Exxon Mobil released its earnings report Thursday that showed flat profit for the first quarter. It got strong earnings on its chemical business that offset the declines in production, exploration, marketing and refining.
Exxon, which is the world’s largest publicly traded oil company, got a net income of $9.5 billion. It was a $50 million increase compared to the first quarter of last year. Analysts attributed the profits to the shift back to drilling for oil rather than drilling for natural gas.
Oil and gas production volumes dropped 3.5 percent but the trend could reverse by the end of the year once the Kearl oil sands project in Western Canada starts. Exxon’s total production has not changed since 2002 despite some acquisitions. This is due to the declines in older fields as the difficulty of exploring for new fields in the present situation where most oil is controlled by national oil companies. Exxon Mobil tried to shift to natural gas from oil in recent years but the high supply and lower prices in the United States cut into the company’s bottom line.
Exxon Mobil has struggled in keeping its top position by investing in large oil sands and liquefied natural gas projects. These are expensive but not prone to declining production as that of traditional oil fields. Large gas and oil projects are also set to start producing in the next five years in Angola, Kazakhstan, and Nigeria.
Analysts pointed to the strong performance trend by Exxon’s refineries in the United States that benefit from the booming domestic oil production as well as inexpensive natural gas. They pointed out drops in the production of high price natural gas in Asia. The company’s chemical business in the United States also benefited from low price natural gas, which is a vital raw component.
