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Exxon Mobil Corp. and Chevron Inc., the number-one and number-two U.S. oil companies, posted higher second-quarter earnings thanks to lofty crude oil and natural gas prices and robust refining profits.
Exxon Mobil said second-quarter earnings rose to $4.38 billion up from $4.15 billion a year earlier. Chevron said second-quarter net income climbed to $1.32 billion up from $1.12 billion in the same period a year ago.
Analysts, however, said Chevron, which is acquiring Rival Texaco Inc., was unlikely to be able to sustain the earnings momentum going forward, due to growing signs of weakness in crude oil and natural gas prices.
ExxonMobil and Chevron both said they benefited from strong crude oil and natural gas prices. But each also recorded healthy profits from their refining and marketing businesses in the United States during a quarter in which gasoline prices soared to record highs.
"Our upstream business -- exploration and production -- continues to be the major contributor to overall profits," said Chevron Chairman and Chief Executive Dave O'Reilly. "However, the improvement in earnings from the year-ago quarter was largely driven by our U.S. downstream operations -- refining, marketing and transportation."
Exxon also benefited from higher gasoline prices during the quarter, rising to record highs during the spring and nearly doubling earnings from its U.S. refining and marketing business. Earnings from its international refining, marketing and transportation earnings also rose.
ExxonMobil's exploration and production unit, which feels the biggest impact from oil and natural gas prices, earned a second-quarter record $2.85 billion, up $85 million from last year.
Merger on Track
According to Chevron, Texaco's refining and marketing business has proved a sticking point in its takeover of White Plains, N.Y. based oil company. Texaco still must agree to terms for a sales of its stakes in its downstream joint-ventures with Royal Dutch/Shell and Saudi Aramco.
Chevron also must get approval from the Federal Trade Commission for the deal, which most observers expect to close in the third quarter. Chevron said discussions were continuing.