Record oil prices send Exxon and Shell quarterly profits to record highs

01 August 2008

Oil prices at record highs may be hurting the whole world, but oil companies can continue laughing all the way to the bank. Both America's and Europe's largest oil companies recorded quarterly profits in excess of $10 billion each even as people worldwide reeled under the inflationary effects crude at nearly $130 a barrel.

When a company can sell the same product at a 74 per cent higher price than it commanded a year ago, record profits don't seem unlikely. Both US-based Exxon Mobil Corp. and Europe-based Royal Dutch Shell exploited this to the maximum and rakied in $11.68 billion and $11.6 billion in quarterly profits respectively, overtakling their own best ever records.

For Exxon, it broke its own record for the highest quarterly profit for a publicly traded US corporation, while Shell recorded a whopping 38 per cent increase over corresponding figures last year. However, even these eye-popping numbers were near to or less than analysts' expectations.

Exxon's second-quarter net income rose 14 per cent to $11.68 billion, or $2.22 a share, in the quarter. Excluding one-time items, the company earned $2.27 a share, more than a quarter below analysts' expectations.

In the quarter that ended 30 June, the Irving, Texas, oil giant spent $8 billion buying back shares of its stock, compared with the $7 billion Exxon invested in exploration and other projects. The company also paid stockholders dividends worth $2.1 billion during the period. Second-quarter revenue totaled $138 billion, up 40 per cent.

Shell, the world's second-largest non-government controlled oil company by market value, reported a 5 per cent rise in second-quarter earnings to $7.9 billion, and said that excluding one-time items, it beat analysts' forecasts.