Oil Giant Exxon Mobil’s Earnings Tumble 58%

Exxon Mobil Corp., the world’s largest publicly traded oil company, said first-quarter earnings fell 58% as oil and natural gas prices plunged and the refining industry had its worst profit slump since the 1980s.

Net income fell to $2.09 billion, or 30 cents a share, from $5 billion, or 71 cents, a year earlier, the company said. Revenue declined 24% to $43.5 billion.

The fuel business had a loss of $28million, compared with a $1-billion profit, because a mild winter hurt demand for heating oil and airlines bought less jet fuel after Sept. 11, which reduced travel. In recent weeks, energy prices and the refining business have shown signs of improving, Chief Executive Lee Raymond said.

The Irving, Texas-based company earned $2.15 billion, or 31 cents a share, excluding a $60-million expense related to the 1999 Exxon-Mobil merger. It had been expected to earn 39 cents, the average estimate of analysts polled by Thomson Financial/First Call.

Exxon Mobil fell 50 cents, or 1.2%, to $41.35 on the New York Stock Exchange. The stock has fallen 5.7% this month and is 2.9% lower than a year ago.

A weak refining market this winter probably will mean larger losses than expected from the oil industry during the quarter, Prudential Securities analyst Michael Mayer said.

Rival refiners Phillips Petroleum Co., Sunoco Inc. and Tesoro Petroleum Corp. have already said they will post losses for the period. BP, the world’s third-largest oil company, said earlier this month that the refining industry in the first quarter was less profitable than at any time in the last decade.

The combination of declining demand and thin profits from refining and fuel sales “led to a downstream margin environment that was the worst since the mid-’80s,” Raymond said.

Analysts underestimated Exxon’s profit decline because the company “provides no guidance whatsoever on anything,” leaving analysts to gauge its performance based on oil prices, economic conditions and the results of its peers, said Gerard Klauer Mattison analyst Michael Young.

Exxon Mobil, the largest U.S. refiner, said it was squeezed by a jump in oil prices from the fourth quarter, which increased its costs faster than the company was able to increase prices for fuels such as gasoline and heating oil.

Exxon Mobil’s U.S. refining profit fell 97% to $14million from $409million. Outside the U.S., the business had a loss of $42million, contrasted with a profit of $590million a year earlier.

Earnings from oil and gas production fell 47% to $2.01billion from the same period a year earlier, the company said.