Exxon 1Q Net Rises 17 Percent, Driven By Surging Prices

Exxon Mobil Corp., one of the world's largest oil companies, Thursday reported that their net income in the first quarter rose 17 percent, falling short of analysts’ estimates. The growth driven by surging crude oil prices led the company's margins to contract as it also dealt with lower production volumes.

Exxon’s increase was the least among the world's three largest oil companies.

Exxon Mobil dropped 3.3 percent to $90 in New York trading after the oil giant revealed that first-quarter net income rose to $10.9 billion or $2.03 a share, from $9.28 billion or $1.62, a year earlier. Profit per share was 10 cents below the average of 17, analyst’s had estimated.

The Irving, Texas-based company said that revenue climbed 34 percent to $116.85 billion from $87.22 billion. This was the best first quarter, the company has ever had.

Considering the surging energy prices it was speculated that Exxon Mobil would beat its own record of the highest quarter profit for a U.S. company. But the latest results fell short of the record $11.7 billion profit Exxon Mobil had posted in the final quarter of 2007.

There is one hitch to the rising oil prices: costs have been driven sharply higher. To deal with which Exxon has been attempting to cut costs, by making its operations more energy-efficient and drilling wells faster, thereby lowering its $4 billion annual bill for renting drilling rigs.

High energy prices also encourage cash-rich, oil-producing nations to become more aggressive—holding back assets, ripping up contracts and raising tax rates and consequently Western oil companies are hindered to access to the biggest remaining pools of oil and gas.

As much as 81 percent of Exxon's income comes from operations outside the U.S. the energy giant insisted that it still has plenty of options to invest in, though access is getting harder.

The company has also been involved in major stock buybacks, of late. Last year, Exxon repurchased $31.8 billion of its shares, a fivefold increase from the amount acquired in 2003, which helped boost the earnings per share.

Growing hysterically, Crude prices averaged nearly $100 a barrel in the first three months, up from roughly $58 a barrel a year ago. The spike has been attributed to rising global demand, speculative trading and a weak dollar, among other factors.