Big gains at Exxon, Shell

The oil companies have seen profits spike as crude oil and natural gas prices have increased.

By Kim Peterson Oct 28, 2010 11:06AM
Price of oil © Kevin Phillips/Digital Vision/AGE FotostockTo understand Exxon's (XOM) great quarter, you need to know just two things.

First, crude oil prices have climbed 13% in the past year, while natural gas has risen 23%. Second, Exxon has been on a furious pace to increase production and saw its oil and gas output rise 20% in the past year.

Put those two together, and you get massive profits for Exxon, which beat expectations with a 55% earnings increase in the third quarter. Royal Dutch Shell (RDS.A) also cruised on higher prices to a 6.5% profit increase.

Shares of both companies rose more than 1% Thursday in morning trading.

Exxon's gains were helped along by its large natural-gas projects in Qatar and its $27 billion acquisition of natural-gas company XTO Energy, Reuters reports.
Profit in the quarter was $7.35 billion, or $1.44 a share, up dramatically from $4.73 billion, or 98 cents a share, a year ago. That beat analysts' expectations for $1.38 to $1.39 a share and was the largest spike in third-quarter profit since 2004.

But revenue slightly missed expectations, with a 16% increase to $95.3 billion. Analysts were expecting $98.12 billion. Post continues after video:
The company's exploration and production unit saw a 36% increase in profit to $5.47 billion, while the refining unit more than tripled its profit to $1.16 billion.

"Exxon already was producing more oil and gas than any of the other public companies, so for them to increase output and by such a large margin is a good thing," the manager of one fund that owns Exxon shares told Bloomberg. "This probably took a lot of people by surprise."

Exxon spends almost $77 million a day to increase production, Bloomberg reported. It's looking at new wells in Canada, California and Texas.

The company bought back $3.3 billion of its own shares in the quarter and intends to repurchase $5 billion more shares by year's end.

Shell said its net profit rose by 6.5% to $3.5 billion, while revenue increased 21% to $90.7 billion. Its oil and gas output was up 5% from a year ago.

The profit picture was a bit convoluted, however, because Shell took net charges of $1.41 billion for a number of items, including a drop in value of some refining operations and some Canadian operations.

Without those one-off items, profit would have risen 88% to $4.93 billion, the company said. That beat the $4.32 billion that analysts were looking for.
Shell's investments and cost cutting are starting to "deliver volume growth and lower cost," one securities analyst wrote to clients, according to The Associated Press. "It is still early days, though, as the full impact will not be felt until 2013."

1Comment
Oct 29, 2010 9:58AM
avatar

Take 2% any day over 1.7% - we still have a huge

unemployment problem so don't let greed get in

the way.  Just keep investing in good quality stocks.

Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

RECENT QUOTES

WATCHLIST

Symbol
Last
Change
Shares
Quotes delayed at least 15 min
Sponsored by:

MARKET UPDATE

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
Market index data delayed by 15 minutes

[BRIEFING.COM] The stock market capped the trading week with losses across the major averages. The S&P 500 fell 0.5% to surrender its weekly gain, while the Dow Jones Industrial Average (-0.7%) and Russell 2000 (-0.9%) underperformed. The two indices posted respective losses of 0.8% and 0.6% for the week.

Equity indices were pressured from the get-go after several heavyweights disappointed the market with their earnings and/or guidance, which led to some broader profit-taking. After ... More


Currencies

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
Sponsored by:

VIDEO ON MSN MONEY