MB Civic

[Based on this, they could lower the price to $1.50 per gallon and still show an 18% profit. How much is enough?!!!!]

By CLIFFORD KRAUSS

Exxon Mobil reported a 36 percent gain in second-quarter earnings yesterday, bolstered by robust oil and gas prices, improving refining margins and the start of production at a field in Nigerian waters.

Exxon, the world’s largest publicly traded oil company, has prospered as gasoline prices have risen sharply in reaction to mounting global tensions in several oil-rich areas and climbing consumption in the United States, China and India. The company, based in Irving, Tex., was the only one of the big three producers to increase output in the quarter and take strong advantage of the increase in oil prices, which have surpassed $70 a barrel.

Net income for the quarter rose to $10.36 billion, or $1.72 a share, from $7.64 billion, or $1.20 a share, a year earlier, the company said. The only time Exxon’s quarterly profit was higher was the fourth quarter of last year.

Revenue climbed 12 percent, to $99 billion, despite a slowdown in production at several company refineries because of repairs. The revenue was second only to Exxon’s third quarter of last year.

Wall Street energy analysts characterized the results as little short of spectacular. But the rich harvest of profit was joined by calls from some in Congress to tax the profit windfall at large oil companies to compensate for the increasing pressure put on consumers’ budgets and the risk that higher energy costs would slow the economy.

Exxon’s quarterly profit, released a day after ConocoPhillips reported similarly strong results, offers Democrats an attractive midterm election topic that assigns the blame for high prices at the pump to the perceived cozy relationship between the Bush administration and the oil giants.

Soon after Exxon reported its earnings, Representative Edward J. Markey, a Massachusetts Democrat and a member of the House Energy and Commerce Committee, released a caustic statement. “While American families get tipped upside down and have their savings shaken out of their pockets at the gas pump, the Bush-Cheney team devises even more ways to line Big Oil’s pockets,” he said.

Henry Hubble, Exxon’s vice president for investor relations and corporate secretary, acknowledged yesterday in a conference call with analysts “the impact today’s high energy prices have on consumers and family budgets” while “our companies do benefit from these conditions.”

He said the answer was not more taxes on oil profit but efforts to “bring more product to the market and ease supply pressure.”

Investors had much to cheer about, even if they, too, were shaking their heads at the pump.

Profit from oil and natural gas sales rose 45 percent from a year earlier, to $7.1 billion.

The company reported that it repurchased $6.8 billion worth of stock during the quarter, topping its target by $800 million. It said it expected buybacks to rise to $7 billion in the third quarter.

Shares of Exxon Mobil fell 13 cents, to $66.47, in New York Stock Exchange trading. The stock has risen about 20 percent this year.

The quarter’s results appeared to reflect well on continuing efforts at cutting costs and improving return on assets since the merger of Exxon and Mobil seven years ago. They also appeared to validate the early decisions by Rex W. Tillerson, the chief executive who succeeded Lee R. Raymond at the end of last year. Mr. Tillerson has moved to raise production in Africa, Russia and the Middle East and expand exploration in Indonesia and Madagascar.

The company’s crude oil output rose more than 9 percent, to 2.7 million barrels a day, as growth in Africa, Asia, the Middle East and Russia offset declines in North America and Europe. Gas output rose only slightly, largely because of expanding operations in Qatar.

Exxon’s total production gain of slightly more than 6 percent, the equivalent of four million barrels of oil a day, compared favorably with the performances of its rivals BP and Royal Dutch Shell, which have reported second-quarter production declines of 2.5 percent and 7.7 percent, respectively.

The company said it spent $4.9 billion for the quarter on capital and exploration projects, an increase of 8 percent over the previous year.

Though analysts said they were impressed with the results, some continue to say that the company needs to do much more with its overflowing cash of nearly $40 billion.

“These are record earnings that exceeded expectations,” said Fadel Gheit, senior energy analyst at Oppenheimer & Company. “Their earnings benefited from record oil prices as well as very high production growth. The only negative in the report — but this is industrywide — is rising cost inflation. Everything energy companies are using, like materials and labor, are costing them more today than anytime before.”

Mr. Gheit added that future quarterly earnings could well continue to satisfy investors, but “only if oil prices continue to rise.”

Mr. Hubble, the Exxon vice president, said gasoline sales in the United States and elsewhere should remain strong. “We continue to see demand growth year-on-year,” he said. “We’re running our capacity full. We’re selling everything we can make. It correlates best with G.D.P. growth. The economy is still performing well around the world.”

Analysts noted that much of Exxon’s production growth was provided by the recent start-up of the Erha project 60 miles off Nigeria in 3,900 feet of water. Exxon estimated that with the Erha North satellite project scheduled to come on stream during the new quarter, total Erha production would rise to 190,000 barrels a day by the end of the year.