ExxonMobil profits down by half; exploration budget remains robust

Allen Baker

Low oil prices and the weakened economy after Sept. 11 pushed profits down 49 percent at ExxonMobil, the world’s largest publicly-traded oil company.

The company, based in Irving, Texas, has earnings of $2.68 billion for the fourth quarter, down from the record $5.22 billion a year earlier, when prices were robust. Net income was $3.18 billion in the third quarter.

For the year, the company earned $15.63 billion, down 8 percent from $16.91 billion in 2000. Figures for 2000 were helped by asset sales during the merger of Exxon and Mobil, as well as the higher prices, the company said.

Company executives say cost efficiencies added a billion dollars to the profit figure in 2001.

Despite lower profits for the quarter, Exxon isn’t backing away from an aggressive exploration program intended to boost volumes by about 3 percent a year, and plans to boost exploration by a further ten percent in 2002. The company spent $3.89 billion on capital and exploration investments in the quarter, up $11 million from a year earlier.

“Reflecting our long-term investment view, capital spending grew by over a billion dollars in 2001 to $12,333 million, an increase of 10 percent above 2000, or 17 percent excluding the purchase of an interest in Sinopec during 2000,” Chairman Lee R. Raymond said in a statement. “Upstream expenditures in 2001 increased by 27 percent. The corporation’s capital and exploration expenditures for 2002 are projected to increase again by about 10 percent, with higher spending continuing to be concentrated in the upstream.”

Upstream profits totaled $1.68 billion, down from $3.75 billion a year earlier, a decline of 55 percent or about $2.1 billion. Worldwide liquids production slipped to 2.527 million barrels daily, from 2.600 million a year earlier. Natural gas volumes were up slightly to 11,373 million cubic feet daily, from 11,252 million in the fourth quarter of 2000.

The average oil price dropped 38 percent for the quarter, while gas prices slid 59 percent for North America, ExxonMobil reported.

Downstream earnings slid $139 million, or 12 percent, to $1.02 billion as refinery margins weakened when jet fuel sales declined in the wake of the Sept. 11 attacks. Chemical earnings were essentially flat at $209 million, down from $215 million a year earlier, with a 38 percent boost in U.S. profits balanced by a decline overseas.

Revenues were $47.3 billion for the fourth quarter, down 26 percent from the 2000 quarter’s $64.1 billion. For the year, revenues were $212.9 billion, compared with $232.7 billion in 2000, a drop of 9 percent.