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Exxon Mobil profit surges 55%

By Charles Riley, staff reporter


NEW YORK (CNNMoney.com) -- Exxon Mobil posted a 55% gain in third-quarter profit Thursday, saying it found more oil and sold it more profitably.

The world's largest publicly traded oil company said it earned $7.35 billion, or $1.44 a share, in the quarter, up from $4.73 billion, or 98 cents, a year earlier.

Analysts surveyed by Thomson Reuters had expected earnings per share of $1.39.

Revenue climbed nearly 16% to $95.3 billion.

"Despite continuing economic uncertainty, we had strong quarterly results and continued to advance our robust investment opportunities," Chairman Rex Tillerson said in a prepared statement.

While Exxon characterized the economic environment in the United States and Europe as "challenging," a more robust recovery in the developing world contributed to the earnings increase.

Oil prices were up about 12% from the same period last year, while gasoline prices have risen about 6%.

While gasoline and oil prices were on the rise, Exxon increased production in the third quarter. Oil and natural gas production were up 11% compared to the first nine months of 2009.

Capital and exploration expenditures were also up, increasing by 35% from the third quarter of 2009 to $8.8 billion.

The company also announced that it spent $3 billion in the third quarter to reduce the number of shares outstanding, and will increase that number to $5 billion in the fourth quarter.

By midday, shares of Exxon (XOM, Fortune 500) were up 46 cents to $66.13.

Exxon has made efforts to expand its natural gas portfolio, most notably through the purchase of natural gas producer XTO Energy.

According to Pavel Molchanov, an analyst at Raymond James, it appears that the integration of XTO is almost complete, but depressed natural gas prices in North America prohibited Exxon from earning significant returns on the deal.

Asked during a conference call with analysts whether Exxon was considering decreasing production of North American natural gas wells to wait for prices to increase, Exxon said it was maintaining capacity.

"We have not shut-in any wells," said David Rosenthal, vice president of investor relations. "Activity continues at the pace we have been running."

Rosenthal also touted the progress of an oil development project in Russia and a tar sand operation in Canada that are expected to increase Exxon's production capacity.

In 2008, while oil prices reached record highs, Exxon posted the highest quarterly profit in corporate history, about $15 billion.

But oil prices have fallen to a bit more than half their all-time high of $147.27 in July 2008, and the fortunes of the company have declined as a result. Last year, Exxon was knocked from the top spot in the Fortune 500. To top of page

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