The oil giant brings in $11.68 billion, the largest profit for a U.S.
company, and still fails to meet analysts’ expectations. Critics say
Exxon and others aren’t doing enough to reduce gas prices.

ExxonMobil Corp. posted second-quarter earnings Thursday of $11.68
billion, once again topping its own record for the biggest three-month
profit ever by a U.S. corporation.

Still, the massive income at the world’s largest publicly traded oil
company pleased hardly anyone. Production fell during the quarter, and
financial analysts had been expecting better earnings — two factors
that helped push the company’s stock down $3.95, or 4.7%, to $80.43 a
share.

Activists renewed their complaints that Exxon and other oil
companies weren’t investing enough to find new oil that would bring
pump prices down, instead preferring to drill for wealth on Wall Street
by purchasing their own stock.

In the quarter that ended June 30, the Irving, Texas, oil giant spent
$8 billion buying back shares of its stock, compared with the $7
billion Exxon invested in exploration and other projects. The company
also paid stockholders dividends worth $2.1 billion during the period.

"Exxon is pumping cash, not oil," said Judy Dugan, research director at
Consumer Watchdog, based in Santa Monica. "The big oil companies are
wallowing in cash, and Exxon is the most aggressive in buying back its
stock instead of taking the risks it should to both find new oil and
develop new forms of energy."

The company said its capital outlay was 38% higher than in the second quarter of 2007.

"We’re investing in any project that we have ready for funding. We do
that first. Then the money that’s earned in our business is the
shareholders’ money, and we return it to the shareholders," Exxon Vice
President Henry Hubble said in a conference call with reporters. "We’d
like to do more" to increase energy supplies and would do more if the
company had access to off-limits areas, he said.

Royal Dutch Shell also reported second-quarter earnings Thursday,
posting 33% higher profit of $11.6 billion. The Anglo-Dutch company
said that Nigerian unrest damped production during the quarter and that
its net investment in projects totaled $5.7 billion. Shell gave $3.8
billion back to shareholders through stock repurchases and dividends
during the quarter.

This week London’s BP and ConocoPhillips of Houston also reported
sharply higher second-quarter profits. Chevron Corp. — rounding out
the list of the so-called Big Five oil firms — is expected to follow
suit when it releases results today.

Rep. Edward J. Markey (D-Mass.), chairman of the House Select Committee
on Energy Independence and Global Warming, complained Thursday that the
companies were on track to collect a combined $160 billion in profit
this year, up from $123 billion in 2007.

Critics have denounced the oil industry for reaping high profits while consumers struggle with record fuel prices.

With fuel costs weighing on household budgets and the economy, some
politicians have blamed oil company greed and market speculation, while
others have pointed to policies that prevent new drilling along key
coastal regions.

Democrats have stepped up their push to repeal billions of dollars in
oil industry tax breaks. The party’s political strategists —
emboldened by a CNN/Opinion Research poll finding that 68% of
respondents consider U.S. oil companies a major culprit behind high
gasoline prices — prepared to highlight oil company profits on the
campaign trail in a new round of attacks against industry-friendly
Republicans.

"These oil companies cannot continue to earn these profits, spend a
pittance on renewable fuels to move America beyond oil and then block
any efforts to shift billions in tax breaks to companies trying to
bring about the next generation of clean energy," Markey said.

Republicans, citing growing public support for more domestic energy
exploration, have put Democratic leaders on the defensive for resisting
an up-or-down vote on lifting the offshore-drilling ban.

Sen. Judd Gregg (R-N.H.), speaking on the Senate floor in support of
expanded drilling, said, "Yes, the oil companies are making some big
profits. . . . When they’re not spending it to look for oil, they’re
paying it for dividends. And who gets those dividends? I suspect
they’re Americans, Americans who invest in pension funds."

Exxon’s second-quarter net income was 14% higher than the $10.26
billion it earned in the same quarter last year. The per-share profit
was $2.22, up from $1.83 a year earlier, but short of the average of
$2.52 a share expected by analysts polled by Thomson Financial.

Second-quarter revenue totaled $138 billion, up 40%.

The company’s flagship business — exploring for, producing and selling
crude oil and natural gas — led the charge, as sharply higher prices
pushed profit up 68% in the quarter, to $10 billion. Exxon said it
received an average of $119.31 per barrel of oil sold during the
quarter, nearly double the average price in 2007.

Refining and marketing profit for the quarter totaled $1.6 billion, down 54%, largely because of declining U.S. sales.

Total worldwide production fell 8%, to the equivalent of 2.4 million
barrels a day. After removing the effects of a strike in Nigeria, the
loss of Venezuelan production taken over by the government and
price-related contract adjustments, Exxon’s worldwide production fell
3%.
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Contact the authors at: [email protected] and [email protected]

Douglass reported from San Diego and Simon from Washington.