Houston Chronicle reports:
Exxon Mobil again broke its own record for highest annual profits ever by a U.S. company, pulling in $45.2 billion in 2008, an 11 percent jump over 2007’s $40.6 billion.
But the Irving-based oil giant’s lower fourth-quartery profits reflected how lower demand and plummeting oil and gas prices in the last three months of 2008 amid the global recession have siphoned the industry’s record-breaking streak, which became almost routine as crude rose to all-time highs.
In the quarter, the company earned $7.8 billion, down 33 percent from $11.6 billion in the last three months of 2007 and barely half its all-time quarterly record of $14.8 billion in the third quarter last year, when oil prices were still in triple digits.
However, Rex Tillerson, Exxon’s chairman and chief executive, said capital spending rose 25 percent last year to $26.1 billion and the world’s largest publicly traded oil company will stay its disciplined course through the tough economic times.
“Exxon Mobil’s financial strength continued to support its disciplined capital investment approach in the midst of a growing global economic downturn,” Tillerson said in a statement. “Through these investments we continued to demonstrate our long-term focus throughout the business cycle.”
Chevron, which also unveiled financial results today, bucked the quarterly trend. The San Ramon, Calif.-based company’s annual income rose 28 percent to $23.9 billion from $18.7 billion in 2007, and its quarterly profit rose slightly to $4.89 billion from $4.87 billion. The quarterly increase stemmed from lower costs of raw materials used in refining that increased margins on sales of gasoline and other products, Chevron Chief Executive Officer Dave O’Reilly said.
Like Tillerson, O’Reilly emphasized the oil major’s muscle and discipline amid the recession.
“We enter 2009 with the financial strength to meet the challenges of a difficult economy and with a continued focus on cost management and capital stewardship,” he said.
Exxon’s annual results included a one-time gain of $1.6 billion from the sale of a natural gas transmission business in Germany and a charge of $460 million related to litigation stemming from the 1989 Exxon Valdez oil spill in Alaska. Excluding those items, the company still surpassed its record with annual earnings of $44 billion.
Exxon attributed its lower quarterly earnings to weaker crude prices, higher operating expenses, lower chemical volumes and impacts of Hurricanes Gustav and Ike. Ike prompted shutdowns and repairs at two of Exxon’s major refineries in Baytown—the nation’s largest—and Beaumont.
Per share, including the one-time items, Exxon earned $8.69 in 2008 compared to $7.28 in 2007. In the quarter, per-share income was $1.55, down 27 percent from $2.13 in the October-December period of 2007. Revenue for the year was $477.35 billion, up from $404.5 billion. In the quarter, revenue fell to $84.7 billion from $116.6 billion.
Exxon also continued its trend of lower production. In the quarter, production fell 3 percent, largely because of lower entitlement volumes, divestments and effects of cuts by the Organization of the Petroleum Exporting Countries. Excluding those effects, production fell 1 percent. Increased oil production from projects in west Africa and the North Sea more than offset field declines, but natural gas production declines surpassed increased volumes and project additions in the North Sea, Qatar and Malaysia, the company said.
Exxon also said exploration and production income fell $2.6 billion to $5.6 billion in the quarter because of lower oil prices. Refining income suffered from hurricane-related repairs and higher operating costs, but higher margins increased earnings by $147 million to $2.4 billion.
Chevron’s production also fell in the quarter, to 2.54 million barrels of oil equivalent per day from 2.6 million barrels. The company said its decline largely stemmed from shutdowns and damage caused to production facilities by the hurricanes.
Per share for the year, Chevron earned $11.67, up from $8.77. In the quarter, per-share earnings were $2.44, up from $2.32. Revenue for the year rose to $273 billion from $220.9 billion, but quarterly revenue fell to $45.2 billion from $61.4 billion.
Chevron’s exploration and production income fell to $3.15 billion from $4.8 billion, while refining and marketing earnings rose to $2 billion from $204 million in the quarter, the company said.