Exxon Mobil rakes in $45 billion in 2012 profit

Exxon Mobil’s profit jumped 6 percent in the fourth quarter of 2012, despite declines in oil production, the company reported Friday.

The world’s second-largest publicly traded company after Apple said its net income was $44.9 billion in 2012, including about $10 billion in the fourth quarter, a 6 percent jump from the same period in 2011. The company’s fourth quarter earnings per share was $2.20. Exxon Mobil’s earnings for the year were up 9 percent from 2011.

Its annual growth was fueled mostly by asset sales and stronger performance in the company’s refining and chemical products divisions, the company said.

The results, even as Exxon Mobil’s oil and gas output fell, “reflect the value of our integrated business model and other competitive advantages,” said David Rosenthal, the company’s vice president of investor relations, during a conference call on the results.

The Irving-based energy giant said its oil and gas production had fallen throughout the year, compared with 2011 totals. Its production was down 5.9 percent from 2011, when its numbers began declines that have lasted now for four quarters.

Exxon Mobil’s fourth-quarter production was 4.3 million barrels of oil equivalent a day, down 5 percent from a year ago. That decline led to a $1 billion drop in earnings for the company’s exploration and production arm, to about $7.8 billion.

But that drop was buoyed by fourth-quarter earnings gains in the company’s refining division, which jumped $1.3 billion from the same period a year ago, to $1.7 billion, because of higher profit margins. Exxon Mobil’s chemical division pulled in $415 million more than in the fourth quarter of 2011, also because of higher margins. The company’s chemical division earnings were $958 million for the final quarter of 2012.

A major bright spot was the company’s efficient and productive refining operations in the Untied States, which will benefit in the years ahead from more than 600,000 barrels a day of oil refining capacity that the company has outside of its facilities on the U.S. Gulf Coast, Rosenthal said. Those plants will be able to efficiently handle the increasing crude oil production occurring at shale plays throughout North America, he said.

“From the Gulf Coast all the way up into Canada, we are optimizing that entire circuit,” he said.

Exxon Mobil plans to launch a series of massive new oil, gas and chemical production projects in the coming years, beginning with the initiation of an oil sands crude field in Canada.

The company’s Kearl oil sands project was meant to start up at the end of 2012, but was delayed because of harsh winter weather in Alberta and will begin production before April, Rosenthal said.

“Weather came earlier than normal and then it has been brutally cold up there so we’ve had to adjust accordingly,” he said. That project has also ballooned in costs, from initial projections of $10.9 billion to $12.9 billion for its first phase.

Production at the field, which is expected to hit 110,000 barrels a day of diluted bitumen, also known as oil sands crude, will start with about 37,000 barrels a day, he said.

Production of bitumen, a solid hydrocarbon-bearing material that has to be heated and diluted so that it can be transported and processed, has been aggressively opposed by environmental groups. Those groups have also challenged the Keystone XL pipeline, which is meant to transport diluted bitumen from oil sands fields in Canada to the Texas coast.

Exxon Mobil will be able to move and process oil from the Kearl field, even without pipelines like Keystone XL, Rosenthal said.

“We do not have an issue in terms of logistics moving those barrels out of the Kearl project and into production,” he said.

The Kearl field is one of several developments in Canada that will make that country one of the largest sources of oil production growth for Exxon Mobil in the world.

Exxon Mobil anticipates Iraq will be its largest source of oil production, but the profits for that deal, which has been thrown into questions because of tension with officials in Baghdad, are expected to be low because of strict government terms.

Russia is another key area of prospective growth for Exxon Mobil, and the company plans to begin drilling in a region of West Siberia this year, Rosenthal said. The company has a 49 percent stake in a joint venture with Russia’s Rosneft to explore and assess the potential of more than 10,000 square kilometers in the region.

The company spent $39.8 billion on projects to expand production of fossil fuels and other products, Exxon Mobil CEO Rex Tillerson said in a statement.

The company set a record for capital expenditure spending “as we continue pursuing opportunities to find and produce new supplies of oil and natural gas to meet global demand for energy,” Tillerson said.

Exxon Mobil is the world’s largest non-state oil company by production. It briefly overtook Apple last week to become the world’s most valuable public company, but fell back into the No. 2 position this week as shares in Apple rebounded on the Nasdaq stock exchange.