NEW YORK (AP) - Exxon Mobil Corp. said Thursday that profit rose 41 percent in the second quarter, when the price of gasoline and other fuels jumped to three-year highs.
Exxon’s second-quarter income of $10.68 billion is the largest since it set a corporate net income record of $14.8 billion in the third quarter of 2008. The company has reaped the benefit of higher oil prices and racked up profits of more than $21 billion so far this year.
While oil’s run-up to about $113 per barrel in early May helped Exxon and other major oil companies boost profits, it also acted as a brake on economic growth, along with debt crises in Europe and high unemployment in the U.S. The company on Thursday sounded a cautionary note, saying sluggish business investment, lower consumer spending and high debt continue to weigh on energy demand.
“A sustained economic recovery remains elusive,” Exxon Vice President David Rosenthal said in a conference call.
The largest publicly traded oil company said its quarterly earnings amounted to $2.18 per share for the three months ended June 30. That compares with $7.56 billion, or $1.60 per share, for the same part of 2010. Revenue grew 36 percent to $125.5 billion.
Results fell short of Wall Street estimates of $2.30 per share, though revenue topped projections of $119.2 billion.
Shares fell $1.19, about 1.2 percent, to $82.12 in afternoon trading.
Oil and natural gas prices rose during the quarter, and the Irving, Texas oil giant took advantage by cranking up production 10 percent. Exxon’s production business increased earnings 60 percent to $8.5 billion.
Much of that added production was in natural gas, however, including huge volumes in the U.S. from XTO Energy, which Exxon acquired last year. During the second quarter, natural gas prices rose 2 percent in the U.S. for Exxon to $4.20 per 1,000 cubic feet, while crude oil prices rose 44 percent to $105.27 per barrel.
“I wonder whether it makes sense to be producing as much (natural gas) as they are at these prices,” Argus Research analyst Phil Weiss said.
In the U.S., many natural gas drilling leases require the holder to maintain at least a base level of natural gas production. But Weiss said Exxon should still be able to cut back while prices remain relatively low.
“If I reduce supply, then prices have to rise,” he said.
Higher oil prices also boosted earnings for Exxon’s European rivals BP and Royal Dutch Shell PLC in the second quarter. All three missed Wall Street expectations, however, as they reported weaker oil production from fields outside the U.S. Foreign entitlement contracts force them to take less oil as prices rise, analysts said.
Exxon said its refining business increased earnings 11 percent overall to $1.4 billion as prices climbed for gasoline, jet fuel, diesel and other petroleum products. Profits dropped, however, for Exxon’s international refineries. Profits also slipped 3 percent to $1.3 billion for Exxon’s chemicals operation because of lower sales volumes and higher taxes.
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