Major firms' profits set to climb

Exxon Mobil Corp and Royal Dutch Shell Plc may report record first-quarter profit and BP Plc the highest earnings in two years after oil rose above $100 a barrel and natural gas prices climbed.

Exxon Mobil probably will say net income rose 25 percent to $11.6 billion, based on the average of six analyst estimates compiled by Bloomberg. Profit at The Hague-based Shell likely gained 4.9 percent to $6.88 billion excluding one-time items, according to the median of eight analysts. BP's probably jumped 32 percent to $5.26 billion, the median of eight analysts surveyed by Bloomberg News shows.

Oil reached $100 for the first time on Jan 2 and $111.80 a barrel in March as the dollar fell, while natural gas increased 22 percent on average. Shares of all three fell as the rise in crude squeezed refining profits by outpacing gains in gasoline and as they faced rising competition from OAO Gazprom of Russia, PetroChina Co and Petroleo Brasileiro SA, Brazil's state- controlled oil company.

"It's obviously all about the oil price," said Edward Collins, a London-based money manager at New Star Asset Management Group Plc. He runs four funds as part of $41 billion of investments, including BP and Shell shares. "Refining margins were weak in the quarter, particularly in the US."

Shell spokesman Wim van de Wiel said the company's average analyst estimate is $6.77 billion. BP spokesman Toby Odone said that a survey of 22 analysts by the London-based producer gave a mean estimate of $5.27 billion. The forecasts exclude changes in oil-inventory values. Exxon Mobil, based in Irving, Texas, didn't return calls seeking comment outside of normal business hours.

Exxon Mobil fell 9.7 percent in New York trading in the first quarter, while BP dropped 17 percent in London and Shell lost 18 percent in London. The MSCI World Index, a global stock-market benchmark, lost 9.5 percent. Both Shell and BP report today.

Biggest firm

In terms of market value, Exxon Mobil is the world's biggest oil company, at $495 billion. Shell comes next with a market value of $242 billion and BP is sixth-largest, at $217 billion. Gazprom fell 13 percent in the quarter and Petrobras lost 16 percent.

ConocoPhillips, the third-largest US oil company, said last Thursday first-quarter net income jumped 17 percent to $4.14 billion as rising crude and gas prices offset narrowing refining margins. Profits from making fuels dropped to $4.57 a barrel in the period from $9.41 a year earlier, according to BP.

Exxon Mobil Chief Executive Officer Rex Tillerson expanded the company's search for reserves to New Zealand, Brazil and the Arctic as North American fields age and contracts with host nations reduce its share of output as prices rise. About 20 percent of Exxon Mobil's output is governed by such accords.

The company, which reports on Thursday, signed a 25-year extension last month to its agreement in Malaysia, where Exxon Mobil pumps 150,000 barrels of crude and 1.2 billion cubic feet of gas daily.

Total production in the period probably slid 4.4 percent to 4.24 million barrels of oil equivalent a day, said Erik Mielke, an analyst at Merrill Lynch & Co in New York.

Agencies

(China Daily 04/29/2008 page17)