Exxon Mobil's profit soars, along with crude oil prices

Washington Post Staff Writer
Monday, January 31, 2011; 8:13 PM

Exxon Mobil's fourth-quarter profit soared 53 percent thanks in large part to higher crude oil prices, which jumped Monday to their loftiest levels since 2008 on jitters about whether Egypt's instability would spread to other countries or imperil Suez Canal and pipeline links.

In London on Monday, Brent quality crude oil passed $100 a barrel for the first time in nearly three years, and on the New York Mercantile Exchange the benchmark West Texas Intermediate crude jumped more than 3 percent to $92.19 a barrel.

Oil prices were already surprisingly high given the struggling global economy and ample petroleum stockpiles, but prices have received an extra boost in recent days.

About 2 million to 3 million barrels a day - about 2.5 percent of world oil supplies - flow through the Suez Canal and the Sumed oil pipeline that links the Red Sea with the Mediterranean.

"This is music to the ears of hedge funds," said Fadel Gheit, an oil analyst with Oppenheimer and Sons.

"The oil market is genuinely worried," said Pavel Molchanov, energy analyst at Raymond James. But he said that he doubted there would be any disruption to oil supplies. He noted that the fall of Egyptian President Hosni Mubarak would be unlikely to lead to an Islamic government, that protests were centered in cities, and that Egypt needs the $6 billion a year in canal revenues.

Egypt, which produces less than 700,000 barrels a day, is not an oil exporter.

The shares of U.S. independent natural gas companies also soared Monday after Chesapeake Energy said Sunday that Chinese energy giant CNOOC will buy a one-third interest in 800,000 acres of Chesapeake's oil and natural gas leases in northeast Colorado and southeast Wyoming.

CNOOC, which did a similar deal with Chesapeake in October, will pay $570 million in cash and fund two-thirds of Chesapeake's share of drilling costs until an additional $697 million is paid.

Chesapeake Energy stock closed at $29.53 , up $2.20, or 8.1 percent.

Chesapeake and other independent exploration companies in the United States have been part of a land rush over the past three years as firms scramble to stake out claims where they can drill for gas trapped in shale rock.

New drilling techniques have made these deposits economical to explore in shale basins across much of the United States, and natural gas prices have been relatively low and stable recently.

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