Oil Companies’ Profits Drop Due To Lower Fuel Use (XOM, RDS.A, COP, E, APA, BP, CVX)
October 29, 2009 12:54 PM
Both Exxon Mobil (NYSE: XOM) and Royal Dutch Shell (NYSE: RDS.A) reported falling profits as the demand for oil was eroded by the recession. The net income for Royal Dutch Shell fell as their earnings dropped to $3.25 billion from $8.45 billion a year ago. Exxon Mobil’s profits fell to $4.73 billion, below the amount analysts expected.
Other oil companies were also affected by the recession as Conoco Phillips (NYSE: COP) announced that their profits declined 71% to $1.5 billion. Italy’s Eni Spa (NYSE: E) announced that their earnings dropped 58% to 1.24 billion and their production will fall short of their production estimates this year. Independent oil producer, Apache Corp (NYSE: APA) announced that 3rd quarter net income dropped 63% to $440.5 million.
Profits of large oil companies are hurting as demand for oil remains low with Oil futures declining to almost a $50 difference from the prices a year earlier. Natural Gas prices are also at its lowest in the last seven years.
Even with declining profits, oil companies BP (NYSE: BP) , Royal Dutch Shell, and Conoco Philips still manage to beat expectation and gain buy rating among analysts as production gains cost cutting help them beat expectations.
Chevron (NYSE: CVX) is set to announce third quarter earnings tomorrow.
