Chicago Indymedia : http://chicago.indymedia.org/archive
Chicago Indymedia

News :: Miscellaneous

Oil Company Bonanza Continues With Record Profits for Shell and Exxon

Royal Dutch Shell and Exxon Mobil emulated BP today by revealing record quarterly profits.
Royal Dutch Shell, the biggest oil company in Europe, beat City expectations with third-quarter current-cost-of-supply profits - which strip out unrealised inventory gains and losses - up 74% to $10.9bn (£6.7bn).

Exxon Mobil, the world's largest oil company, smashed its own record for the highest quarterly earnings by a US firm by delivering a profit of $14.83bn.

Despite the better-than-expected figures, Royal Dutch Shell shares fell more than 3%, in part because of lower-than-expected production.

"Overall, this is a good outcome," said Tony Shepard, an analyst at stockbroker Charles Stanley. "But some investors will be disappointed by the sluggish production volumes."

Shell said it had benefited from higher oil and gas prices. Crude prices were more than 50% higher and gas realisations were about 48% ahead of the same quarter last year.

Oil prices have fallen by about half from their peak in July when they reached $147 a barrel but the continued scale of oil company profits have prompted calls for lower prices for consumers and the imposition of a windfall tax.

"We are steering the Shell ship through rough waters and so far OK," said the chief executive, Jeroen van der Veer. "Yes, we are generating large profits. Yes, we have the largest investment programme in Shell's history to create value for shareholders and to play our part in providing safe and cost competitive energy for consumers."

He said that, as well as its investment programme to secure energy supplies, his company's strategy remained to pay "competitive and progressive dividends".

The combination of a commitment to investment and dividend pay-outs echoed BP's response this week to questions about the scale of its earnings.

Chief financial officer Peter Voser, who will take over from Van der Veer next summer, said the company was on track to reach its target of asset sales of $5bn this year, although he acknowledged the credit crunch was curbing the number of buyers.

"We are in no rush to sell assets. It's not a fire sale," he said.

Like Shell and BP, Exxon benefited from the high price of crude oil. Its profits amounted to $162m a day or $113,000 a minute, despite disruption caused to offshore production in the Gulf of Mexico by two hurricanes - Gustav and Ike.

"Despite the continuing uncertainty in world financial markets, ExxonMobil has maintained a strong financial position," said the chairman, Rex Tillerson. Capital investment of $19.3bn this year had made "a substantial contribution to employment and economic activity in the countries in which we operate," he said.

The figures are likely to raise hackles among critics of the oil industry. Exxon's previous quarter yielded profits of $11.6bn, which was itself a US record.

The presidential candidate Barack Obama branded the company's earnings as "outrageous" at a time when US motorists were "paying record prices at the pump".

Exxon has been attacked by the environmental movement for its reluctance to invest in alternative energy sources. At the company's annual meeting in May, a significant minority of investors backed resolutions demanding limits on the company's greenhouse gas emissions and a shift towards renewable energy.

The Texas-based company's upstream businesses, comprising exploration and production, enjoyed a 48% surge in earnings to $9.35bn as commodity prices soared, despite an 8% fall in output. Downstream, Exxon's refineries saw profits rise by $1bn to $3.01bn.

The figures comfortably beat analysts' expectations and Exxon's shares rose in early trading on Wall Street.

"US downstream was up from last year, so that was a positive surprise," said Gene Pisasale, an energy analyst at PNC Capital Advisers. "They have the strongest balance sheet in the business."
 
 

Donate

Views

Account Login

Media Centers

 

This site made manifest by dadaIMC software