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Daily Telegraph: High oil prices enable Shell and Exxon
to make $195bn: "In
the third-quarter, Shell's net income was twice that of
General Electric, the world's biggest company.": Friday
28 October 2005
By Malcolm
Moore (Filed: 28/10/2005)
Shell and Exxon Mobil earned a
combined $195.4billion (£109billion) in revenues in the
past three months because of high oil prices.
The sum is just less than the annual
output of both Argentina and New Zealand.
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| Lee Raymond:
Exxon does not see the point of a windfall tax
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Shell said it had enjoyed a 68pc
jump in its net profits to $7.4billion; Exxon's net
profits were up 75pc to $9.9billion - the largest-ever
quarterly profit by an oil company.
Shell was hit badly by the hurricane
season in the US, which will cost it $350m. Its Mars
platform in the Gulf of Mexico will stay shut for at
least another eight months.
However, Jeroen van der Veer, chief
executive, said the company's "operational performance
is paying off".
The oil major earned enough money to
pay $2billion in dividends, and buy back 1pc of its
shares. Profits were boosted, however, by the
$1.57billion sale of Gasunie, a Dutch gas network.
Even after stripping that out, the
profits were well above analysts' expectations, and
Shell's share price rose14p at £17.91.
Shell promised it would not go on a
buying spree with its $16billion cash pile, but would
continue to spend more money on finding oil, and return
cash to investors. "We have already recruited around
1,000 technical professionals this year so far," said
Peter Voser, finance director.
In the US, Exxon's results were
greeted with more accusations oil companies earn
billions but under-invest.
Lee Raymond, Exxon's chief
executive, tried hard to placate the growing lobby that
believes oil companies are exploitingthe public with
high prices.
"Following the hurricane, Exxon
Mobil maximised gasoline production from all of our
refineries which were operating in the US, and increased
imports from overseas affiliates to meet demand," he
said.
"We acted responsibly in pricing at
our company operated service stations and we encouraged
our independent retailers to do the same," he added.
Nevertheless, Sam Bodman, the US
Energy Secretary, said oil firms have a responsibility
to boost refining capacity in times of record profits.
In response, Marathon Oil said it would invest
$2.2billion expanding in Louisiana.
"We're already seeing some companies
yielding to pressure," said Fadel Gheit, an analyst at
Oppenheimer. "But everybody is waiting for the big lady
to sing, which is Exxon." Exxon did not see the point of
a windfall profits tax.
The chances of a windfall tax in the
pre-Budget report in November for UK oil companies are
slim, according to accountants.
Derek Leith, head of oil taxation at
Ernst & Young, said: "Corporation tax hikes, in recent
years, have resulted in a very pronounced suspension of
exploration activity and investment in producing fields,
particularly by the super majors."
The price of Brent in London
yesterday was $59.34, up 47 cents, while in New York, it
was trading at $60.65.
In the third-quarter, Shell's net
income was twice that of General Electric, the world's
biggest company.
Among them, the world's five biggest
oil companies may report a combined $26billion of
profits for the past three months, according to Credit
Suisse.
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