(XOM) Exxon Profit Rises Less Than Estimated on Health Bill (Update1)
By Joe Carroll
April 29 (Bloomberg) -- Exxon Mobil Corp., the world’s largest company, posted a smaller gain in first-quarter profit than analysts estimated as health-care legislation increased costs and U.S. refineries operated at a loss.
Net income rose 38 percent to $6.3 billion, or $1.33 a share, from $4.55 billion, or 92 cents, a year earlier, Irving, Texas-based Exxon said today in a statement. Per-share profit was 8 cents below the average of 16 analyst estimates compiled by Bloomberg.
Exxon recorded a $200 million charge to reflect an increase in health-care costs driven by legislation that President Barack Obama signed into law last month. The company’s U.S. refineries lost more than $600,000 a day as gains in gasoline and diesel prices failed to keep pace with crude-oil costs.
“The costs of health-care legislation are a hit every company is going to take in one shape or another,” said Gianna Bern, president of Brookshire Advisory & Research in Flossmoor, Illinois. “In refining, they’re taking it on the chin because crude is so expensive and demand for fuel is lackluster.”
Exxon fell 84 cents to $68.35 at 8:19 a.m. New York time in trading before U.S. exchanges opened. The stock has 10 buy ratings from analysts, 10 holds and 1 sell.
Price Gains
The profit increase was Exxon’s first since the 2008 third quarter. The company benefited from a jump in oil prices and its biggest gain in first-quarter crude and natural-gas production since 2000. Revenue climbed 41 percent to $90.3 billion, Exxon said.
Oil futures in New York averaged almost $79 a barrel in the quarter, up 82 percent. Global crude demand increased enough to fill 83 supertankers after economies around the world emerged from recession. Gas futures traded 12 percent higher than in last year’s first quarter.
Chief Executive Officer Rex Tillerson plans $28 billion in capital spending this year to boost production with new wells from California to the Middle East and to upgrade refineries. Exxon also agreed in December to buy XTO Energy Inc., the largest U.S. gas producer, for more than $29 billion.
Exxon plans to close the purchase of Fort Worth, Texas- based XTO by the end of June. The acquisition, Exxon’s largest since it bought the former Mobil Corp. in 1999, will give the company access to XTO’s gas reserves and its expertise in tapping rock formations impervious to conventional drilling techniques.
BP Plc of London said April 27 that its first-quarter profit more than doubled to $6.08 billion. Chevron Corp., the second-largest U.S. energy company, is scheduled to report earnings tomorrow.
Worldwide demand for crude rose by 1.84 million barrels a day during the first quarter, almost three times the growth rate of the final three months of 2009, according to the International Energy Agency in Paris.
To contact the reporter on this story: Joe Carroll in Houston at jcarroll8@bloomberg.net.
Last Updated: April 29, 2010 08:26 EDT
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