Exxon ends year exceeds profit expectations

By Steve Quinn The Associated Press

DALLAS – Exxon Mobil Corp. posted record profits for any U.S. company yesterday – $10.71 billion for the fourth quarter and $36.13 billion for the year – as the world’s biggest publicly traded oil company benefited from high oil and natural-gas prices and solid demand for refined products.

The results exceeded Wall Street expectations and Exxon shares rose, but some lawmakers expressed outrage at the industry’s latest profit surge, renewing calls for a windfall profits tax and increased investment in alternative fuels.

The company’s earnings amounted to $1.71 per share for the October-December quarter, up 27 percent from $8.42 billion, or $1.30 per share, in the year ago quarter. The result topped the then-record quarterly profit of $9.92 billion Exxon posted in the third quarter of 2005.

Exxon’s profit for the year was also the largest annual reported net income in U.S. history, according to Howard Silverblatt, a senior index analyst for Standard ‘ Poor’s. He said the previous high was Exxon’s $25.3 billion profit in 2004.

“What do you expect when you combine record oil and gas prices and strong operations everywhere else?” said analyst Fadel Gheit at Oppenheimer ‘ Co. “Unless prices collapse, earnings in 2006 will make 2005 look like a cake walk.”

The company said its average sale price for crude oil in the U.S. during the quarter was $52.23 a barrel, compared with $38.85 a year earlier. It sold natural gas in the U.S., on average, for $11.34 per 1,000 cubic feet, compared with $6.61 during the same period a year ago.

Exxon’s vice president of investor relations Henry Hubble said that while strong commodity prices clearly helped drive the record earnings, the company also deserved credit for its ability to complete projects on time while keeping costs in check.

“We continue to identify world-class projects, post industry-leading returns, and are well-placed for continued growth,” Hubble told analysts in a conference call. “Our record results show a disciplined approach and we continue to deliver superior value to our shareholders.”

Exxon’s results lifted the combined 2005 profits for the country’s three largest integrated oil companies to more than $63 billion.

Conoco Phillips said last Wednesday that its fourth-quarter earnings rose 51 percent to $3.68 billion, while annual income climbed 66 percent to $13.53 billion. Two days later, Chevron Corp. said its fourth-quarter earnings rose 20 percent to $4.14 billion, while annual income jumped 6 percent to $14.1 billion.

The oil industry’s stellar results have renewed talk for a windfall profit tax that would push companies to invest more in new production and refining capacity.

Sen. Barbara Boxer, a California Democrat who sharply criticized oil executives appearing before Congress in November, on Friday called on the Bush administration and the Federal Trade Commission to “put an end to gouging.” She then suggested that FTC stood for “Friend to Chevron.”

Sen. Chuck Schumer, a New York Democrat who proposed an extra tax on oil company profits in November, said yesterday that “the federal government has a responsibility to make sure that these companies continue to innovate instead of just profiting from the status quo.”

But John Felmy, chief economist for the American Petroleum Institute, a Washington-based trade group, said yesterday that the political rhetoric was “not a case based on fact.”

“We invested somewhere in the order of $86 billion last year,” Felmy said. “Then we have to treat investors appropriately; otherwise we’d have the Eliot Spitzers of the world coming after us.”

Analysts said they are not worried about any fallout from potential pressure coming from Capitol Hill.

“I hope the capitalist system would promote and applaud the hard work of companies that have been smart and lucky to achieve good earnings for shareholders,” said Tina Vital, another analyst for S’P.