Exxon Quarterly Profits More Than Triples Last Year's

NewsStand - Friday, May 02, 2003 <a href=www.menafn.com>MENAFN-The Dallas Morning News Exxon Mobil Corp. Sudeep Reddy

Exxon Mobil Corp. reported a record quarterly profit of $7.04 billion Thursday, more than triple its earnings from a year earlier, but analysts said a recent drop in crude oil prices should restrain profits for the rest of the year.

"Earnings were strong but really weaker than they appear," said Fadel Gheit, an analyst at Fahnestock & Co. who attributes some of the gains to lower-than-expected tax rates and other factors out of the company's control. "When you dig into them, they are a lot softer."

Crude oil prices rose more than 50 percent in the first quarter due to the war in Iraq and production disruptions in Venezuela and Nigeria. Natural gas prices more than doubled due to cold weather and fears of a supply shortage.

Irving, Texas-based Exxon Mobil, the largest publicly traded oil company, said first-quarter earnings were $1.05 per share, compared with 30 cents a year ago, when profit was $2.09 billion. Quarterly revenue grew from $63.8 billion from $43.4 billion.

Without an accounting change, discontinued operations, merger effects and a special item, first-quarter earnings were $4.79 billion, or 71 cents a share, a penny above Wall Street's consensus estimate, according to Thomson First Call.

Despite record earnings across the sector, oil company shares have stalled as investors bet on lower profits now that commodity prices have fallen. Exxon Mobil shares closed Thursday at $35.48, up 28 cents. The stock has lost 14 percent over the last year.

But the company's shares have done better than the overall market in the last three years. They've declined 33 percent, while the Standard & Poor's 500 stock index has fallen 40 percent.

Commodity prices are still higher than historical levels, which are under $20 per barrel for crude oil and around $2 per million British thermal units for natural gas.

Crude oil for June delivery closed Thursday at $26.03 per barrel on the New York Mercantile Exchange. Natural gas closed at $5.27 per million BTUs.

That should support returns across the sector and attract new investment, said Tina Vital, an equity analyst at Standard & Poor's.

"When the market realizes that, you won't see the disconnect between the oil and gas fundamentals and the stock market," Vital said.

(c) 2003, The Dallas Morning News. Distributed by Knight Ridder/Tribune News Service.