Thursday, energy giant Exxon Mobil Corp. (XOM) reported a 58% surge in its third-quarter profit as summer's record oil prices offset lower production. Quarterly results also benefited from a $1.620 billion gain from the sale of a natural gas transportation business in Germany. However, Exxon warned that its fourth quarter earnings would be reduced by about $500 million due to damage repairs and lower volumes across all business lines associated with the hurricanes.
The Irving, Texas-based oil and gas refiner earned $14.83 billion in the latest quarter, or $2.86 per share, compared to $9.41 billion or $1.70 per share in the same quarter last year.
Excluding the $1.62 billion gain from the sale of business and the $170 million charge related to Valdez oil-spill damages, earnings amounted to $13.38 billion, or $2.59 per share for the third quarter of 2008.
On average, 13 analysts polled by First Call/Thomson Financial expected earnings of $2.39 per share for the period.
Total revenues and other income for the quarter soared to $137.74 billion from $102.34 billion in the comparable quarter a year-ago.
Upstream earnings jumped to $10.97 billion, from $6.30 billion last year, despite 8% drop in production. Excluding the gain related to the sale of the German natural gas transportation business, upstream earnings for the latest quarter would have been $9.35 billion. Higher crude oil and natural gas realizations increased earnings approximately $4.4 billion, while lower sales volumes decreased earnings about $1.3 billion.
Liquids production totaled 2,291 kbd (thousands of barrels per day), down 246 kbd from the third quarter of 2007. Excluding lower entitlement volumes and the impacts of the hurricanes, liquids production was down 5%, as increased production from projects in west Africa and the North Sea was more than offset by mature field decline and higher maintenance activity.
Third-quarter natural gas production was 7,823 mcfd (millions of cubic feet per day), down 460 mcfd from 2007. Higher European demand and new production volumes from project additions in the North Sea and Malaysia were more than offset by mature field decline, increased maintenance activity and entitlement effects.
Earnings from U.S. upstream operations were $1.88 billion, higher than $1.20 billion in the third quarter of 2007. Non-U.S. Upstream earnings, excluding the gain related to the sale of the German natural gas transportation business, climbed to $7.47 billion from $5.10 billion a year-ago.
Downstream earnings of $3.01 billion were up from $2 billion last year. Higher margins, driven by lower crude prices, increased earnings by $1.1 billion, while favorable mix effects increased earnings by $200 million.
Exxon reported petroleum product sales of 6,688 kbd, which were 413 kbd lower than last year's third quarter, mainly reflecting asset sales and lower demand. U.S. downstream earnings were $978 million, up $64 million from the third quarter of 2007 and non-U.S. downstream earnings of $2.035 billion were higher than $1.087 billion a year-ago. Chemical segment earnings declined to $1.09 billion from $1.20 billion in the third quarter of 2007, reflecting lower volumes and margins. Third-quarter prime product sales of 6,060 kt (thousands of metric tons) were 669 kt lower than the prior year due to hurricane effects and lower demand.
In the third quarter of 2008, the company's spending for capital and exploration project increased 26% to $6.9 billion. Despite turmoil in the global financial markets, the company stuck to its plan to spend about $25 billion in 2008.
ExxonMobil-operated Kizomba C deepwater development started production from the Saxi and Batuque fields.
ExxonMobil also started the East Area Natural Gas Liquids II project, located offshore Nigeria. The project started ahead of schedule and is expected to recover more than 275 million barrels of natural gas liquids from several East Area fields.
During the third quarter of 2008, Exxon continued its share buyback plan purchasing 109 million shares of its common stock for $8.7 billion.
For the first nine-months, the company earned $37.40 billion, or $7.11 per share, up from $28.95 billion, or $5.15 per share, in the same period last year. Excluding items, earnings would have been $36.24 billion, or $6.89 per share for the latest period. Total revenues and other income climbed to $392.66 billion from $287.91 billion in the prior year period.
Among others in the industry, Royal Dutch Shell Plc (RDS-A), reported a 22% growth in third-quarter profit to $8.54 billion, while earlier this week, London-based BP Plc (BP) said that its net income climbed 83% to $8.05 billion. Last week, ConocoPhillips (COP), the third-largest U.S. oil company, said that its third-quarter profit jumped 41% to $5.19 billion.
Chevron Corp. (CVX), Exxon's biggest U.S. rival, is scheduled to report earnings on October 30. Wall Street is expecting the firm to earn $3.25 per share on revenue of $86.79 billion.
By reporting quarterly earnings of $14.83 billion, Exxon might have broken its own record for the biggest profit from operations by a U.S. corporation, but the dream run is expected to end with the latest quarter following the significant decline in crude oil prices.
Oil prices touched $147 a barrel in the early days of the third quarter and started falling steadily. In recent weeks, oil has fallen to the $65-a-barrel level, indicating an end to record profits for Exxon and other oil giants. Oil prices have fallen significantly on slumping demand for the commodity, as big economies including the US, China and Europe are in the midst of global economic slowdown.
On the positive side, lower oil prices help boost refining margins, while a drilling slowdown in the oil-services sector could also lower the cost of getting precious crude out of the ground.
Shares of Exxon are currently down $1.56 or 2.09% at $73.09. For the past 52-weeks, the stock has been trading in the range of $56.51 - $96.12.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.