Exxon Profits Rise, and So Does Congressional Scrutiny
WASHINGTON (By Jad Mouawad, NYTimes)
The surge in energy costs has jumped to the top of the political agenda as the average price of gasoline recently reached $3 a gallon in many parts of the country. Last week, crude oil prices jumped above $75 a barrel, the highest in over a quarter century.
Facing growing political pressure ahead of this year's mid-term elections, Congress is considering ways to trim $2 billion in tax breaks it awarded oil companies as part of last year's energy bill. Some would also like to see a windfall profit tax imposed on oil companies.
Net income at Exxon, the world's largest publicly traded oil company, rose to $8.4 billion in the first quarter, compared with $7.86 billion in the year-earlier period. Sales climbed 9 percent to $89 billion.
Despite the gains, the company's stock fell as much as 3.3 percent to $61 a share on Thursday morning as the Exxon's earnings fell short of expectations.
Exxon's quarterly profit of $1.37 a share, up from $1.15 last year, was 10 cents lower than analysts' expectations, according to an estimate compiled by Thomson Financial.
"Exxon Mobil's result was disappointing, because the miss was in upstream," Paul Sankey, an analyst at Deutsche Bank in New York, wrote in a note to investors, referring to the company's oil and natural gas production unit. The other businesses, refining and chemicals, met expectations.
The company's oil and natural gas production in the quarter rose by 5 percent to an average of 4.56 million barrels a day. During that period, the company's output of oil and natural gas liquids was 2.7 million barrels a day while natural gas output was 11 billion cubic feet a day.
The growth in output came primarily from Exxon's operations in the Middle East and Africa.
The company, based in Irving, Texas, said it had returned $7 billion back to its shareholders - $2 billion paid out as dividends and share buybacks of $5 billion. It plans to purchase another $6 billion in the second quarter.
Exxon spent $4.8 billion on capital investments and exploration projects in the first quarter, 41 percent more that in did in the first quarter of last year.
Last year's net income included $460 million from the sale of Exxon's stage in China's Sinopec. Excluding that, Exxon's net income for the quarter rose by 14 percent.
Although the profits of all oil companies have come under scrutiny in recent months, Exxon has drawn added attention over of the compensation package for Lee R. Raymond, who retired in December as chairman and chief executive. According to an analysis done for The New York Times, Mr. Raymond was compensated more than $686 million from 1993 to 2005. He received more than $400 million in his final year at the company.
