Big gains at Exxon, Shell
The oil companies have seen profits spike as crude oil and natural gas prices have increased.
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.
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.
according to The Associated Press. "It is still early days, though, as the full impact will not be felt until 2013."
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It was a sea of green across Asia as all of the major bourses, aside from Hong Kong's Hang Seng, finished in positive territory.
- Economic data was limited:
- Australia's Construction Work Done fell 1.2% quarter-over-quarter (expected -0.3%; prior -0.4%)
- New Zealand's FPI slipped 0.7% month-over-month ... More
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