Exxon Mobil Posts $10.36 Billion Profit

By Tomoeh Murakami Tse
Washington Post Staff Writer
Friday, July 28, 2006

Exxon Mobil Corp. said yesterday that its second-quarter earnings jumped 36 percent, to $10.36 billion, boosted by climbing oil prices and larger profits at its refineries.

The quarterly profit -- the second-largest in U.S. history -- brought forth a fresh round of criticism from consumer and environmental groups. Critics accused the Irving, Tex.-based company of getting rich at the expense of motorists -- squeezed by $3-a-gallon gas prices -- while distributing billions to shareholders through dividends and by buying back shares. The largest quarterly profit by an American company, $10.71 billion, was also posted by Exxon, in the fourth quarter of 2005.

"Once again we see Exxon competing with itself for record profits," said Shawnee Hoover, campaign director of Exxpose Exxon, a group made up of environmental and public interest advocacy organizations that was formed last year.

Mindful of the criticism, Exxon Mobil stressed that it had increased oil production during the quarter to keep supplies strong and head off any shortfalls that might put further pressure on prices. The company said it spent $4.9 billion on capital and exploration projects during the quarter, up 8 percent from a year ago.

"We're running our capacity full," Henry Hubble, Exxon Mobil's vice president of investor relations, said in response to a question about gasoline demand during a conference call with analysts. "We're selling everything we can make."

The company reported that it increased profits in all parts of its business, which includes exploration, production, refining and marketing of oil and natural gas.

The earnings for the quarter exceeded many analysts' expectations and were equal to $1.72 a share, up from $1.20 a share in the comparable period last year.

Investors initially bid up Exxon shares but retreated from the stock later in the day. The company's shares closed at $66.47 , down 13 cents.

Exxon was one of several oil companies to release earnings reports this week. ConocoPhillips said its earnings rose 65 percent, to $5.18 billion. Royal Dutch Shell PLC said its earnings jumped 40 percent, to $7.32 billion.

The big numbers have become a popular target of politicians in an election year and fodder for late-night comedians.

On Wednesday, Jon Stewart told his "Daily Show" audience that BP PLC's $7.27 billion profit meant that the British oil giant made $55,000 a minute during the quarter.

"How did they do it? It's not just unmitigated greed. BP's secret is they drill into banks," Stewart said, as the image of a drill boring through a ceiling into a vault popped up on the screen.

By comparison, Exxon's profit per minute during the quarter amounted to $79,000.

Exxpose Exxon complained that the company was "refusing" to invest in alternative energy and was a "giant blocking the way" of smarter energy policy.

Some analysts on the teleconference seemed concerned about the outside pressure on Exxon. One asked Hubble what negative attention Exxon's profit might attract from lawmakers. In Washington, various ideas have been floated in recent months to offer relief to consumers and punish suppliers, including windfall-profit taxes.

Any such measures, Hubble said, "basically are going to reduce the funds available for increasing the supplies."

In response to another question about whether Exxon was looking into renewable energy, Hubble replied that there are "very few [biofuels] that are economic without subsidies."

But he said Exxon was investing in "breakthrough technologies."

"Right now, the technology that's out there . . . basically requires subsidies for the long haul, and we don't think that makes sense to invest in at this point," he said, quickly adding that Exxon is a major buyer and blender of ethanol, and that it blends biodiesel in Europe.

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