May 1, 2024

Refining Margins Help Profit at Exxon Mobil

DALLAS (AP) — Exxon Mobil Corp. said Friday that fourth-quarter earnings rose 6 percent to $9.95 billion with help from higher refining profit margins.

The oil giant barely missed a record for full-year earnings. It earned $44.88 billion in 2012, about $340 million shy of its 2008 mark of $45.22 billion, an all-time high for a publicly traded company.

Exxon still makes most of its money by producing oil and gas, but that end of the business was less profitable than a year ago because of lower prices and production. The company made up the difference in the refining business.

The nation’s biggest oil company said Friday that net income equaled $2.20 per share, compared with $9.4 billion, or $1.97 per share, a year earlier. But revenue fell 5 percent to $115.17 billion, a drop of $6.44 billion.

Analysts surveyed by FactSet expected profit of $1.99 per share on revenue of $115.22 billion.

Profit from exploration and production of oil and gas fell 12 percent but still totaled $7.76 billion, more than three-fourths of Exxon’s income for the quarter. Production fell 5 percent, oil prices dipped, and the company took in less money from asset sales.

Exxon produces most of its oil outside the United States. Profit from overseas production tumbled by nearly one-fifth, but Exxon partly offset that by boosting its profit from U.S. production by more than one-third.

Outside of exploration and production, most of Exxon’s other profit comes from refining and selling petroleum products such as gasoline, diesel and jet fuel. That business did very well in the fourth quarter, earning $1.8 billion, an increase of more than $1.3 billion from a year earlier, mainly due to higher refining margins.

Other oil refiners have also reported better margins this earnings season as they switched from foreign crude to cheaper U.S. oil. On Friday, benchmark U.S. crude oil was trading at about $97 per barrel, $19 less than the same amount of Brent crude, the measuring stick for international sources of oil.

At Exxon’s U.S. Gulf Coast refineries, “We have more than tripled the processing of (cheaper) North American crude over the last couple of years,” the company’s vice president of investor relations, David Rosenthal, told analysts on a conference call. He declined to give precise figures or percentages.

Irving, Texas-based Exxon Mobil said it spent $5 billion during the quarter buying back its own shares and plans to spend another $5 billion on buybacks in the first three months of 2013.

Exxon shares fell 10 cents to $89.88 in morning trading. They gained 4 percent in January.

Chevron Corp., the No. 2 U.S. oil company, reported that fourth-quarter net income rose 41 percent to $7.23 billion. That result was helped by a gain of $1.4 billion related to an exchange of assets in Australia.

Article source: http://www.nytimes.com/aponline/2013/02/01/business/ap-us-earns-exxon-mobil.html?partner=rss&emc=rss

North Dakota Went Boom

Apart from a few fanatics who sometimes turned up at midnight, the landmen would begin arriving at the courthouse around 6 a.m. In the dead of winter, it would still be dark and often 20 or 30 below zero, and because the courthouse didn’t open until 7:30, the landmen would leave their briefcases outside the entrance, on the steps, in the order they arrived. And then they would go back to their cars and trucks to wait with the engines running, their faces wreathed in coffee steam. Sometimes there were more than 20 briefcases filed on the courthouse steps. The former landman who told me this — Brent Brannan, now director of the North Dakota Oil and Gas Research Program — said he sometimes thought he could see the whole boom in that one image, briefcases waiting for the day to start, and it killed him a little that he never took a picture.

For many years North Dakota has been a frontier — not the classic 19th-century kind based on American avarice and the lure of opportunity in unsettled lands, but the kind that comes afterward, when a place has been stripped bare or just forgotten because it was a hard garden that no one wanted too much to begin with, and now it has reverted to the wilderness that widens around dying towns. In a way, of course, this kind of frontier is as much a state of mind as an actual place, a melancholy mood you can’t shake as you drive all day in a raw spring rain with nothing but fence posts and featureless cattle range for company thinking, Is this all there is? until finally you get out at some windswept intersection and gratefully fall on the fellowship of a dog-faced bar with a jukebox of songs about people on their way to somewhere else.

All of which may explain the shock of coming around a bend and suddenly finding a derrick illuminated at night, or a gas flare framed by stars, or dozens of neatly ranked trailers in a “man camp,” or a vast yard of drill pipe, or a herd of water trucks, or tracts of almost-finished single-family homes with Tyvek paper flapping in the wind of what just yesterday was a wheat field. North Dakota has had oil booms before but never one so big, never one that rivaled the land rush precipitated more than a century ago by the transcontinental railroads, never one that so radically changed the subtext of the Dakota frontier from the Bitter Past That Was to the Better Future That May Yet Be.

It’s hard to think of what oil hasn’t done to life in the small communities of western North Dakota, good and bad. It has minted millionaires, paid off mortgages, created businesses; it has raised rents, stressed roads, vexed planners and overwhelmed schools; it has polluted streams, spoiled fields and boosted crime. It has confounded kids running lemonade stands: 50 cents a cup but your customer has only hundreds in his payday wallet. Oil has financed multimillion-dollar recreation centers and new hospital wings. It has fitted highways with passing lanes and rumble strips. It has forced McDonald’s to offer bonuses and brought job seekers from all over the country — truck drivers, frack hands, pipe fitters, teachers, manicurists, strippers. It has ginned up an unreleased reality show called “Boomtown Girls,” which follows the lives of “five bold and brave sisters” in the formerly drowsy farm center of Williston, N.D. Williston, whose population has tripled in the past 10 years, lies in the middle of the 150,000-square-mile Williston Basin, a depression in the crust of the earth that geologists now believe contains one of the largest oil fields in the world.

In the fall of 2011 in Crosby, N.D., Continental Resources, the oil company with the most acreage leased in the basin, erected a self-congratulatory granite monument celebrating its work in the so-called Bakken Formation, the Williston Basin rocks that, as Continental put it, ushered in “a new era in the American oil industry.” The number of rigs drilling new wells in North Dakota’s part of the basin reached a record 218 last May. It has now leveled off at around 200, as thousands of wells have been completed under deadline pressure to secure expiring mineral leases. Many thousands more will be spudded in the next two years as the boom moves from discovery to production and crews drill “infill” wells, complete pipelines, fortify roads, enlarge refineries and build natural-gas pumping stations and oil-loading train yards.

North Dakota’s last oil boom, 30 years ago, collapsed so quickly when prices crashed that workers in the small city of Dickinson left the coffee in their cups when they quit their trailers. Apostles of “Bakken gold” insist that what’s different this time is that this time is different, the history of frontier avarice notwithstanding. This is the boom that is going to change everything without the remorse and misgivings that have marked the aftermath of so many past orgies of resource extraction. This is the boom that won’t leave the land trashed, won’t destroy communities, won’t afflict the state with the so-called Dutch Disease in which natural-resource development and the sugar rush of fast cash paradoxically make other parts of the economy less competitive and more difficult to sustain. This is the boom being managed by local people certain they know how to look after their interests and safeguard the land they live on. This is the Big One that North Dakota has been waiting for for more than a century.

Chip Brown is a contributing writer for the magazine. He last wrote about the filmmaker Whit Stillman.

Alec Soth is a photographer in Minnesota. He recently published “LBM Dispatch No. 3: Michigan.”

Editor: Sheila Glaser

Article source: http://www.nytimes.com/2013/02/03/magazine/north-dakota-went-boom.html?partner=rss&emc=rss

It’s the Economy: Can Politicians Really Create Jobs?

Starting this week, I’ll be writing a regular column in the magazine that tries to demystify complicated economic issues — like whether anyone (C.E.O.’s, politicians, people running for the presidency) can actually create jobs. The fact is that creating them in a far-too-sluggish economy is practically impossible in our current capitalist democracy. No corporate leader is rewarded for hiring people who aren’t absolutely required. Most companies hire only when its workforce can no longer keep up with the demand for its products.

Even with all the attention on hiring, the government’s ability to create jobs is pretty dispiriting, no matter who is in charge. The most popular types of jobs programs involve state tax breaks or subsidies that seek to seduce a company from one state to another. While this can mean good news for “business-friendly” states like Texas, such policies don’t add to overall employment so much as they just shuffle jobs around. This helps explain Rick Perry’s claim that more than one million jobs were created under his watch in Texas while the rest of the country lost more than two million.

The federal government does something similar when it decides, for instance, to regulate oil drillers and subsidize windmill makers. Such a policy might help the environment but it just moves jobs from one sector to another without adding any. And while both Perry and Mitt Romney propose that further oil and gas drilling in the U.S. will transform the jobs picture, only 30,000 Americans work in oil and gas extraction, and about another 125,000 in support occupations. With more than 25 million Americans unemployed or underemployed, it’s unlikely that any changes in that part of the energy sector would make a real dent.

One reason we have so few ideas about job creation is that up until recently, the U.S. economy had been growing so well for so long that few economists spent much time studying it. (They’re trying to make up for it now. See this chart.) With no new theories, Democrats dusted off the big idea from the Great Depression, John Maynard Keynes’s view that government can create jobs by spending a lot of money. The stimulus, however, has to be borrowed, and it has to be really, truly huge — probably something like $1.5 or $2 trillion — to fill the gap between where the economy is and where it would be if everyone was spending at pre-recession levels. The goal is to goad consumers into spending again. And President Obama’s jettisoned $400 billion jobs package, hard-core Keynesians argue, is nowhere near what it would take to persuade them.

Many Republicans follow the more fiscally conservative University of Chicago School, which argues that Keynesian stimulus can’t heal a sick economy — only time can. Chicagoans believe that economies can only truly recover on their own and that policy interventions only slow the recovery. It’s a puzzle of modern politics that Republicans have had electoral success with a policy that fundamentally asserts there is nothing the government can do to create jobs any time soon.

Of course, Romney, Perry, Herman Cain and the rest won’t come out and say, “If elected, I will tell you to wait this thing out.” Instead, Republican candidates fill their jobs plans with Chicagoan ideas that have nothing to do with the current crisis, like permanent cuts in taxes and regulation. These policies may (or may not) make the economy healthier in 5 years or 10, but the immediate impact would require firing a large number of America’s roughly 23 million government workers.

How bad might that be? The U.K., as part of its austerity measures, is in the process of firing about a half-million government workers under the notion that the private sector would be so thrilled by low taxes and less regulation that it will expand and snatch up all those laid-off public servants. But this plainly isn’t happening. The British economy continues to grow slowly, if at all, and few former government workers have found new jobs in the private sector.

Article source: http://feeds.nytimes.com/click.phdo?i=ca0167319e1edcb9d824ef30e8a80a2d

Green Blog: BP to Drill Again in the Gulf of Mexico

The Obama administration on Wednesday gave BP its first drilling permit in the Gulf of Mexico since the Deepwater Horizon rig exploded in April 2010.

The decision was expected after the administration approved the company’s drilling plan for four exploratory wells last week, but it still was an important achievement for the company, which is counting on gulf wells to expand its oil and gas reserves.

The approval is for one well off the Louisiana coast in the Kaskida
field, at a depth of about 6,000 feet.

“BP has met all of the enhanced safety requirements that we have implemented and applied consistently over the past year,” said Michael R. Bromwich, the director of the Bureau of Safety and Environmental Enforcement, in a statement. “In addition, BP has adhered to voluntary standards that go beyond the agency’s regulatory requirements.”

BP hopes to drill several new wells next year. The company now has three rigs in the area working on the plugging and abandonment of old wells, but its chief executive, Robert Dudley, said this week that he hoped to have as many as eight rigs drilling in the gulf next year if permits are forthcoming.

The company released a statement on Wednesday saying, “We are pleased to have received a permit to drill.” It characterized the decision as “another milestone in our steady return to safely drilling in the Gulf of Mexico.”

The administration also announced this month that BP would be allowed to bid on new oil leases in the gulf in a December lease auction, the first auction scheduled since the Deepwater Horizon accident, which left 11 workers dead and spilled millions of barrels of oil into the gulf.

Article source: http://feeds.nytimes.com/click.phdo?i=3d7c67e70f929f4255523996b2e15a02