Challenged by lower energy prices and production, ExxonMobil Corp. overcame the odds and finessed its way to a surprising 10% gain in 1Q2007 net profit from a year ago.

Net income rose to $9.28 billion ($1.62/share), a record for the quarter, from $8.4 billion ($1.37/share) in 1Q2006. Wall Street analysts had pegged average earnings of $1.52/share. Revenue fell 2% to $87.22 billion, and capital spending dropped to $4.28 billion.

“It was a record first quarter for the corporation,” said Investor Relations Vice President Henry Hubble, who presided over a conference call with analysts Thursday.

The Irving, TX-based major exceeded expectations by slashing its capital spending by 11% in the quarter to $4.28 billion from $4.83 billion in 1Q2006. Upstream spending in the United States was cut to $466 million from $548 million, and downstream U.S. spending was cut to $319 million from $419 million. Spending was down in all of ExxonMobil’s businesses except for the chemicals unit, which saw an increase worldwide to $272 million from $144 million in 1Q2006. In the United States, ExxonMobil increased its chemicals unit spending to $84 million from $63 million.

ExxonMobil’s oil-equivalent production worldwide for the quarter reached 4.436 billion boe/d, down from 4.56 billion boe/d reported in 1Q2006. Natural gas production available for sale in the United States dropped to 1.53 Bcf/d from 1.69 Bcf/d, and in Canada, gas output fell to 774 MMcf/d from 882 MMcf/d. Net U.S. crude and natural gas liquids production also was off, falling to 417,000 bbl from 442,000 bbl, and in Canada it declined to 297,000 bbl from 332,000 bbl in 1Q2006.

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