Exxon Mobil Corp. (XOM) released quarterly earnings Thursday that easily beat analysts’ expectations.
The world’s largest public energy company cited higher crude prices and improved refining margins.
Net income rose to $7.56 billion, or $1.60 a share, in the second quarter, up 91% from $3.95 billion, or 81 cents a share, in the same period in 2009.
Revenues for the quarter rose 24.2% year-over-year to $92.5 billion, missing consensus estimates of $98.5 billion.
Earnings for the first half of 2010, excluding special items, were $13.9 billion, up 60% over the first half of 2009.
Rex Tillerson, Exxon’s chief executive officer, said in a statement that the results reflect increased output, improved refining margins and strong performance in the company’s chemicals business.
“ExxonMobil’s focus on operational excellence continues to deliver strong results,” said Tillerson.
Lower refining margins had weighed on Exxon’s results in recent quarters as the weak economy damped fuel consumption and crude prices rose. But margins improved in the second quarter as refining activity picked up ahead of the summer driving season.
Exxon said earnings in its global refining business rose $708 million to $1.22 billion in the quarter, driven by improved margins. Profit in the company’s chemicals business, its smallest division, jumped $1 billion to $1.37 billion.
“Downstream (production) and chemicals really drove the results,” said Pavel Molchanov, an analyst who covers Exxon at Raymond James. But he cautioned that uncertain economic conditions around the world could curb energy demand once the “seasonal bounce” fades.
“There is still over-capacity in the global refining industry,” he said. “Exxon is certainly not immune to that.”
Meanwhile, the ongoing rebound in oil prices helped boost profits in Exxon’s oil production and exploration unit, where earnings rose $1.5 billion to $5.34 billion in the quarter.
Unlike rivals BP PLC and Shell Oil, Exxon Mobil has a relatively small portion of its global business in the Gulf of Mexico, where BP’s giant oil spill has halted deepwater exploration and led to a headline replacement cost result loss of $17 billion related to the oil spill.
Brian Youngberg, analyst at Edward Jones, said Exxon Mobil turned in a “good quarter” that benefitted from a production increase and higher crude oil prices.
Oil prices averaged $78 a barrel in the quarter, up from $60 a barrel in the same period last year.
Production was up 8% in the quarter, driven by contributions from Exxon’s assets in Qatar.
“In the past, the company has struggled on the production growth side,” he said. “If it wasn’t for new projects in Qatar, it would have been a challenging quarter.”
The refining side of the business was boosted by stronger demand from diesel fuel, jet fuel, asphalt and other refined products, while gasoline economics remained slack, he said.
“Demand for gasoline hasn’t come back a whole lot but diesel has improved, because it fell so dramatically last year,” Youngberg said. “It was a good quarter for refining in general across the industry.”
The results included a slight impact from Exxon’s recent purchase of XTO Energy, a natural gas company. The $36 billion deal closed on June 25.
Shares of Exxon were up 0.7% to $61.34 in Thursday trading.
