to the steel industry and manufacturing, I get very angry at what our lawmakers stand for.

[doug108]

It's estimated that it would cost 160 billion dollars to repair all of America's bridges, of which the majority are approaching the end of their 50 year lifespans. That's just 10 months in Iraq. It's also a lot of jobs that aren't being created here. Sickening.

[The5thW]

Think about what you're saying. Just this tiny fragment of the automobile infrastructure can be temporarily upgraded for your figure. That's a few temporary jobs and further degradation of the natural landscape on behalf of obsolete technology, the automobile. Yet for an investment like that we could be well along the inevitable and highly desirable creation of self sufficient compacts towns that has been delayed for 30 years already while the US role as innovator to the world is passed to others and our economy and lifestyle became little more than a consumerist parody. The irony is that producers of oil are using the income from automobile-based culture to build their own prototypes of energy-efficient communities while our own oil men fight tooth and nail to prevent it here.

[Podewumun]

I'm even angrier over what they DON'T stand for, Harrier - US, the people who elect them!

[darthdarcy]

Gas and Oil went from $57 dollars per barrel to an average, and this is low of $109.00 on the commodities market, it's all about the Commodities Market being criminally manipulated not peak oil not supply demand this is the biggest swindle of all time...

The Republicans and our President are lying about this issue, using it to get the off shore drilling and drilling in ANWAR they always wanted, and way too many on the left are obfuscating the issue due to their keen jerk hatred of Oil, and all it stands for, but this only aids the Republicans and Bush as it splits and diffuses the main issue right now, which is why has Oil climbed so high doubled in one year the last year of the Bush administra­tion...whe­n they would not really pay for the ramifications of this huge rip off...

Go learn the real reasons for this meteoric increase it's the deregulation and utter absence of any oversight of the Commodities and Futures Market and the trading in the so called "dark markets" there are those on this sight who will deny and criticize this but they do not understand Futures trading at all as they have shown all here who do...at least have some grip on what's going on...

We must close these huge loopholes that allow this the Enron and other loopholes and also the rules that allows this market manipulation to be done in the dark..!

[Destin]

Awesome post. And I agree, it's high time we close the loopholes and start looking out for the little people, the US citizens.

[fiberoptimist]

Now we know what was REALLY discussed at Cheney's secret National Energy Policy Development Group (NEPDG) meetings in 2000.

This has got to be the largest REDISTRIBUTION OF WEALTH in human history, and is the direct result of the Bush Crime Family's policies and cronyism. A blind man could see it with a cane!