Net income at the world's largest oil company rose 17% to $10.9 billion, or $2.03 per share, from $9.3 billion, or $1.62 per share, a year earlier. Revenue rose 34% to $116.9 billion. Analysts had expected profit of $2.13 on revenue of $124.4 billion, according to Thomson Financial. Shares of the company fell.
Just because oil prices remain above $100 per barrel doesn't necessarily mean everything is going Exxon's way. For one thing, high oil prices resulted in "significantly lower" refining margins, which pushed down downstream earnings by $746 million to $1.16 billion. Lower margins also pushed down profit in Exxon's chemical business by $208 million to $1.03 billion. Moreover, spending on capital and exploration projects soared 30% to $5.5 billion "as we continued to actively invest in projects to bring additional crude oil, natural gas and finished products to market."
The problem is that's proving to be difficult. For one thing, production at the company's oil wells dropped as did natural gas production in the Middle East, The U.S., Canada, South America and Asia. This is happening as surging demand from the developing world is keeping oil prices at record levels. Exxon is "having trouble raising production, and that's not a good sign,'' Leeb Capital Management's Stephen Leeb told Bloomberg News.
While many older oil fields are producing less than they used to, new discoveries of crude may make up for that. The Wall Street Journal reports, "Projects under way in Brazil, Saudi Arabia, West Africa, the Caspian Sea and the Gulf of Mexico will more than make up for natural declines from fields now in production."
If the information is accurate and oil demand falls due to an economic slowdown, prices for crude could drop over the next several years.
What is not clear is whether demand for oil in markets like China and India will continue to spike up. If the Chinese government is willing to underwrite the cost of gas and diesel for its industrial and consumer sectors, the use of oil in that country could continue to rise at an alarming rate.
Distorted demand, caused by the Chinese government, could be the wild card in oil pricing.
Douglas A. McIntyre is an editor at 247wallst.com.
Exxon Mobil stated that this agreement provides the company with exploration rights to "one of the most prospective unlicensed areas" located in the Libyan offshore area. The offshore exploration will take place approximately 110 miles off the Libyan coast, and the area is roughly 2.5 million acres. The water depth of the location ranges between 5,400 feet to more than 8,700 feet below sea level.
The Wall Street Journal (subscription required) reported that under the terms of the deal, Exxon Mobil will drill at least one well in the area, as well as pay a bonus to the Libyan government. Terms of the bonus were not disclosed.
Last year Libya ranked 8th in production among OPEC nations, and was removed from the U.S. list of countries that sponsored terrorism less than two years ago.
Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer. DISCLOSURE: Mr. Fowlkes owns and/or controls diversified portfolios of long and short stock and option positions that include holdings in XOM.
Having just shed its land-based oil exploration division, Pride International Inc. (NYSE: PDE) is now focusing only on offshore drilling for oil. According to a recent report from Goldman Sachs, this move puts PDE's stock price in a position to grow significantly even while the report claimed the outlook is down for offshore drilling as a whole.
According to the Goldman report, PDE's assets have been undervalued by the market, and there's a potential for backlogs to grow and increase profitability. This report expects profits, which have been growing steadily along with revenues, to grow even more over the next year as costs come down.
It's not just the Goldman analysts who have been paying attention to this stock. PDE has recently undertaken contracts to build two new drill ships, which will give the company much more range to seek out profitable drilling areas, and the company is widely seen as a potential acquisition target. Meanwhile, getting out of Latin America frees the company from dealing with leaders like Hugo Chavez or Evo Morales.
There was a big acquisition announced today [subscription required] in the world of oil and gas, as Marathon Oil Corp (NYSE: MRO) is picking up Canada's Western Oil Sands Inc. for $5.56 billion, plus assumed debt of $650 million.
The deal is going to give Marathon Oil a huge presence in one of the world's largest crude oil reservoirs, the Athabasca Oil Sands Project. The deal, which is scheduled to finalize during the fourth quarter of this year, is going to give Marathon control over 300,000 gross acres of oil sands.
There are lots of hopes riding on the future of oil coming out of the Canadian oil sands. While the cost of getting that oil out of the ground is much higher than the cost of normal oil exploration, there are several reasons why it is being viewed as very profitable. The primary reason is the close proximity that the area has to America, which is, after all, the world's largest consumer. Being the closest supplier to the world's largest consumer of oil puts companies in Canada in a very enviable position.
Exxon Mobil Corp. (NYSE: XOM), whose huge profits have made it one of the most vilified companies in America, was brought down to earth today after posting disappointing earnings.
While many older oil fields are producing less than they used to, new discoveries of crude may make up for that. The Wall Street Journal 
The world's largest oil company, 
Having just shed its land-based oil exploration division, 
There was a 
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