IRVING, Texas, April 23 (UPI) -- Exxon Mobil Corp., the world's largest publicly traded oil company, said its first-quarter net income fell due to a weak refining business and lower crude and natural gas prices.
Exxon Mobil said its net income dropped to $2.09 billion, or 30 cents a diluted share, from a record $5 billion, or 71 cents a diluted share during the same period last year.
Excluding special items, Exxon Mobil's earning fell to 31 cents a diluted share, the third consecutive quarter the oil company has seen profits drop after a string of record-breaking results.
Analysts on Wall Street had expected the oil giant to post a net income of 39 cents a share, according to Thomson Financial/First Call.
Revenue fell to $43.53 billion from $57.30 billion a year ago.
Capital and exploration expenditures rose 18 percent to $2.97 billion in the quarter from $2.52 billion last year.
Chairman Lee R. Raymond said, "The reduction in earnings reflected weakened conditions in all business segments, including lower crude oil prices, a sharp decline in natural gas realizations, and significantly weaker refining and marketing margins.
"Ample inventories, weakened demand and rapidly rising raw materials costs created the worst downstream conditions since the mid-80s. Capital expenditures increased in line with higher full-year spending plans, consistent with a disciplined, long-term focus on investing for profitable growth," he said.
The company said compared with the fourth quarter of 2001, upstream earnings improved $339 million, reflecting an upward trend in crude oil prices. Liquids volumes were also higher as production from new operations more than offset OPEC quota restrictions and natural field decline. Gas volumes were up 3 percent reflecting higher production in Indonesia and seasonal demand patterns in Europe.
Downstream results fell $1.05 billion from the fourth quarter of 2001. Severely compressed industry refining and marketing margins were experienced worldwide and were the primary driver in the decline. Additionally, the absence of benefits from planned inventory reductions that occurred in the fourth quarter contributed to the decrease.
"Industry conditions have improved in both the upstream and downstream thus far in the second quarter. Oil prices have remained above first quarter levels and natural gas prices in North America have also improved. Early in the quarter, we have seen some recovery in most refining and marketing margins, although they remain at low levels, particularly in the Asia-Pacific region," Raymond said.
The company said its upstream earnings were $2.0 billion, a decrease of $1.80 billion from the record first quarter 2001 results.
Average realizations on crude oil sales were 20 percent lower than the prior year, and natural gas prices in North America fell about 70 percent from the historic highs reached during the same period last year.
Liquids production, excluding the impact of OPEC quota restrictions, was consistent with plans. Natural gas volumes were down 3 percent due to a reduction in weather-related demand in Europe and also were consistent with plans.
"Although first-quarter earnings were negatively affected by declines in prices and margins, Exxon Mobil continued its vigorous pursuit of plans and programs to enhance shareholder value," Raymond said.
"Each of the businesses captured additional efficiencies in line with planned full-year targets. Asset management activities included the sale of coal operations in Colombia. Capital and exploration expenditures increased 18 percent, including a 28 percent increase in the upstream, laying the groundwork for future profitable production growth," Raymond added.
