Sunday 4 December 2016

Higher oil prices fuel first-quarter profit surge at Exxon and Shell

Tom Bergin and Matt Daily

Published 29/04/2011 | 05:00

Exxon and Royal Dutch Shell posted steep jumps in first-quarter profits and beat analysts' forecasts, helped by high oil prices and buoyant refining margins.

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Profits for the world's biggest oil producers have surged as oil prices moved above $100 (€67) 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 69pc increase in earnings to $10.65bn, 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 10pc increase from a year earlier to 4.82m barrels of oil equivalent per day (boepd), helped by its takeover of US natural gas company XTO last year.

Shell's earnings rose 22pc to $6.9bn, although asset sales pressured its oil and gas output down 3pc to 3.5m boepd.



Assets

Still, that decline was more modest than the 11pc drop that BP reported on Wednesday and the 7pc drop in Conoco Phillips' output.

BP has been selling assets to pay the more than $40bn 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.

Shell, the largest shipper of liquefied natural gas (LNG), 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 7pc on Wednesday, while Chevron boosted its dividend 8pc.

Chevron is due to release its quarterly earnings today.

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

Exxon also benefited from a jump in earnings from its chemicals arm, which recorded $1.5bn in profits in the quarter. The company is the second largest US 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 0.7pc to 2325.5p on the London Stock Exchange, while Exxon shares were off 0.5pc to $87.35 on the New York Stock Exchange.

US oil and gas firms Apache and Occidental Petroleum both reported earnings that topped Wall Street forecasts, lifting their share prices. (Reuters)

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