Exxon, Shell profits surge on higher oil prices

Thursday, April 28th, 2011 | Finance News

LONDON/NEW YORK (Reuters) – Exxon Mobil Corp and Royal Dutch Shell Plc posted steep jumps in first-quarter profits and beat analysts' forecasts, helped by high oil prices and buoyant refining margins.

Profits for the world's biggest oil producers have surged as oil prices moved above $100 per barrel in the first quarter on unrest in the Middle East and Africa and growing global demand for energy.

Exxon, the world's largest publicly listed company, posted a 69 percent increase in earnings to $10.65 billion, its biggest profit since the third-quarter of 2008, when oil prices last traded above $100 per barrel.

The company was alone among its Western peers to so far record an increase in production in the quarter, notching up a 10 percent increase from a year-earlier to 4.82 million barrels of oil equivalent per day (boepd), helped by its takeover of U.S. natural gas company XTO last year.

Shell's earnings rose 22 percent to $6.9 billion, although asset sales pressured its oil and gas output down 3 percent 3.50 million boepd.

Still, that decline was more modest than the 11 percent drop that BP Plc reported on Wednesday and 7 percent drop in ConocoPhillips's output.

BP has been selling assets to pay the more than $40 billion in liabilities it racked up from the massive oil spill in the Gulf of Mexico last year, while Conoco had been shedding assets to pare its debt load.

GAS BUBBLES UP

Shell, the largest shipper of liquefied natural gas, also benefited from higher LNG prices following the Japanese earthquake, which was expected to lead to higher LNG demand in that country as nuclear power is scaled back.

That LNG strength, plus a number of large projects coming on stream this year, sparked hopes that Shell could join Exxon and Chevron in raising its dividend payments to shareholders.

Exxon raised its second-quarter payout 7 percent on Wednesday, while Chevron, while boosted its dividend 8 percent.

Chevron is due to release its quarterly earnings on Friday.

Fatter profit margins at both Exxon and Shell refineries that process crude oil into products such as gasoline, diesel fuel and jet fuel also helped their quarterly earnings.

Exxon also benefited from a jump in earnings from its chemicals arm, which recorded $1.5 billion in profits in the quarter. The company is the second largest U.S. chemicals maker behind Dow Chemical.

"It looks like chemical was really strong," Phil Weiss, oil analyst at Argus Research, said about Exxon's earnings. "And production came in on the higher side relative to my expectations, especially gas."

Shares in Shell rose 0.7 percent to 2325.5 pence on the London Stock Exchange, while Exxon shares were off 0.5 percent to $87.35 on the New York Stock Exchange.

U.S. oil and gas companies Apache Corp and Occidental Petroleum Corp both reported earnings that topped Wall Street forecasts, lifting their share prices.

(Additional reporting by Marie Maitre in Paris, Anna Driver in Houston and Braden Reddall in San Francisco)

(Reporting by Matt Daily; editing by Gunna Dickson)

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