Shell and Exxon profits slip as downturn depletes demand
October 30, 2009
By Joe Carroll and Edward Klump Houston
ROYAL Dutch Shell and Exxon Mobil yesterday posted their lowest third-quarter profits in six years after the global recession eroded energy demand, pulling down fuel prices.
Shell said net income declined 62 percent year on year to $3.25 billion (R25bn), while Exxon Mobil said its profit dropped 68 percent to $4.73bn.
Exxon Mobil's profit a share was 98c, which was 4c below average analyst estimates. Shell exceeded estimates as production gains helped cushion the impact of declining prices.
Average prices of oil futures for the quarter slid almost $50 a barrel from last year and natural gas prices tumbled to a seven-year low.
Exxon Mobil's US refineries lost about $2.3 million a day as petrol and diesel prices fell.
Shell, whose refining earnings fell 47 percent, said slumping demand would keep profit margins narrow in "the short and medium term".
"I think it's well advertised that refining conditions going forward are not going to be as stellar as they were in the hallmark period between 2004 and 2007," said Robbert Van Batenburg, the head of equity research at Louis Capital Markets in New York. "It's going to be here to stay."
Exxon Mobil fell 2.1 percent to $72.26 by 10am in New York yesterday. Shell slid 3.7 percent to £18.40 (Ré.34) in London.
Also yesterday, Eni said its earnings plunged 58 percent to e1.24 billion (R14bn). The Italian oil producer said it would fall short of its full-year production forecast.
ConocoPhillips reported on Wednesday that its profit declined 71 percent to $1.5bn, and on Tuesday BP posted a 34 percent decline in net income to $5.34bn.
Crude producers pumped 3.68 million barrels in excess of daily global demand during the quarter, equivalent to the combined production of Kuwait and Libya, according to the International Energy Agency in Paris.
"They're being impacted by demand out there," said James Halloran at Financial America Securities. "You're seeing that there's no pickup." - Bloomberg
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