Exxon Mobil, Licking Its Lips Ahead of Earnings (XOM)

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Exxon Mobil Corp. (NYSE:XOM) hasn’t really dropped any hints about second quarter results, but there seems to be no reason to expect anything except higher earnings if you have looked at oil prices lately. 

First quarter results were 18% higher than the first quarter of 2006 even as production from Exxon’s upstream units was off a little. Lower crude oil prices in the first quarter didn’t hurt Exxon, and prices have been going up since.  The First Call estimate is $1.96 EPS, up from $1.65 net for the 2nd quarter last year, and $1.52 net for the 1st quarter of 2007. That would be an 18% bump over last year and 25% better than last quarter. 

Oil prices are not really expected to fall, at least not much. OPEC is taking a hit on the falling U.S. dollar, and is not likely to respond to pleas to pump more and sell it for less.  Refined products prices are high and climbing, mostly due to unscheduled maintenance, which in turn is due to refineries running flat out since late 2005. Lack of U.S. refinery capacity is more of a problem than scarce crude oil and U.S. crude oil stocks are well above their average range, while gasoline stocks are somewhat below.

It seems like all this add up to a big quarter for Exxon. And probably many more to come.  Will it have another $100 Billion in quarterly revenues?  Here’s an interesting statistic for you: even down 3% off of recent highs, Exxon’s market cap is greater than $500 Billion and is by far the largest company in the country by that metric.

Paul Ausick
July 25, 2007