Exxon posts another huge quarterly profit
12:45 p.m. 04/27/2006 Provided by
By Deepa Babington
NEW YORK (Reuters) - Exxon Mobil Corp. (XOM), the world's largest publicly traded oil company, posted its biggest first-quarter profit ever on Thursday, but higher taxes dragged the results below Wall Street forecasts.
The Texas behemoth reported a profit of $8.4 billion, on the heels of record earnings of $10.7 billion in the previous quarter. The news is expected to fuel growing consumer resentment in the United States over Big Oil's long-running profit bonanza.
Stung by soaring gasoline prices, U.S. lawmakers and consumer advocates have stepped up calls for special taxes on oil company profits and the repeal of tax breaks the companies enjoy.
But Exxon's results failed to impress Wall Street, where analysts fretted about the company's higher-than-expected tax rate and lackluster refining results. Exxon shares were little changed in midday trade.
"This is a tax story," said John S. Herold analyst Lysle Brinker. "What we don't know is how long the higher tax rate will be sustained going forward."
With oil-producing nations increasingly slapping harsher terms on contracts with big Western oil companies, analysts fear higher taxes are here to stay, eating into the companies' profitability over the long run.
Exxon reported a first-quarter profit of $1.37 a share, up from $1.22 a share, or $7.86 billion, a year earlier.
Excluding special items, profit was $1.41 a share, below the average analyst forecast of $1.46 as compiled by Reuters Estimates. First-quarter revenue jumped to $88.98 billion from $82.05 billion a year earlier.
OUTPUT SURGES
Crude oil prices have risen steadily from about $20 a barrel in 2002 to more than $75 last week, driven up by fears of supply disruptions in Nigeria and Iran coupled with booming demand in China and India.
Exxon's oil and gas production in the quarter grew 5 percent, boosted by higher volumes from projects in West Africa and Qatar. Excluding divestments and the effect of prices on production-sharing contracts, output was up 7 percent.
"Delivering volume growth is critical to the Exxon story -- but incremental margins are equally critical," Citigroup analyst Doug Leggate said in a research note.
Refining and marketing earnings rose, helped by higher marketing margins, but fell short of some Wall Street forecasts.
Lower margins led to a sharp fall in earnings from the company's chemical operations.
Capital spending in the quarter jumped 41 percent to $4.82 billion. The company also spent $5 billion to buy back stock in the quarter, and promised to buy back $6 billion in stock in the second quarter.
Oil companies like Exxon Mobil have been attacked for spending hefty amounts to buy back stock and pay dividends rather than reinvesting those profits to boost production.
(Additional reporting by Ben Berkowitz)
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