Exxon shatters profit records
Oil giant makes corporate history by booking $11.7 billion in quarterly profit; earns $1,300 a second in 2007.

By David Ellis, CNNMoney.com staff writer
February 1 2008: 11:26 AM EST

Exxon Mobil booked the biggest quarterly and annual profits in U.S. corporate history Friday, helped by higher oil prices.

NEW YORK (CNNMoney.com) -- Exxon Mobil made history on Friday by reporting the highest quarterly and annual profits ever for a U.S. company, boosted in large part by soaring crude prices.

Exxon, the world's largest publicly traded oil company, said fourth-quarter net income rose 14% to $11.66 billion, or $2.13 per share. The company earned $10.25 billion, or $1.76 per share, in the year-ago period.

The profit topped Exxon's previous quarterly record of $10.7 billion, set in the fourth quarter of 2005, which also was an all-time high for a U.S. corporation.

"Exxon can put out some amazing numbers and this is one of those cases," said Jason Gammel, senior analyst at Macquarie Securities in New York.

Exxon also set an annual profit record by earning $40.61 billion last year - or nearly $1,300 per second in 2007. That exceeded its previous record of $39.5 billion in 2006.

In the fourth quarter, the company said revenue rose 29.5% from a year ago to $116.64 billion.

Analysts were looking for the company to report quarterly profit of $10.36 billion on revenue of $114.9 billion, according to earnings tracker Thomson Financial.

Despite topping Wall Street's estimates, Exxon (XOM, Fortune 500) shares slipped in midday trading.

The company reported strong results in its worldwide exploration and production, or "upstream," business. Profit rose 32% to $8.2 billion during the quarter, offsetting some weakness earlier in the year.

Income in Exxon's refining, or "downstream," business rose 15.7% during the quarter to $2.27 billion.

Exxon attributed its impressive results to strong performance across its divisions, but a large part of the profit surge was underpinned by climbing oil prices.

Crude prices skyrocketed nearly 60% last year. The surge helped prices break through the $100 a barrel mark for the first time ever early last month. Since crossing that milestone, prices have eased to around $90 a barrel.

Natural gas prices also jumped last year, albeit marginally. But costs have also increased for the oil companies, which is why profits haven't risen as rapidly as crude prices.

Big oil companies that both pump oil and refine crude into gasoline have to spend more for crude but are unable to pass on all the extra cost to consumers, which eats in to gasoline profit margins.

The average price for a gallon of regular gasoline hit an all-time high of $3.23 in May, according to the motorist organization AAA. The high prices were blamed on strong demand and a series of accidents that shut down refineries in the U.S. But slack demand for gasoline in the latter half of last year kept gas prices from rising as dramatically as crude prices.

Exxon's record results, which coincide with smaller rival Chevron's (CVX, Fortune 500) profit jump, are likely to draw fire from consumer rights groups, who contend the oil industry is deliberately restricting supply and profiting on the back of U.S. motorists. They have previously called for a windfall profit tax on oil firms and have proposed breaking up the big oil companies created during the 1990s merger wave.

"Congratulations to Exxon Mobil and Chevron for reminding Americans why they cringe every time they pull into a gas station and for reminding Washington why it needs to act swiftly to break our dependence on foreign oil and rollback unnecessary tax incentives for oil companies," Sen. Charles Schumer, D-N.Y., said in a statement Friday.

Exxon and Chevron aren't the only two oil giants to report impressive earnings. Conoco (COP, Fortune 500), the nation's third-largest oil company, trounced profit estimates by nearly 25% when it reported last week. And Royal Dutch Shell PLC, Europe's largest oil company, reported a 60% increase in profits Thursday.

"Congratulations to Exxon Mobil and Chevron for reminding Americans why they cringe every time they pull into a gas station and for reminding Washington why it needs to act swiftly to break our dependence on foreign oil and rollback unnecessary tax incentives for oil companies," Sen. Charles Schumer, D-N.Y., said in a statement Friday.