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Exxon and Shell Post Strong Profits

July 28, 2011 by Leave a Comment

HOUSTON — Exxon Mobil and Royal Dutch Shell reported strong second-quarter earnings on Thursday, taking advantage of higher oil and gasoline prices while investing heavily in new energy projects.

Exxon’s earnings were a bit lower than analysts had expected, despite strong revenue growth, reflecting a record $10.3 billion in capital and exploration expenditures in new oil and gas projects, up 58 percent from the second quarter of 2010. Its stock fell $1.25 a share in early trading to $82.06.

It was the strongest quarter for Exxon since it set a corporate quarterly earnings record of $14.8 billion in 2008, when crude oil prices approached $150 a barrel before collapsing as the world economy slowed.

The strong profits reported by the largest oil companies of the United States and Europe followed the strong results posted by ConocoPhillips and a number of other independent oil companies and oil service companies in recent days.

The industry is investing heavily in the United States in oil and gas projects in shale fields, gradually shifting to oil because of the high price of crude and lagging price of gas. Oil prices rose more than 30 percent during the quarter, mainly because of political disruptions in North Africa and the Middle East, while natural gas prices rose less than 1 percent.

But even with low gas prices, Exxon, Shell and other energy companies are continuing to buy prospective fields in the United States, Europe, Argentina and elsewhere, and overall gas production is still rising after a decade of strong increases in output.

Shell started two projects in the first half of the year in Qatar and expanded its Canadian oil sands operation. The Qatargas 4 liquified natural gas project is now at full capacity and the new Pearl gas-to-liquids operation has started producing, Shell said. The projects are expected to contribute more than 400,000 barrels of oil equivalent per day in peak production, the company said.

“We have made important progress with new production in 2011, and the ramp-up of our new projects should drive our financial performance in the coming quarters,” said the Shell chief executive, Peter Voser, in a statement.

Oil and gas production at Shell dropped slightly because of its sale of a stake in a deepwater Brazilian project earlier this month. This year, it has sold assets in Britain, Canada and the United States. It completed a sale of a group of gas fields in South Texas to Occidental Petroleum for $1.8 billion in January.

Exxon reported earnings of $10.7 billion for the quarter, up from $7.56 billion and revenue of $125.49 billion, up from $92.47 billion. Shell profit rose to $8.7 billion from $4.4 billion.

Julie Werdigier reported from London.

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Filed Under: Economy News Tagged With: , ,

Average Price for U.S. Gas Falls to $3.63

June 27, 2011 by Leave a Comment

The price covers the two-week period that ended Friday and is derived from a survey of about 2,500 filling stations nationwide by Trilby Lundberg. She said that prices had dropped 37.2 cents a gallon since they hit almost $4 a gallon on average on May 8.

“The rate of decline was reduced in the latest two weeks, but we have yet to see the impact of the government sale of crude,” Ms. Lundberg said Sunday.

Prices have fallen after member countries of the International Energy Agency said last week they would release 60 million barrels of oil from emergency stockpiles and on concern that the United States and European economies are weakening.

“If we suppose that crude oil prices fall another few dollars, then this could accelerate the drop another 20 cents” for gasoline, Ms. Lundberg said. “Poor economic news continues to be a factor in petroleum prices for crude and gasoline, with or without putting government oil up for bid.”

Separately, AAA reported this weekend that the number of Americans traveling by automobile during the Independence Day holiday would fall 3 percent to 32.8 million, from 33.7 million a year earlier.

Concern that the global economic recovery is sputtering was reflected in remarks by the Federal Reserve chairman, Ben S. Bernanke, that the United States recovery was proceeding “somewhat more slowly” than projected, prompting the Fed to maintain record monetary stimulus.

The Energy Department reported last week that gasoline stockpiles in the United States in the week that ended June 17 fell 464,000 barrels to 214.6 million. Wholesale demand fell 0.5 percent to 9.32 million barrels a day.

The highest price among cities surveyed in the 48 contiguous states on June 10 was in Chicago, at $4.06 a gallon. The lowest price, $3.32, was in Jackson, Miss., the Lundberg Survey said.

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FedEx Credits Its Cost Controls as Profit Rises 33%, Exceeding Forecasts

June 23, 2011 by Leave a Comment

The company said it would spend more on technology and fuel-efficient aircraft, helping to increase revenue per package.

“Our actions to improve yields continue to drive revenue and earnings growth across our transportation segments,” FedEx’s chief financial officer, Alan B. Graf Jr., said.

“Even with higher planned capital spending in fiscal 2012, margins, cash flows and returns are expected to improve year over year.”

FedEx, which ranks No. 2 behind United Parcel Service among package shipping companies, has been able to pass through higher costs via fuel surcharges and still has room to raise prices without widespread retaliation from consumers, many analysts said.

“Pricing and expense control” drove FedEx earnings up even as it navigated harsh weather, an economic soft patch and supply chain disruptions caused by Japan’s earthquake, and lofty fuel costs, said Peter Nesvold, a Jefferies Company analyst.

FedEx’s chief executive, Frederick W. Smith, said the combination of rising fuel prices, the devastation in Japan and consumer sentiment contributed to the slowing of the economic recovery. However, he said he expected a turnaround now that crude oil prices were retreating.

FedEx predicted that consumer spending, industrial production and gross domestic product would improve in the second half of 2011. FedEx said its profit rose 33 percent, to $558 million, or $1.75 a share, from $419 million, or $1.33 a share, a year earlier.

Analysts, on average, forecast a profit of $1.72 a share.

FedEx forecast its fiscal 2012 profit rising to $6.35 to $6.85 a share, allowing for oil’s volatility, Mr. Graf said. The midpoint of $6.60 topped analyst forecasts.

Revenue in the period, which ended May 31 and was the fourth quarter of FedEx’s fiscal year, rose 12 percent, to $10.55 billion from $9.43 billion.

FedEx Express and the less expensive ground segments, which account for more than 80 percent of the company’s revenue, had revenue growth of more than 10 percent in the quarter.

Fast-growing e-commerce drove up FedEx’s SmartPost average daily volume 24 percent as revenue per package rose 8 percent. SmartPost involves shipping packages to the United States Postal Service, which in turn delivers to residences.

FedEx’s freight division posted a long-awaited return to profitability after two company segments were combined.

Stock in FedEx, which is based in Memphis, rose $2.31, or 2.6 percent, to $91.44 a share.

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