Exxon Corp. will continue to report earnings increases throughout 1980, but they will be smaller than the 100 percent jump during the first quarter, Chairman Clifford C. Garvin, Jr. told shareholders today.
He also said that the world's largest company plans to invest more than $1 billion in a Colorado project designed to extract oil from shale.
At a press conference following the company's annual meeting here, Garvin said that the oil shale project, which Exxon announced it was buying into earlier this week, could be in operation as early as 1984.
Garvin told reporters that although profits in the second quarter should be above those of a year earlier, they will be below those for the first quarter of this year, when the oil giant earned more than $1.9 billion.
More than $300 million of the increase was attributed to a stronger U.S. dollar, Garvin told shareholders, a "factor (that) is moving in the other direction and will probably prove to be an adverse item rather than a gain" in the second quarter.
He also estimated, for the first time, the advantage that Exxon has because it purchases a large portion of its crude oil from Saudi Arabia -- a nation that has been slower to raise prices than have other members of the Organization of Petroleum Exporting Countries.
Under questioning from a shareholder, Garvin said that the so-called Saudi advantage helped Exxon's profits by about $100 million during the first quarter, exclusively in its non-U.S. operations. He said U.S. price controls allow oil companies to pass along to consumers only the actual increases in the cost of the crude oil they buy. As a result, Exxon prices in the United States were slightly lower than the prices of some other oil companies who buy more of their oil from exporting countries that charge more.
In many other countries, however, Exxon was able to sell its products at the going rate and therefore was able to earn a higher profit than some of its competitors.
Garvin told reporters, however, that the advantage will be smaller in the second quarter than it was in the first.
He also said that increases such as the $2-a-barrel hike the Saudis announced this week reduce the so-called advantage because of the Saudis' propensity to make the increases retroactive to an earlier date. This week's hike was retroactive to April 1.
Garvin said that oil-producing countries have no justification for any further increases in the near future, although there is some evidence that some producing countries are raising their prices by charging premiums over their posted prices.
During a long, four-hour meeting at Chicago's Civic Opera House, shareholders defeated a number of proposals, including ones that would have ended the company's investments in nuclear power and put a halt to any expansion in South Africa because of that nation's racial policies.