Exxon Mobil has set a quarterly proft record with reported earnings of $14.8 billion for the third quarter ended September 30, 2008.
Chairman Rex W. Tillerson said, "ExxonMobil’s strong results in the third quarter of 2008 demonstrate the continued success of our disciplined business approach. Third quarter earnings excluding special items were a record $13,380 million, up 42% from the third quarter of 2007. Earnings per share excluding special items were up 52% reflecting the benefit of the share purchase program. Record net income for the third quarter of $14,830 million was up 58% from the third quarter of 2007. Net income included an after-tax special gain of $1,620 million from the sale of a natural gas transportation business in Germany and an after-tax special charge of $170 million reflecting a provision for interest related to the Valdez punitive damages award. Earnings for the first nine months of 2008 excluding special items were $36,240 million, an increase of 25% over the first nine months of 2007. Net income for the first nine months of 2008 was $37,400 million, up 29% versus 2007.
The project started ahead of schedule and is expected to recover more than 275 million barrels of natural gas liquids from several East Area fields, which will help monetize gas resources and reduce gas flaring. At its peak, the project is expected to produce 50,000 barrels of natural gas liquids per day.
Third Quarter 2008 vs. Third Quarter 2007
Upstream earnings, excluding the gain related to the sale of the German natural gas transportation business, were $9,351 million, up $3,052 million from the third quarter of 2007. Higher crude oil and natural gas realizations increased earnings approximately $4.4 billion. Lower sales volumes decreased earnings about $1.3 billion.
On an oil-equivalent basis, production decreased 8% from the third quarter of 2007. Excluding lower entitlement volumes (which include price and spend impacts and PSC net interest reductions) and impacts associated with the hurricanes, production was down about 5%. Higher maintenance activity and downtime reduced volumes by just under 3%.
Liquids production totaled 2,291 kbd (thousands of barrels per day), down 246 kbd from the third quarter of 2007. Excluding lower entitlement volumes and the impacts of the hurricanes, liquids production was down 5%, as increased production from projects in west Africa and the North Sea was more than offset by mature field decline and higher maintenance activity.
Third quarter natural gas production was 7,823 mcfd (millions of cubic feet per day), down 460 mcfd from 2007. Higher European demand and new production volumes from project additions in the North Sea and Malaysia were more than offset by mature field decline, increased maintenance activity and entitlement effects.
Earnings from U.S. Upstream operations were $1,879 million, $683 million higher than the third quarter of 2007. Non-U.S. Upstream earnings, excluding the gain related to the sale of the German natural gas transportation business, were $7,472 million, up $2,369 million from last year.
Downstream earnings of $3,013 million were up $1,012 million from the third quarter of 2007. Higher margins increased earnings by $1.1 billion while favorable mix effects increased earnings by $200 million. Unfavorable foreign exchange effects were a partial offset. Petroleum product sales of 6,688 kbd were 413 kbd lower than last year's third quarter, mainly reflecting asset sales and lower demand.
U.S. Downstream earnings were $978 million, up $64 million from the third quarter of 2007. Non-U.S. Downstream earnings of $2,035 million were $948 million higher than last year.
Chemical earnings of $1,087 million were $115 million lower than the third quarter of 2007. Lower volumes, which reduced earnings approximately $200 million, and lower margins were partly offset by favorable foreign exchange effects. Third quarter prime product sales of 6,060 kt (thousands of metric tons) were 669 kt lower than the prior year due to hurricane effects and lower demand.
Corporate and financing expenses of $71 million, excluding the charge for interest related to the Valdez litigation, decreased by $21 million.
During the third quarter of 2008, Exxon Mobil Corporation purchased 109 million shares of its common stock for the treasury at a gross cost of $8.7 billion. These purchases included $8.0 billion to reduce the number of shares outstanding, with the balance used to offset shares issued in conjunction with the company's benefit plans and programs. Shares outstanding were reduced from 5,194 million at the end of the second quarter to 5,087 million at the end of the third quarter. Purchases may be made in both the open market and through negotiated transactions, and may be increased, decreased or discontinued at any time without prior notice.
First Nine Months 2008 vs. First Nine Months 2007
Net income of $37,400 million ($7.11 per share) was a record and increased $8,450 million from 2007. Excluding special items, earnings for the first nine months of 2008 were $36,240 million, an increase of $7,290 million from 2007.
FIRST NINE MONTHS HIGHLIGHTS
Upstream earnings, excluding the gain related to the sale of the German natural gas transportation business, were a record $28,148 million, up $9,855 million from 2007. Record high crude oil and natural gas realizations increased earnings approximately $14.8 billion. Lower sales volumes reduced earnings about $3.7 billion.
Higher taxes and increased operating costs decreased earnings approximately $1.5 billion. Favorable foreign exchange effects provided a partial offset.
On an oil-equivalent basis, production decreased 7% from last year. Excluding impacts related to the Venezuela expropriation and lower entitlement volumes, production was down about 4%.
Liquids production of 2,383 kbd decreased 267 kbd from 2007. Excluding the Venezuela expropriation and lower entitlement volumes, liquids production was down about 5%, as field decline in mature areas more than offset project volume increases.
Natural gas production of 8,843 mcfd decreased 194 mcfd from 2007. Higher volumes from North Sea, Malaysia and Qatar projects and higher European demand were more than offset by mature field decline and planned maintenance activity.
Earnings from U.S. Upstream operations for 2008 were $5,544 million, an increase of $1,949 million. Earnings outside the U.S., excluding the gain related to the sale of the German natural gas transportation business, were $22,604 million, $7,906 million higher than 2007.
Downstream earnings of $5,737 million were $1,569 million lower than 2007. Lower worldwide refining margins decreased earnings approximately $1.9 billion while higher operating costs reduced earnings about $400 million. Improved refinery operations increased earnings about $800 million. Petroleum product sales of 6,761 kbd decreased from 7,090 kbd in 2007, mainly reflecting asset sales and lower demand.
U.S. Downstream earnings were $1,669 million, down $1,829 million. Non-U.S. Downstream earnings were $4,068 million, $260 million higher than last year.
Chemical earnings of $2,802 million decreased $649 million from 2007. Lower margins decreased earnings approximately $900 million, while lower volumes decreased earnings by about $200 million. Favorable foreign exchange and tax effects provided a partial offset. Prime product sales of 19,356 kt were down 1,075 kt from 2007.
Corporate and financing expenses of $447 million, excluding the charges related to the Valdez litigation, increased by $347 million, mainly due to lower interest rates and higher corporate costs.
Gross share purchases through the first nine months of 2008 were $26.9 billion, reducing shares outstanding by 5.5%.
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