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The Guardian/UK

Oil Company Bonanza Continues With Record Profits for Shell and Exxon

Mark Milner and Andrew Clark

Exxon has made the highest ever quarterly profit by a US company. Again.

Royal Dutch Shell and Exxon Mobil emulated BP today by revealing record quarterly profits.

Royal Dutch Shell, the biggest oil
company in Europe, beat City expectations with third-quarter
current-cost-of-supply profits - which strip out unrealised inventory
gains and losses - up 74% to $10.9bn (£6.7bn).

Exxon Mobil, the
world's largest oil company, smashed its own record for the highest
quarterly earnings by a US firm by delivering a profit of $14.83bn.

the better-than-expected figures, Royal Dutch Shell shares fell more
than 3%, in part because of lower-than-expected production.

this is a good outcome," said Tony Shepard, an analyst at stockbroker
Charles Stanley. "But some investors will be disappointed by the
sluggish production volumes."

Shell said it had benefited from
higher oil and gas prices. Crude prices were more than 50% higher and
gas realisations were about 48% ahead of the same quarter last year.

prices have fallen by about half from their peak in July when they
reached $147 a barrel but the continued scale of oil company profits
have prompted calls for lower prices for consumers and the imposition
of a windfall tax.

"We are steering the Shell ship through rough
waters and so far OK," said the chief executive, Jeroen van der Veer.
"Yes, we are generating large profits. Yes, we have the largest
investment programme in Shell's history to create value for
shareholders and to play our part in providing safe and cost
competitive energy for consumers."

He said that, as well as its
investment programme to secure energy supplies, his company's strategy
remained to pay "competitive and progressive dividends".

The combination of a commitment to investment and dividend pay-outs echoed BP's response this week to questions about the scale of its earnings.

Chief financial officer Peter Voser,
who will take over from Van der Veer next summer, said the company was
on track to reach its target of asset sales of $5bn this year, although
he acknowledged the credit crunch was curbing the number of buyers.

"We are in no rush to sell assets. It's not a fire sale," he said.

Shell and BP, Exxon benefited from the high price of crude oil. Its
profits amounted to $162m a day or $113,000 a minute, despite
disruption caused to offshore production in the Gulf of Mexico by two
hurricanes - Gustav and Ike.

"Despite the continuing uncertainty
in world financial markets, ExxonMobil has maintained a strong
financial position," said the chairman, Rex Tillerson. Capital
investment of $19.3bn this year had made "a substantial contribution to
employment and economic activity in the countries in which we operate,"
he said.

The figures are likely to raise hackles among critics of
the oil industry. Exxon's previous quarter yielded profits of $11.6bn,
which was itself a US record.

The presidential candidate Barack
Obama branded the company's earnings as "outrageous" at a time when US
motorists were "paying record prices at the pump".

Exxon has been
attacked by the environmental movement for its reluctance to invest in
alternative energy sources. At the company's annual meeting in May, a
significant minority of investors backed resolutions demanding limits
on the company's greenhouse gas emissions and a shift towards renewable

The Texas-based company's upstream businesses, comprising
exploration and production, enjoyed a 48% surge in earnings to $9.35bn
as commodity prices soared, despite an 8% fall in output. Downstream,
Exxon's refineries saw profits rise by $1bn to $3.01bn.

The figures comfortably beat analysts' expectations and Exxon's shares rose in early trading on Wall Street.

downstream was up from last year, so that was a positive surprise,"
said Gene Pisasale, an energy analyst at PNC Capital Advisers. "They
have the strongest balance sheet in the business."


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