Exxon Mobil Profit Falls 33%, Less Than Estimated

By Joe Carroll

Jan. 30 (Bloomberg) -- Exxon Mobil Corp., the world’s largest company by market value, posted a smaller decline in profit than analysts estimated as increased refining earnings cushioned the impact of a record drop in oil prices.

Fourth-quarter net income tumbled 33 percent to $7.82 billion, or $1.55 a share, from $11.7 billion, or $2.13, a year earlier, the Irving, Texas-based company said today in a statement. Per-share profit was 8 cents higher than the average of 12 analyst estimates compiled by Bloomberg.

Refining profit climbed more than 6 percent to $2.41 billion as widening margins in overseas markets made up for a loss from U.S. plants. Chief Executive Officer Rex Tillerson plans to boost capital spending by as much as $5 billion this year to expand operations, including the world’s largest collection of refineries, while rivals retrench.

“Exxon is unique in that it is able to take advantage of the current environment when crude prices are falling,” said Gianna Bern, president of Brookshire Advisory & Research Inc. in Flossmoor, Illinois. “Exxon has the deepest pockets of all the oil companies, so that will allow them to keep investing in exploration as crude prices collapse.”

Exxon Mobil rose $1.56, or 2 percent, to $78.56 at 8:57 a.m. New York time in trading before U.S. exchanges opened. The stock has 11 buy and 6 hold ratings from analysts.

Prices Drop

Crude futures in New York plunged 56 percent in the quarter, the biggest decline since the contracts began trading in 1983, as economies slumped in the U.S., Europe and Japan.

Fourth-quarter revenue dropped 27 percent to $84.7 billion, Exxon Mobil said. Oil and natural-gas production fell 3.3 percent to the equivalent of 4.1 million barrels of crude a day, the fourth straight decline in quarterly output.

Royal Dutch Shell Plc, Europe’s largest oil company, yesterday reported its first loss in a decade, at $2.81 billion. Los Angeles-based Occidental Petroleum Corp. said yesterday that its fourth-quarter profit slid to $443 million, a five-year low.

Houston-based ConocoPhillips, the third-biggest U.S. oil company, this week posted the largest loss in its history, at $31.8 billion, on costs recorded to reflect a drop in the value of acquired assets. Chevron Corp., the second-largest U.S. oil company, said today that its profit rose less than 1 percent to $4.9 billion on a one-time gain from an asset exchange.

Spending Plans

Tillerson, who is starting his fourth year leading Exxon Mobil, said last month that he may increase capital spending this year to $30 billion in his costliest-ever push to add crude reserves, lift petroleum output and boost fuel and chemicals output.

Exxon Mobil said it plans to repurchase $7 billion in shares during the current quarter after spending $32 billion on buybacks in 2008.

The company, which traces its roots to the 19th century and John D. Rockefeller’s Standard Oil Trust, found oil in an offshore Brazilian prospect adjacent to the Western Hemisphere’s largest petroleum discovery since 1976, the South American country’s petroleum regulator said last week.

Exxon Mobil, which owns 40 percent of the field and operates it on behalf of partners Petroleo Brasileiro SA and Hess Corp., is drilling deeper into the subsea formation to search for more oil-soaked layers of sand and stone, company spokesman Patrick McGinn said on Jan. 20.

Exxon Mobil’s cost to discover and develop new fields is less than half the average the world’s 10 largest oil companies, according to data compiled by Bloomberg. Exxon Mobil spends $9.21 to find and extract each barrel of oil equivalent, compared with an average of $26.77 for its peers.

To contact the reporter on this story: Joe Carroll in Houston at jcarroll8@bloomberg.net.