Exxon profit sets record, but its stock drops

HOUSTON - Exxon Mobil Corp. reported the fattest operating profit in U.S. corporate history yesterday, but it took a beating anyway - from politicians railing against Big Oil, drivers bleeding cash at the pump, and investors who expected more.

The world's largest publicly traded oil company turned a profit of $11.68 billion for the second quarter, lifted mostly by meteoric crude-oil prices. Its earnings were up 14 percent from a year earlier.

Total sales: $138 billion - roughly the gross domestic product of Hungary.

Henry Hubble, Exxon Mobil's vice president for investor relations, said the record profit highlighted "the quality of our integrated business model and disciplined investment approach."

But Exxon's profit was a disappointment on Wall Street, and its stock slumped nearly 5 percent. Almost the entire energy industry was walloped by investors yesterday.

Royal Dutch Shell P.L.C. posted its own record profit across the Atlantic, with earnings of $11.6 billion. Its American depository receipts tumbled nearly 4 percent.

Growing investor apprehension can be found at the heart of what the oil industry does - finding and producing oil and natural gas.

Exxon Mobil's overall output fell 8 percent in the second quarter from a year earlier, a significant blow for a company that generates more than two-thirds of earnings from oil and gas production.

For Exxon Mobil, which produces 3 percent of the world's oil, finding new deposits of hydrocarbons is getting harder and harder. State-run oil companies such as those in Saudi Arabia and Venezuela control about 80 percent of known global oil reserves. It is difficult if not impossible for Exxon and its competitors to get any part of that oil.

Exxon Mobil was not alone in the industry in posting massive profits over the last week.

The reward? A broadening backlash from a public that is getting squeezed on fuel prices from every front.

The American Petroleum Institute, the industry's trade association, said Big Oil earnings were not out of line compared with earnings in other industrial sectors.

The entire industry is not rolling in cash. Refiners, including Exxon Mobil, must also buy crude. The company's earnings from refining and marketing fell 54 percent in the quarter to $1.55 billion.

Profit for Marathon Oil Corp., also reported yesterday, fell roughly 50 percent. The company said it might split itself in two, with one company focused primarily on exploration and production and the other on refining and marketing.

Exxon shares fell 4.68 percent, or $3.95, to $80.43. After Marathon's announcement, its shares jumped 9.62 percent, or $4.34, to $49.47.