Challenged by lower energy prices and production, Wall Street wizards had predicted that the oil and natural gas producers would unveil less-than-stellar results in the first three months of 2007. However, ExxonMobil Corp. led by example, stunning the financial prognosticators with yet another record quarter.

Irving, TX-based ExxonMobil 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.

ExxonMobil 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.

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.

Chevron Corp., the second-largest U.S.-based major, also posted a rise in profit, but the company still managed to chart an 18% rise in profit on the sale of some overseas assets. The San Ramon, CA-based oil major posted net income of $47.2 billion ($2.18/share), compared with $4 billion ($1.80) in 1Q2006. Results included a $700 million gain (32 cents/share) on the sale of its interest in the Netherlands manufacturing and refining business. However, revenue dropped 13% to $48.2 billion from $54.62 billion.

Capital spending in 1Q2007 totaled $4.1 billion, up from $3 billion for the same period of 2006. However, the increased spending did nothing to boost U.S. upstream production. U.S. natural gas output was 1.723 Bcf/d, which was nearly flat compared with the 1.782 Bcf/d reported in both 1Q2006 and 4Q2006. Total U.S. production was 746,000 boe/d, compared with 750,000 boe/d in 1Q2006 and 763,000 boe/d in 4Q2006.

In a retreat from the record profits of a year ago, London-based BP plc reported its profit fell 17% from the same period in 2006 on falling energy prices and lower oil and natural gas production. BP reported a decline in profit to $4.66 billion (24 cents/share) from $5.62 billion (27 cents) in 1Q2006. BP’s oil and natural gas output was off 3% from a year ago to 3.912 MMboe/d from 4.04 MMboe/d in 1Q2006. U.S. natural gas production fell to 2.163 Bcf/d net from 2.485 Bcf/d a year ago.

Los Angeles-based Occidental Petroleum Corp. (Oxy), the fourth-largest U.S. oil company, reported a 1.5% decline in profit, falling to $1.21 billion ($1.43/share) from $1.23 billion ($1.43). Production from continuing operations averaged 587,000 boe/d, a 24,000 boe/d increase from 1Q2006. Oxy’s U.S. gas production rose to 585 MMcf/d from 582 MMcf/d. The gain in output was partially offset by a gas pipeline rupture at Elk Hills in California’s San Joaquin Valley in February, which negatively impacted Oxy’s net production for the quarter by 14,000 boe/d (see NGI, Feb. 12).

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