Exxon Mobil Corp. and Chevron Corp., the number one and two energy companies in the world, both posted record profits in their second quarter earnings, but analysts warned that going forward, it will be difficult for the energy companies to continue soaring if oil and natural gas prices remain depressed. Exxon, the largest publicly traded company, saw earnings up 5.5% in both natural gas and refining operations, while Chevron’s jumped 21%.

Despite its high earnings, Irving, TX-based Exxon Mobil did not meet analysts’ average forecasts. Profit from operations rose to $4.38 billion, or 64 cents a share, up from $4.15 billion, or 60 cents in the second quarter of 2000, with per-share numbers adjusted for a stock split announced in June. Revenue also was up about 1% over second quarter 2000, standing at $56.5 billion from $56 billion. The energy giant was expected to earn 66 cents a share on average, according to First Call/Thomson Financial, with estimates ranging between 56 cents and 73 cents.

Not surprising, Exxon Mobil’s profit came from commodities pricing in gasoline and heating oil, up 35% from a year earlier. Natural gas prices also sent profit up 20%. Chairman Lee R. Raymond said natural gas prices and refining margins were “very strong” early in the second quarter, but had declined by June.

“The decline in these key earnings drivers along with crude oil prices has continued into the third quarter,” Raymond said. He also pointed to capital and exploration expenses, which jumped 17% to $2.83 billion from $2.42 billion a year earlier. Exxon Mobil also spent $1.52 billion to buy back about 34.8 million shares, and it split its stock 2-for-1 in June.

San Francisco-based Chevron saw its earnings jump almost 19%, actually surpassing analysts’ figures, as it profited from gasoline prices that climbed above $2 in California. It earned $1.32 billion, or $2.05 a share, in the second quarter, compared with $1.12 billion, or $1.71 per share for second quarter 2000. Excluding one-time charges, Chevron earned $1.38 billion, or $2.15 per share, a 21% increase from a year ago. First Call had predicted earnings to be $2.06 per share.

Chevron CEO David O’Reilly attributed the earnings growth to refining and gasoline operations, and said the company also profited from rising natural gas prices. Chevron’s average price for natural gas in the second quarter was up 65% to $5.52/Mcf, compared with $3.35/Mcf for the second quarter of 2000.

“Our upstream business, exploration and production, continues to be the major contributor to overall profits,” O’Reilly said. “However, the improvement in earnings from the year-ago quarter was largely driven by our U.S. downstream operations — refining, marketing and transportation.”

©Copyright 2001 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.