Exxon Mobil Profits Down 49 Percent

NEW YORK – Exxon Mobil Corp. the world's largest publicly traded oil company, reported a 49 percent drop in fourth-quarter profits on Wednesday as the recession put the brakes on petroleum demand and sent prices tumbling from their year-ago highs.

The fortunes of Exxon Mobil, based in Irving, Texas, and other energy companies have declined sharply in recent quarters alongside crude oil and natural gas prices. Compared with the last three months of 2000, when energy companies were posting record profits, oil and natural gas prices dropped by 36 percent and 63 percent, respectively, in the fourth quarter of 2001.

With energy prices way down, Exxon Mobil's fourth-quarter net income fell to $2.68 billion, or 39 cents a diluted share, from $5.22 billion, or 75 cents a diluted share, a year earlier.

Excluding special items and expenses relating to Exxon's 1999 acquisition of Mobil, it earned 42 cents a diluted share, down from 73 cents a share the prior year, but at the high side of analysts' estimates.

``Rising tides lift all ships, but receding tides bring all ships down, including Exxon Mobil,'' said Fadel Gheit an analyst with Fahnestock & Co.

Earnings from its exploration and production business fell hard, dropping 55 percent to $1.67 billion.

``That is very difficult to make up elsewhere,'' Gheit said.

Revenues at Exxon Mobil fell 26 percent to $47.3 billion.

WINTER DEMAND FREEZE

After a fourth-quarter when U.S. crude prices averaged just over $20 a barrel, OPEC and its leading export rivals agreed to cut nearly 2 million barrels per day of oil production from the 76 million bpd world market.

It marked OPEC's fourth production cut in a year, and included promises by competing exporters such as Russia, Norway and Mexico to help by slicing their exports.

So far, the cuts have done little to lift crude prices. Instead, a mild winter has capped consumption of heating oil, leading companies to slow down output at their refineries and creating a surplus of petroleum sitting in storage tanks around the country.

As a result, few experts see profits for companies such as Exxon Mobil improving much from the fourth quarter. Fahnestock's Gheit, for one, sees Exxon Mobil's earnings in 2002 dropping by 15 to 17 percent from 2001.

Even so, Exxon Mobil's profits should hold up better than those of its rivals because of its size and its ability to cut costs, analysts said.

That cost cutting -- along with better-than-expected results from its chemicals and refining and marketing business -- helped Exxon Mobil beat analysts' consensus estimate of 39 cents a share by three cents in the fourth quarter of 2001.

Shares of Exxon Mobil rose 52 cents to $38.54 in early activity on the New York Stock Exchange.

In the downstream -- or refining, marketing, and transportation -- the company earned $1.02 billion during the fourth quarter compared with $1.16 billion a year earlier. Its chemical earnings slipped to $209 million from $215 million.

Merger expenses of $200 million in the latest quarter included severance costs related to the Exxon's 1999 acquisition of Mobil.