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Yet Again, Exxon Breaks Its Record Quarterly Profit
Oil is well off its July peak, so profits at oil firms will probably be lower in the current quarter and the year ahead.
(By Don Ryan -- Associated Press)
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The engine of Exxon's earnings growth came from its production of crude oil, where high prices more than offset production volume that was 8 percent lower than in the third quarter of 2007. Exxon produced 2.29 million barrels a day of crude oil and natural gas liquids (the biggest portion, 28 percent, in Africa) and received an average of $111 a barrel during the three-month period.
Although Exxon expanded production off the coast of West Africa and in the North Sea, the firm's overall oil production fell as a result of the natural decline of older fields, down time because of maintenance, hurricane damage and contract terms that trim its share of production at high prices.
"It's an uphill battle for the company to increase production," Gheit said. But he said Exxon could benefit if overheated oil and gas exploration costs drop.
The company also made more money from its refining and marketing operations, widening profit margins in those areas even as retail prices set record highs over the summer.
During the quarter ended Sept. 30, Exxon also spent $8.7 billion buying back its own stock, reducing the number of outstanding shares by about 2 percent. Exxon says this helps return money to shareholders, but some critics argue that it should use the money to expand oil and gas exploration or to invest in renewable energy.
Exxon's capital expenditures were $6.9 billion, up 26 percent from the third quarter of 2007.
The profit figures included a one-time gain of $1.6 billion from the sale of the company's natural gas transmission business in Germany.
The third-quarter results also included a $170 million charge to cover a punitive damages award from the oil spill that took place when the tanker Exxon Valdez ran aground in Alaska in March 1989. The set-aside for the hotly contested damage award is barely more than 1 percent of the company's profit this quarter. Exxon has set aside $460 million for the damages so far this year.
Even without the one-time items, the company's profit still would have set a new U.S. record at $13.4 billion.
