Oil Prices Lift Exxon Mobil Profits

asia.reuters.com Thu January 30, 2003 02:19 PM ET By Carolyn Koo

NEW YORK (Reuters) - Exxon Mobil Corp.XOM.N on Thursday said quarterly profit rose by more than 50 percent as sharply higher oil and gas prices helped fuel better-than-expected results.

The hike in energy prices also lifted profit at independent oil and gas producer Apache Corp.APA.N , while a large charge erased the benefit of stronger commodity prices at Amerada Hess Corp.AHC.N , which posted a quarterly loss.

Exxon Mobil, the world's No. 1 publicly traded oil company, saw benchmark oil prices rise by more than 40 percent from a year earlier amid fears of a potential war in Iraq and as a labor strike hit Venezuela, one of the largest crude exporters in the world.

Net income jumped 53 percent to $4.09 billion, or 60 cents a share, in the fourth quarter from $2.68 billion, or 39 cents a share, a year earlier.

EXXON MOBIL TOPS ESTIMATES

Excluding special items, the Irving, Texas company reported earnings per share of 56 cents, beating the Thomson First Call consensus estimate by 6 cents.

Revenue jumped 18 percent in the fourth quarter to $56.21 billion, although revenue for the year dropped 4 percent to $204.51 billion.

Shares of Exxon Mobil, a component of the Dow Jones industrial average, were up fractionally to $33.83 Thursday, after rising almost 10 percent during the fourth quarter.

While the rally in oil prices lifted Exxon Mobil's exploration and production division's profit by 73 percent to $3 billion, it took a toll on the refining and marketing and chemicals businesses, which use crude as a key raw material.

"It was pretty clearly a strong quarter, though I don't think it's indicative of a company firing on all cylinders," said Tyler Dann, an analyst at Banc of America Securities who rates the company a "neutral" and does not own any shares.

"I think chemicals could clearly do better and even the downstream, you could argue, might do better down the road."

REFINERS STRUGGLED

Downstream, or refining and marketing, earnings fell 19 percent to $821 million, reflecting weaker industrywide conditions.

Refiners struggled through last year as high inventories of products such as jet fuel and gasoline hurt profit margins. Companies such as Exxon Mobil, which not only produce oil, but refine it into products such as gasoline to be sold at retail stations, are banking on a turnaround this year.

Banc of America's Dann believes the refining and marketing business may improve in 2003.

"We think that this company's leverage to that is significant, especially outside the United States," he said. "It just so happens that they have a more balanced asset portfolio between exploration and production, downstream and chemicals."

The chemicals business posted a 64 percent drop in earnings to $76 million, on worldwide margins that fell because of higher costs for oil, gas and other raw materials.

PRODUCTION FLAT

Oil and gas production for the quarter was flat versus a year ago, as the contribution from new projects was wiped out by natural field declines and OPEC quota restrictions.

Houston-based Apache's quarterly profit more than doubled from a year-ago to $179.4 million, or $1.24 a share. Amerada Hess, based in New York, reported a loss of $371 million, or $4.20 a share, reversing a prior-year profit, because of the write-down of a key oilfield in Equatorial Guinea.

Shares of Apache were up 11 cents to $60.85 and shares of Amerada Hess dropped $6.36. or more than 11 percent, to $49.92.