Note: With the second-quarter earnings season nearing
its close, HP is recapping the results from major market
players in various segments. For a look at petrochemical results,
The second quarter of 2011 continued to be a boon for most US
and global refiners, with high oil prices hitting a late April
peak and leading to sharply higher margins.
Crude values were up about 40% on a year on year basis, as
political unrest in the Middle East and North Africa pushed
prices higher throughout the quarter.
But prices began to correct in May, as economic turbulence
hit developed markets such as the US and Europe.
That led companies such as ExxonMobil to caution
expectations for future growth. Moreover, other companies came
in slightly below analyst expectations.
Heres a rundown of how some of the top industry
Net income for ExxonMobil, the largest US
oil company, rose 41% to $10.7 billion. Overall, that income
was the highest since the company set a corporate net income
record of $14.8 billion in the 2008 third quarter.
Revenue jumped 36% to $125.5 billion, topping projections of $119.2 billion.
The company credited much of its gains to fuel costs, which
jumped to three-year highs during the quarter.
In response, ExxonMobil increased its production by 10%
during the quarter. Earnings in the productions segment surged
60% to $8.5 billion.
Going forward, however, ExxonMobil vice president David
Rosenthal cautioned that a sustained economic recovery
remains elusive, noting that sluggish business
investment, lower consumer spending and high debt are weighing
on energy demand.
Earnings for Chevron, the No. 2 US oil
company, were $7.73 billion up 43% from $5.41 billion a
Chevron said its profits from oil and natural
gas sales rose 51% to $6.87 billion, as the price Chevron
received for each non-US bbl of oil rose to $107/bbl, up from
$71/bbl in the 2010 quarter.
With 74% of Chevrons oil production located outside
the US, Chevron capitalized on the premium for Brent crude
Meanwhile, ConocoPhillips the No. 3
US oil firm saw second-quarter profit drop 18.3% to $3.4
billion, down from $4.2 billion a year ago.
However, those earnings came out ahead of analyst
expectations. The year-earlier period was artificially inflated
from large gains due to asset sales, the company said.
Revenues increased 34% year on year to $67 billion, also
beating projections of $57.9 billion.
Conocos refining business swung to a $766
million profit after reporting a $279 million loss a year ago,
owing to higher prices for gasoline, diesel, jet fuel and other
Valero, the largest US crude refiner,
posted $135 million in operating income the second-best
quarterly performance in company history.
For all segments, Valero recorded a net income of $745
million in the second quarter, up 24% from $520 million a year
Our earnings momentum continues to build, said
CEO Bill Klesse.
However, overall earnings came in shy of the $832 million projected by analysts. They
attributed the shortfall to Valero losing money on refining fuel in Canada, where it
relies on higher-priced imports of Brent crude oil.
Revenues were $31.29 billion, up 52.2% from $20.56 billion a
Looking ahead, Klesse said that with crude oil prices
holding in a range and economic growth continuing,
refined product demand will grow. Benchmark margins in the
third quarter have increased from second-quarter levels, and
the forward curve shows margins are strong into 2012.
Marathon Oil reported a second-quarter
profit of $996 million, up 40.5% from $709 million in the 2010
Revenues jumped 31.8% to $3.87 billion.
However, the companys adjusted net income was 96
cents/share, falling short of analyst estimates of 99
Our second quarter financial results, while solid,
were negatively impacted by unplanned downtime at key
international operations, which held our second quarter
production to the lower end of guidance, said CEO
Clarence P. Cazalot Jr.
These operations are all back operating at or above
expected capacity, he added.
Marathon completed the spinoff of its downstream business in
the second quarter, and also announced a pending $3.5 billion
acquisition of Eagle Ford shale assets in Texas.
Overall, Marathon has now seen its net income rise for three
The trend toward higher second-quarter profits extended
globally, with Royal Dutch Shell nearly
doubling its profits to $8.66 billion.
Shell attributed the gains to higher oil prices and new
production from Canadian oil sands and natural
gas in Qatar.
Profits at upstream operations were up 85% to $6.06 billion,
but profits at downstream operations slipped 7% to $1.08
billion, reflecting lower refinery intakes and worse margins,
the company said.
Global production fell 2% to 3.05 million bpd, Shell
officials said. The company noted that its output in the US
Gulf region was still about 50,000 bpd below normal, owing to
the moratorium put in place following the Deepwater Horizon rig
Also impacted by the Deepwater Horizon incident was rig
operator BP, which swung to a second-quarter
net profit of $5.6 billion.
Thats up from a net loss of $17.2 billion a year
earlier, when earnings were hit by a $32 billion charge for
responding to the Gulf of Mexico crisis.
However, that $5.6 billion profit came in below analyst
expectations. The company said fallout from the Gulf disaster
was limiting production, still down 11% from pre-spill
Even so, BP chief executive Robert Dudley was optimistic
about his companys future, noting that 2011 has been
an unusually good year for gaining access to
resources in locations such as Australia, Indonesia,
Azerbaijan, the UK, the South China Sea and Trinidad.
We expect the momentum of our recovery to build into
2012 and 2013 as new projects come on stream,
particularly in higher-margin areas; as we complete current
turnaround activity; as we return to work in the Gulf of
Mexico; and as uncertainties reduce, Dudley said.
BP said it expects to soon be approved by US regulators to
again explore in the Gulf of Mexico.
Stay tuned to the HPInformer blog next week for a similar
earnings recap of the global construction segment.