Exxon Mobil Corp. and the Shell Group of companies had some good news and some bad news for their shareholders Thursday. The good news: they made a profit. The bad news: for each of them it was about 38-39% less than last year. Mitigating factor: last year’s 2Q set a record. The culprits: lower gas and oil prices and a drop in refinery returns.

Exxon Mobil reported second quarter earnings, excluding merger effects and special items, of $2,670 million ($0.39 per share), a decrease of $1,710 million from the record second quarter of 2001. Including merger effects and special items, net income was $2,640 million ($0.39 per share) a drop of $1,820 million.

Earnings for Exxon Mobil, excluding merger effects, were up $520 million, however, from first quarter 2002 earnings of $2,150 million. Shell also, preferred to stress its 10% consecutive quarter gain. “These results demonstrate the Group’s continued ability to deliver robust profitability in uncertain times,” said Philip Watts, Chairman of Shell.

Exxon Mobil saw upstream earnings fall to $2,153 million, down $697 million from the second quarter record achieved in 2001. This reflected a 6% decline in crude oil realizations and a 35% reduction in North American natural gas prices.

Second quarter natural gas production of 9.17 Bcf/d compared with 9.09 Bcf/d last year. Part of the fall-off was attributed to natural gas field decline in the U.S., which saw a drop in production from 2.61 Bcf/d in the second quarter of 2001 to 2.37 Bcf/d in 2Q 2002.

Earnings from Exxon Mobil’s U.S. upstream operations were $674 million, a decrease of $437 million from the prior year, reflecting the sharp decline in natural gas prices. Upstream earnings outside the U.S. were $1,479 million, a decrease of $260 million, reflecting lower crude oil and natural gas prices.

The Shell group’s adjusted adjusted current cost of supplies (CCS) earnings, excluding special items, of $2,202 million were 38% lower than last year. The decline, the company said, “was primarily due to the much weaker refining environment, and lower oil, gas and liquefied natural gas (LNG) prices.”

Exploration and Production adjusted earnings of $1,809 million were down from $2,185 million a year ago, as an 8% increase in production “was more than offset by lower hydrocarbon prices.”

Gas & Power adjusted earnings were $149 million compared to the record $390 million achieved a year ago. The lower earnings mainly reflected lower prices for LNG and positive, but lower trading results in the USA.

Shell said its worldwide gas production had increased to 8.39 Bcf/d in the second quarter 2002, compared to 8.16 Bcf/d in the same period last year.

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