Exxon Mobil posts quarterly profit of $9.9 billion

Exxon Mobil Corp. (XOM.N: Quote, Profile, Research) on Thursday posted
a quarterly profit of $9.9 billion, its biggest ever and one of the
largest in U.S. corporate history, as it raked in a bonanza from
soaring oil and gas prices.

Record profits for Big Oil at a time when consumers are paying
sky-high prices for gasoline have brought calls for a windfall profits
tax or other penalties on oil companies. U.S. Senate Majority Leader
Bill Frist on Tuesday called for hearings with oil companies on high
energy costs.

The companies have been enjoying an unusually rosy environment for
months. In the third quarter, oil prices and refining margins rose
sharply after Hurricanes Katrina and Rita ripped through the Gulf of
Mexico, disrupting energy operations in the region.

While Exxon's quarterly profit was up 75 percent from a year earlier,
and revenue rose 32 percent to more than $100 billion, the results
fell short of Wall Street forecasts due to production outages caused
by the hurricanes and sharply lower profit at the company's chemicals
division.

"They were a bit disappointing, but this a temporary phenomenon," said
Paul Kuklinski, an analyst with Boston Energy Research/Soleil
Securities. "This is largely attributable to hurricane effects."

Exxon shares fell slightly in afternoon trade.
The world's largest publicly traded oil company said net income jumped
to $9.92 billion, or $1.58 a share, from $5.68 billion, or 88 cents a
share, a year earlier.

Excluding a gain of $1.62 billion from restructuring its stake in a
Dutch gas transportation business, earnings were $1.32 per share, 7
cents below the average forecast among analysts polled by Reuters
Estimates.

The record earnings topped the $9 billion net profit reported on
Thursday by Royal Dutch Shell Plc (RDSa.L: Quote, Profile, Research),
though it was smaller than some out-sized profits posted in past years
by companies with one-time items, like MediaOne's $26.62 billion
profit in the second quarter of 1998 or Ford Motor Co.'s $17.6 billion
profit in the first quarter of that year.

In addition to calls for a windfall profits tax or other penalties,
lawmakers and consumer advocates have been urging oil companies to
expand refining capacity and take other steps to help bring down
gasoline prices.

U.S. Energy Secretary Sam Bodman said on Thursday that oil firms have
a responsibility to boost refining capacity in times of record
profits. Marathon Oil (MRO.N: Quote, Profile, Research) said it would
do just that, announcing a $2.2 billion expansion of its Garyville,
Louisiana, refinery.

"We're already seeing some companies yielding to pressure," said
Oppenheimer & Co. analyst Fadel Gheit. "But everybody is waiting for
the big lady to sing, which is Exxon."

Exxon said it did not see the point of a windfall profits tax.
"Frankly, if you're trying to encourage supply growth, it seems odd to
put in place disincentives," Henry Hubble, vice president of investor
relations for Exxon, said on a conference call with analysts.

PRODUCTION FALLS
Exxon's oil and gas production fell 4.7 percent in the third quarter
from a year earlier as outages caused by Katrina and Rita, maintenance
activities, and maturing fields more than offset higher production
from new fields in West Africa.

Excluding the impact of the hurricanes, divestments and entitlement
effects, output fell 1 percent.

Still, record crude oil prices -- which touched $70 a barrel in the
quarter -- pushed earnings at its exploration and production unit to
$5.73 billion, up $1.8 billion from a year earlier.

At its refining and marketing operations, profit rose to $2.13
billion, up $727 million from a year earlier. Stronger refining
margins outweighed weak marketing margins and lower petroleum product
sales.

Earnings at its chemicals division tumbled to $472 million, down $537
million from a year earlier, due to higher feedstock costs and lower
margins.

Exxon's capital expenditures jumped to $4.41 billion from $3.63
billion a year earlier.

Shares of of Exxon, the largest of the so-called "super-major" oil
companies, were down 33 cents to $55.87 in late-day trade on the New
York Stock Exchange. The shares rose more than 10 percent in the third
quarter but underperformed the broader Standard & Poor's integrated
oil and gas index, which climbed more than 13 percent. (Additional
reporting by Ben Berkowitz)

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