new frontiers of profit......

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New oil fields and tax gain help Exxon hit record profit

Terry Macalister
Friday January 30, 2004
The Guardian

ExxonMobil, the world's biggest stock-listed oil group, yesterday wiped
away some of the pessimism surrounding its business by unveiling $17bn
(£9.4bn) annual profits - the biggest in corporate history.

The Texan oil firm, under fire from environmentalists and the courts, took
full advantage of booming crude prices but also benefited from a large tax
gain, plus a rebound in chemical earnings.

Exxon reported net income of $6.65bn - up 60% - with the help of a $2.23bn
bonus from the Internal Revenue Service in settlement of a long-running
tax dispute.

The strong result puts added pressure on rival Shell, which reports next
week, and BP, on February 10, while raising Exxon morale, which was hit by
a $6.75bn clean-up bill from an Anchorage court over its Valdez tanker
spill in Alaska.

The Texan company is also happy to switch attention away from renewed
criticism by environmentalists, who claim to have calculated that the
company has been responsible for 5% of certain global warming emissions.

Fadel Gheit, oil analyst with the Fahnestock brokerage in New York,
described the financial performance of Exxon as "stellar" and said it was
the perfect riposte to those worried about the court judgment.

"When things get tough, the tough get going. This is a stellar result
which Shell and BP will have to match if they don't want to be relegated
to second class citizens," he said.

First-quarter revenue at Exxon was up 17% to $66bn but total worldwide
production fell by 0.6% to 4.41m barrels a day, bringing questions about
where the group's future earnings will come from.

Exxon blamed lower output from mature wells in North America but it
benefited from new fields and extra production from Opec countries.

The biggest surprise came from the chemical division where profits surged
from $76m to $476m, the best performance in five years.

Shares in the company increased 1% to $41.22 in a falling market.

On Wednesday an Anchorage district court increased its punitive damages
award against Exxon for the 1989 oil spill. The company has already spent
$3.5bn on cleaning .

Friends of the Earth said research showed Exxon had caused 5% of global
man-made climate changing carbon dioxide emissions over the past 120 years
but Exxon dismissed the research as "absurd".