Exxon Mobil: $9.4B profit in 3 months

NEW YORK (CNNMoney.com) -- Exxon Mobil made $9.4 billion in the last three months, 10 percent less than last year and below what analysts expected as gasoline and diesel prices failed to keep pace with rising crude costs.

The quarterly performance by the world's second-largest company after Wal-Mart fell short of its all-time record. In the last quarter of 2005, Exxon Mobil (Charts, Fortune 500) made a profit of $10.7 billion - the largest quarterly corporate profit ever recorded.

Exxon makes $9.4 billion in third quarter, but still misses estimates.

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The Irving, Texas-based company reported revenue of $102.3 billion in the third quarter, about 3 percent more than last year.

But rising costs to find and produce oil and to buy crude ate into profits.

"The decrease reflected lower downstream [refining] and chemical margins partly offset by higher crude oil realizations," read a company statement.

Exxon refines twice as many barrels of oil as it pumps on its own.

Despite record high oil prices, most big oil companies that both pump oil and sell gasoline have seen earnings fall over the last three months.

ConocoPhillips (Charts, Fortune 500), the world's sixth largest publicly traded oil company, reported a 5 percent drop in earnings late Wednesday. BP (Charts), the world's third largest oil firm, reported a 29 percent decline.

Gasoline prices have not risen as fast as oil prices, so the firms have not been able to pass along the added cost to consumers.

Crude oil prices went from about $71 a barrel at the start of the quarter to more than $81 a barrel at the end. Gasoline prices, meanwhile, fell to a national average of $2.81 a gallon from $2.95, according to numbers from the Energy Information Administration.

Things could change for oil companies in the fourth quarter, as many analysts say oil's recent record run to over $96 a barrel will inevitably show up in gasoline prices. They expect gasoline to top $3 a gallon by the end of the year, if oil remains at or near its current high.

Exxon said it pumped about 2.5 million barrels of oil a day in the third quarter, down about 100,000 barrels a day from a year earlier. It blamed the decrease on OPEC production quotas, maturing oil fields and halting operations in Venezuela. The world consumes about 84 million barrels of oil a day.

Excluding what the company called "the impact of entitlements, divestments, OPEC quota effects and Venezuela," oil production increased by 3 percent, most of it from Russia and Africa.

Exxon refined about 5.6 million barrels of oil a day in the quarter, most of it into gasoline and diesel fuel.

On a per share basis, the company earned $1.70 in the third quarter, down from $1.77 a share in the year-earlier period. The earnings missed estimates for the first time in several quarters. Analysts had expected the company to make $1.75 per share, according to earnings tracker Thomson First Call.

Shares in Exxon Mobil fell nearly 2 percent on the New York Stock Exchange.

But earnings per share didn't fall as much as profit, largely due to an aggressive share repurchase program the company has undertaken since high oil prices have left it with lots of cash.

Exxon said it spent $7 billion buying back shares in the third quarter, and returned another $1.9 billion to shareholders in the form of dividends.

The company spent $5.4 billion on efforts to find new oil in the quarter, up 8 percent from the same time last year.

Exxon also said it paid $7.3 billion in income taxes in the third quarter, as well as $18.8 billion in other taxes, for a total tax bill of over $26 billion.