HOUSTON -(Dow Jones)- Exxon Mobil Corp. (XOM) said Monday its fourth-quarter earnings surged 53%, beating Wall Street expectations thanks to higher oil prices, improved refining margins and a jump in oil and gas output.
The results of the world's largest publicly traded oil company by market value reflected how quickly the energy sector has recovered from deep recession, and seems poised for a return toward the boom days that preceded the financial collapse in 2008. Fellow U.S. oil giants Chevron Corp. (CVX) and ConocoPhillips (COP), and oilfield service companies like Schlumberger Ltd. (SLB) and Baker Hughes Inc. (BHI) have also posted vastly improved results from last year.
The Texas oil giant reported a profit of $9.25 billion, or $1.85 a share, up from $6.05 billion, or $1.27 a share, a year earlier. Revenue increased 17% to $105.19 billion. Analyst were expecting earnings of $1.63 on revenue of $99.11 billion.
The results were driven by better-than-expected earnings in its international exploration-and-production segment. A cold European winter has increased demand for natural gas and commodity prices outside the U.S., according to Credit Suisse.
Exxon international upstream segment also benefited from the sharp premium at which Brent crude--the benchmark for much of Europe and Asia--trades in relation to U.S. benchmark West Texas Intermediate, said Pavel Molchanov, an analyst at Raymond James. West Texas Intermediate sells at a discount because of high supplies at the contract's delivery point in Cushing, Okla. Other international companies such as Royal Dutch Shell (RDSA), with high exposure to European markets, are also expected to benefit from this effect. Shell reports Feb. 3.
Exxon Mobil's production rose 19% to about 5 million barrels of oil equivalent compared with a year earlier, boosted by its acquisition last year of XTO Energy Inc., which more than doubled its U.S. natural gas production.
Exxon Mobil quarterly results echoed a widespread improvement in the profitability of the refining industry, which was wrecked by the recession, and a continued strengthening of the chemical business. Exxon Mobil's refining business returned to the black, posting earnings of $1.5 billion up from a loss of $189 million a year ago. Exxon's chemical arm posted quarterly earnings of $1.07 billion compared with $716 million in the same period in 2009.
Exxon Mobil's shares, which Monday were trading up 1% to $79.78 but have lagged behind Exxon's peers for the last two years, are expected to continue recovering helped by the company's strong quarterly results and a jump in production growth, according to investment bank UBS.
Exxon Mobil said its capital and exploration expenditures in 2010 were $32.2 billion, up 19% from 2009. The increase tops the company's guidance of $25 billion to $30 billion a year through 2014, but isn't unexpected due to the additional expenses brought by the acquisition of XTO Energy, Raymond James' Molchanov said.
It isn't clear yet whether the XTO acquisition is significantly boosting Exxon's bottom line, however. Most of this quarter's boost in profitability comes from the international segment, from which XTO Energy is excluded, Raymond James' Mochanov said. Exxon has been criticized for betting heavily on natural gas, which trades cheaply in comparison to oil, while its peers focus on crude; but Exxon and other major energy companies say there will be strong demand growth for natural gas in the long term.
ExxonMobil said it plans to spend $5 billion in share repurchases during the first quarter, about the same level it spent in the fourth quarter.
-Tess Stynes contributed to this article.
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