Exxon Mobil Corp., the most profitable U.S. company this year and last, said third-quarter net income rose 56 percent as oil prices surged and chemicals earnings quadrupled.

Net income climbed to $5.68 billion, or 88 cents a share, from $3.65 billion, or 55 cents, a year earlier, the Irving, Texas-based company said in a statement. Sales rose 28 percent to $76.4 billion, the most ever for a U.S. company.

Exxon Mobil, BP Plc and other producers are reaping record profits as demand gains in China and elsewhere around the world combine with supply concerns to send crude-oil futures above $50 a barrel for the first time in 21 years of New York trading. Increases in demand and prices spurred a jump in Exxon Mobil’s chemicals profit to a record $1.01 billion.

“These are the kinds of conditions that you rarely see in the oil industry,” said Gene Pisasale, senior investment officer at Wilmington Trust Corp., which owns more than 7 million Exxon Mobil shares. “They’re wonderful while they last, and they generally don’t last long.”

Excluding $550 million in estimated damages set aside after the U.S. Supreme Court refused to hear part of Exxon Mobil’s appeal in a case brought by gas station owners, profit was 96 cents a share, the company said. On that basis, Exxon Mobil was expected to earn 87 cents a share, the average estimate from 20 analysts surveyed by Thomson Financial.

Profit Leader

Exxon Mobil had net income of $16.9 billion in 2004’s first nine months, exceeding General Electric Co.’s $11.2 billion. Analysts expect Exxon Mobil to surpass its record profit of $21.5 billion last year, also the most for any U.S. company.

Third-quarter profit was the seventh-highest quarterly total for any Standard & Poor’s 500 Index member since at least 1993, according to data compiled by Bloomberg. Since the start of last year, Exxon Mobil has posted five of the 10 most profitable quarters on that list.

U.S. oil futures this week extended an all-time high at $55.67 a barrel. Gas futures have almost doubled in price in the past year.

Exxon Mobil’s third-quarter profit from oil and gas production climbed 45 percent to $3.93 billion, the company said.

Production Rises

Total output rose 1 percent to the equivalent of 3.91 million barrels of oil a day as Chief Executive Officer Lee R. Raymond added production from the $3.4 billion Kizomba A project in deep waters off the coast of Angola. Other projects began producing in the past year in the North Sea and off Equatorial Guinea.

The impact of new projects was almost outweighed by a 14 percent drop in U.S. gas output, asset sales and production- sharing contracts under which the company gets fewer barrels of crude from certain fields as prices rise.

Shares of Exxon Mobil fell 32 cents to $48.63 at 2:21 p.m. in New York Stock Exchange composite trading as oil futures slid for a second day. The stock still has climbed 19 percent this year, most among members of the Dow Jones Industrial Average.

Third-quarter profit from making and selling fuels climbed 54 percent to $1.4 billion. Exxon Mobil makes 8 million barrels of fuel a day in 25 countries, and the average capacity of its refineries is about 200,000 barrels a day, 80 percent above the industry average.

Chemicals earnings rose to $1.01 billion from $230 million as margins widened and product sales climbed 6.8 percent to 7.1 million metric tons, Exxon Mobil said.

Strong `Across the Line’

“It was a very strong quarter across the line,” said Robert Goodof, a portfolio manager at Loomis Sayles & Co. in Boston, which owns more than 3 million Exxon Mobil shares. “Chemicals were huge.”

The company’s stock trades at about 15.1 times estimated 2005 earnings per share, compared with 13.2 times for BP and 12.8 times for Royal Dutch/Shell Group. Exxon Mobil commands a premium because of its higher returns on capital, said Larry Crockett, an analyst at Fifth Third Investment in Cincinnati, which owns about 7.6 million of the company’s shares.

“I think you own Exxon through thick and thin, no matter what commodity prices are doing,” Crockett said.

The last year in which the company’s stock rose as much as it has in 2004 was 1998, when oil traded as low as $10.35 a barrel. Because the company is less sensitive to swings in oil prices than smaller rivals, such as ChevronTexaco Corp. and Total SA, its shares haven’t risen as much during this year’s rally, analysts said.

ChevronTexaco, ConocoPhillips

“Exxon is not the stock you want to own if you believe oil prices are going to continue to rise,” said Fadel Gheit, an analyst at Oppenheimer & Co. in New York who rates the company’s shares at buy and owns an undisclosed number.

Shares of ChevronTexaco, the second-largest U.S. oil company, have climbed 22 percent this year. Houston-based ConocoPhillips, the third-largest, has risen 26 percent.

ConocoPhillips yesterday said its third-quarter net income rose 54 percent to $2.01 billion as refining and oil and gas earnings surged. BP, Europe’s largest oil company, this week reported a 53 percent increase in profit to a record $3.46 billion. ChevronTexaco is scheduled to report its third-quarter results tomorrow.

Exxon Mobil had $20.7 billion in cash, double its level of debt, at the end of the third quarter, spokesman Henry Hubble said on a conference call with analysts and investors. Capital spending next year will be little changed at $15 billion to $16 billion, he said.

CEO Raymond, 66, has used increasing cash flow to buy back more of the company’s stock and boost dividends. Exxon Mobil purchased 65 million of its shares for $3.01 billion during the third quarter, the company said.

Capital and exploration expenses in the latest quarter were $3.63 billion, down from $3.84 billion a year earlier.

To contact the reporter on this story:
Jeffrey Tomich in Houston [email protected].

To contact the editor responsible for this story:
Robert Dieterich at [email protected].