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Exxon profit soars, but misses forecasts

Steve Hargreaves, CNNMoney
Record oil prices netted Exxon Mobil a $10.89 billion profit in the first three months of the year, sharply higher than a year earlier but short of Wall Street estimates and below what was needed to set a new all-time profit record.

… Exxon – which makes more gas than it produces oil – saw less profit than expected partly because it has to pay more to buy crude oil.

… Another reason Exxon missed estimates is that its overall production fell. The company said “liquids production,” which includes oil, fell 6% in the quarter, even excluding things such as OPEC production quotas or seizures in Venezuela.

One analyst said Exxon could be easing production as certain fields, giving them a chance to rest and rebuild pressure – and avoiding posting even higher profits.

… Despite Exxon’s investments in finding new oil, the company production declined. In addition to oil production falling, overall production including natural gas fell by 3 percent.

That drop will likely be noticed by proponents of the “peak oil” theory, who contend world oil production has peaked and will run out in fairly short order.

Many analysts – and Exxon executives – say the oil is there, it’s just held in countries not particularly friendly to U.S. oil firms.
(1 May 2008)

Lower oil production is the real story

Loren Steffy, Houston Chronicle
… The profit is what captures everyone’s attention, but there’s a bigger concern hidden amid the numbers of Exxon Mobil’s earnings.

The company’s worldwide oil production fell 10 percent, to just under 2.5 million barrels a day.

Some of the decline came from Exxon Mobil’s dispute over the seizure of assets by the Venezuelan government, but even excluding those assets, the company’s production declined. Overall production, including natural gas, fell 3 percent.

While Exxon Mobil boosted production from fields in West Africa and the North Sea, the gains weren’t enough to offset declines from aging oil fields, the company said.

The company blamed the decline in part on its contracts with oil-producing countries, which allow those countries to claim a larger share of oil volumes as prices rise. In other words, the higher prices go, the less oil Exxon Mobil gets.

As those countries benefit from higher prices, living standards rise and, as I mentioned last week, their own demand for oil increases. That, in turn, means less oil for companies such as Exxon Mobil over the long term.

The problem isn’t unique to Exxon Mobil.

Other major oil companies also offered a stark production picture. BP’s was unchanged from a year earlier. Shell reported a gain only because it boosted natural gas production, which offset lower oil output. ConocoPhillips reported an increase but attributed it to its 20 percent stake in Russia’s Lukoil.

With national oil companies now holding most of the world’s reserves, companies like Exxon Mobil are left with few places to look for new production.
(1 May 2008)

‘Dishonest, irresponsible’: Shell lambasted for pulling out of world’s biggest wind farm

Terry Macalister, The Guardian
Shell was accused last night of being greedy and irresponsible as it came under ferocious attack from politicians and environmentalists for its decision to drop a commitment to the biggest offshore wind farm in the world.

Although the environment minister Hilary Benn called the decision to withdraw from the London Array scheme off the Kent coast “very disappointing”, the government was also under attack from opponents who saw the move as a body-blow to UK renewable energy policies. They called for more incentives to encourage wind developments.
(2 May 2008)

Peak Oil Quotes

Oil Depletion Analysis Center (ODAC)
Statements by key individuals – 2008

Jeroem van de Veer – CEO of Shell, 22nd January 2008
“Shell estimates that after 2015 supplies of easy-to-access oil and gas will no longer keep up with demand.”

Rick Wagoner – GM Chairman and Cheif Exec, at the Detroit Motor Show, 13th January, 2008
“There is no doubt demand for oil is outpacing supply at a rapid pace, and has been for some time now,…As a business necessity and an obligation to society we need to develop alternative sources of propulsion.”

Dave O’Reilly – Chevron, 15th February 2008, “We’re seeing the beginnings of a bidding war for Middle Eastern oil between east and west,”

Fatih Birol – IEA, writing in The Independent 2nd March 2008
– “We are on the brink of a new energy order. Over the next few decades, our reserves of oil will start to run out and it is imperative that governments in both producing and consuming nations prepare now for that time. We should not cling to crude down to the last drop – we should leave oil before it leaves us. That means new approaches must be found soon….. The really important thing is that even though we are not yet running out of oil, we are running out of time.”
(1 May 2008)
More at original. Sohbet Karbuz had another list of Opinions of oil company executives on peak oil at Energy Bulletin. -BA