Exxon profit jumps 49 pct, helped by asset sales
NEW YORK (AP) - July 26, 2012 (WPVI) -- A jump in Exxon Mobil's net income couldn't mask nagging problems for America's largest oil company.
The company's said its second-quarter net income rose 49 percent to $15.9 billion. But most of the gain came from $7.5 billion in asset sales.
It was an otherwise challenging quarter for Exxon Mobil. The company produced less oil and natural gas, and it sold both at lower prices. Excluding the asset sales, company profit fell by 22 percent to $8.4 billion, or $1.80 per share. That was its smallest operating profit since the third quarter of 2010 and it fell far short of Wall Street expectations.
Shares rose 16 cents, or less than 1 percent, to $85.40 in premarket trading.
The big gain included the sale of Exxon's stake in its Japanese fuel and lubricants business to TonenGeneral Sekiyu K.K. The $3.9 billion deal, announced in January, boosted profits for Exxon's international refining and chemicals businesses in the second quarter.
Meanwhile, Exxon's core oil and natural gas production business suffered. Total production fell by 5.6 percent, when compared with the same part of 2011. And benchmark U.S. crude prices fell 8.8 percent in the period while natural gas prices dropped by 46.2 percent.
Despite the drop in commodity prices, Exxon says it will press forward with aggressive exploration plan announced earlier this year. Exxon says it will spend $37 billion per year over the next five years to find new energy sources around the world.
"Despite global economic uncertainty, we continue to invest throughout the business cycle taking a long-term view of resource development," Chairman and CEO Rex Tillerson said.
Overall, Exxon Mobil's net income amounted to $3.41 per share for the April-June period. A year earlier, Exxon earned $10.7 billion, or $2.18 per share. Revenue increased during the quarter by 1.5 percent to $127.4 billion.
Lower oil and natural gas prices did help some parts of Exxon's global operation. Its refineries were able to buy oil for cheaper prices, and lower natural gas prices made it less expensive to power some of their equipment. The company also was also able to sell gasoline at higher prices in some parts of the U.S.
Exxon's U.S. downstream business, which includes refineries, increased profits by 14 percent in the period. Profits fell for its U.S. chemical manufacturing business by 21 percent.
Smaller petroleum companies also reported weaker second quarter earnings this week, mostly due to the decline in oil and natural gas prices.
Second-quarter profits declined 53 percent at Royal Dutch Shell, 27 percent at Occidental Petroleum Corp. and 33 percent at ConocoPhillips. Chevron Corp. will release its financial results on Friday, and BP will report next week.
exxon mobil, business/finance
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