Exxon Mobil Corp. (NYSE: XOM) today posted yet another record profit. The problem is that the results were not as fabulous as Wall Street expected.Net income at the world's largest oil company surged 14% to $11.7 billion, or $2.22 a share, from $10.3 billion, or $1.83, a year earlier, the Irving, Texas-based company said in a statement. The results, which broke the company's previous record, trailed Wall Street expectations by a whopping 26 cents, according to Bloomberg News. They trailed the Thomson Reuters forecast by 25 cents. Revenue rose 40.4% to $138.07 billion.
The earnings were a mixed bag. The upstream business jumped 68%, while liquid oil volumes fell and natural gas production declined. Slumping margins pushed down profit at the downstream business by 54% and 32% in the chemicals business, according to The Wall Street Journal.
Even though Exxon Mobil is rolling in money, it's spending quite a bit of it as well.
Exxon Mobil also is spending $52 million a day to find new fields because reserves fell in 2007 by the most in at least a decade, Bloomberg News reported, adding that the company plans to start 12 new projects this year that will pump more than the daily output of Prudhoe Bay.
The company, though, has few friends in Washington during an election year. Look for these earnings to serve as fodder for arguments for a windfall profits tax on the oil industry. I have no love for the oil industry, but I think that is the wrong idea.
Exxon Mobil makes a convenient public whipping boy for high gas prices. The company does not have a magic wand that can make prices go down. Punishing the company does no one any good. Oil companies need lower taxes not higher ones to encourage them to develop alternative fuels and find new sources of petroleum.
Besides, the market already is punishing Exxon Mobil, sending its shares down in premarket trading
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Reader Comments (Page 1 of 1)
7-31-2008 @ 10:50AM
jack said...
Exxon post record profits(period)
Please don't be sooooooooooo obsurd to defend these profits.
Oil is not a choice purchase, it is almost as valuable as air and water.. we have to have it!
What would happen to the price of water if the oil companies had sole distribution rights?
7-31-2008 @ 11:52AM
micky said...
So they are spending a lot also. That shows in the record profits because profit = revenue - expenditure(including spending on exploring new fields)
Seems to me that spending is going down while profit is going up. After all in past three years of exploration on our taxes hasnt given us back much except soaring oil prices. In the meantime profits have skyrocketed and so has the stock price.
Exxon in 3 years from 2005 to 2008 = 60% up
Exxon in 3 years from 2002 to 2005 = 29% up
Guess what the windfall tax cut bill was passed in 2005 :) Hmmmmmmmm
7-31-2008 @ 1:16PM
Nick Fiorillo said...
Jack: Yesterday I bought a bottle of water from a vending machine in a medical office. The price was $1.30 for a 20 oz bottle. That comes to $8.32 a gallon. Go get the Democrats to put a special tax on Dasani's profit!!!
7-31-2008 @ 6:11PM
DEE said...
THEY KEEP SETTING RECORD'S IN PROFIT BUT THIER STOCK KEEPS GOING DOWN?
8-01-2008 @ 10:15AM
elizabeth said...
I can tell you that they aren't spending any money on their USA properties. I live on a big ranch in south texas where Exxon operates and oil and gas lease. They have operated it since 1935. They are such slobs -- I made a website about it
All the photos and video on my site are from 2008. It's ongoing. I had to start a blog for every day spills, explosions and fires because it is just never ending.
www.rancholosmalulos
If you want to see how Exxon really operates, up close and personal, you can use our property.
8-15-2008 @ 5:48PM
Bill Robelen said...
Every one looks at the huge profits made by the oil companies. They almost never look at the profit margins. Most industries have about a 12% to 15% profit margin. Most oil companies have about a 9% profit margin. Oh by the way, in the first quarter of 2007, Exxon made a 9% profit margin. They paid 29% of their total revenue to the Government in taxes. This is after the windfall profit tax was cut. The other point that very few mention is that it is the shareholders of Exxon who receive these enormous profits. This includes many retirement plans. So if you want to hurt the retired schoolteachers go ahead and tax Exxon more. Don't just complain about the high profits, buy stock in the company, than you can get your share of those profits.