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ExxonMobil profits take plunge; downstream operations show loss
Allen Baker PNA Contributing Writer
Lower prices and weak refinery margins pushed earnings down as the world’s biggest investor-owned oil company kicked off the first-quarter reports for the industry.
Exxon Mobil Corp. reported overall profits of $2.09 billion, a drop of 68 percent from the first quarter of 2001, when high prices, particularly for natural gas, produced the second-largest quarterly earnings in the company’s history — $5 billion. The Irving, Texas company made $2.68 billion in the fourth quarter.
Gas prices in North America were 70 percent below the robust amounts received in the 2001 quarter, and crude oil brought 20 percent less. That cut upstream earnings by $1.77 billion to $2.01 billion. Much of that came in the United States, which was responsible for $1.2 billion of the decline. Big surprise in downstream results The big surprise was in downstream results, even though companies across the industry have said refinery margins are slim.
ExxonMobil reported a loss of $28 million on those operations, even though U.S. refineries increased their throughput by 5 percent. That compares with profits of just under $1 billion in the 2001 quarter from the downstream.
“In total, the confluence of margin weakness in both the refining and marketing sectors led to a downstream margin environment that was the worst seen since the mid-80s,” said Lee R. Raymond, ExxonMobil’s chairman. Margins improve in new quarter The company says margins have improved in the early weeks of the new quarter.
Overall, product sales dropped by 288 thousand barrels daily to 7.70 billion barrels, as demand slipped in Europe and Asia.
The company boosted capital and exploration spending by $458 million, or 18 percent, to $2.97 billion. Focus was on the upstream, where those investments rose 28 percent as part of the company’s goal to boost production by 3 percent annually.
But instead, production slipped 3 percent for both liquids and gas compared with the year-ago period. Liquids slid to 2.54 million barrels a day, while daily gas flow dropped to 11.74 billion cubic feet.
ExxonMobil said that OPEC quota restrictions and natural field declines were the reason for the drop in oil production. Gas volumes up in Asia-Pacific Gas volumes were up in the Asia-Pacific region as the big Arun field in Indonesia wasn’t curtailed as it was a year ago. But that was more than balanced by natural field decline and lower demand in Europe.
Profits dropped by a third in the chemical business, which showed earnings of $132 million.
Bigger pension payments kicked corporate and financing costs up 71 percent to $116 million, while merger expenses of $60 million were down by a third compared with the 2001 quarter.
Revenues dropped $13.77 billion, or 24 percent, to $43.53 billion in the first quarter of 2002 compared with the year-ago period.
That was down 8 percent from the $47.3 billion ExxonMobil collected in the fourth quarter.
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