Higher fuel prices allow Big Oil to post bigger profits

NEW YORK - The major oil companies continue to climb back from the recession, with higher fuel prices driving up earnings.

After setting a record profit in 2008, the oil industry tanked last year as the global economic downturn produced a dramatic drop in oil and natural gas prices. On Thursday, Exxon Mobil Corp. said it earned $7.56 billion in the second quarter, its best result since the last three months of 2008. Royal Dutch Shell Group posted a 15 percent gain in net income. A day earlier, ConocoPhillips said net income nearly tripled in the April-to-June period.

Chevron Corp. reports its quarterly results Friday.

The increase in profit comes as oil companies wait out a ban on deepwater drilling in the Gulf of Mexico that is scheduled to last until Nov. 30. Shell took a $56 million charge for idling its rigs while Exxon halted work on an appraisal well and suspended operations at one of its gulf platforms.

But their operations are so vast that the effect is likely to be minimal. And both remain committed to deepwater drilling around the globe, including the gulf. Exxon continues to explore the deep waters off countries such as Indonesia and the Philippines.

"Slight delay in the gulf, but we're proceeding full speed ahead in the rest of the world," Exxon Mobil vice president David Rosenthal said in a conference call with investors.

Shell said it planned to wait out America's six-month ban on exploratory drilling.

"We are just trying to keep the rigs warm, ready to start up again," Shell chief financial officer Simon Henry said.

For BP P.L.C., of course, the gulf is paramount at the moment. It will be paying for years for the oil spill set off in April when the Deepwater Horizon rig exploded and sank. The British oil company took a charge of $32.2 billion to cover the costs that it can reliably estimate at this time. On Tuesday, it reported a record quarterly loss of $17 billion.

BP, however, remains committed to deepwater projects. The company plans to begin drilling a deepwater well off the coast of Libya in coming weeks.

Argus Research Corp. analyst Phil Weiss said Exxon, BP, and Shell had no choice but to keep exploring the deep sea. Most of the world's oil reserves are in the hands of state-owned companies, he said. "Deepwater is one of the few places where they can grow."

For its second quarter, Exxon's net income nearly doubled as oil prices increased to an average of $78.16 per barrel from $59.80. Revenue increased 24 percent to $92.5 billion. The company boosted oil and natural gas production 8 percent. Refining margins also improved as gasoline demand increased.

Per-share earnings increased to $1.60 from 81 cents. Analysts had expected $1.46 per share on revenue of $98.5 billion.