ExxonMobil, Shell Tell Much Different Earnings Stories

IRVING, Texas and THE HAGUE, Netherlands -- ExxonMobil Corp. and Royal Dutch Shell plc had much different first-quarter earnings stories to share this morning.

ExxonMobil's downstream division -- home to the company's convenience stores -- saw its earnings increase to $1.58 billion, a gain of $487 million compared to the same time period in 2011.

The world's largest oil company cited profits from continuing refining activities and asset sales for the downstream earnings improvement.

However, ExxonMobil as a whole saw its 2012 fiscal first-quarter earnings decline by 11 percent. The company earned a profit of $9.45 billion in its latest quarter, compared to $10.65 billion during its 2011 first quarter.

The oil giant said problems in Europe heavily contributed to the overall earnings decrease. Chinese oil demand is beginning to ease somewhat, David Rosenthal, ExxonMobil's vice president of investor relations, noted.

"First-quarter results reflect our ongoing focus on developing and delivering energy needed to support job creation and economic growth," said Rex W. Tillerson, ExxonMobil's chairman. "Despite continuing economic uncertainty, we are progressing our robust investment plans to meet the energy demands of the future."

At the end of its first quarter, ExxonMobil had $19.1 billion in available cash and $15.7 billion worth of debt.

ExxonMobil also made news today by announcing it would increase its quarterly dividend to 57 cents per share. Hence, ExxonMobil will now surpass AT&T Inc. and pay the world's largest dividend. The petroleum company previously paid a quarterly dividend of 47 cents per share.

For the future, ExxonMobil said it is "looking into all options" regarding exporting liquefied natural gas (LNG), said Rosenthal.

At Shell, downstream earnings dropped to $1.12 billion during its 2012 fiscal first quarter, compared to $1.65 billion in the same quarter in 2011. However, the results significantly improved vs. its 2011 fiscal fourth quarter, when Shell's downstream division lost $278 million.

Simon Henry, Shell's CFO, said weaker refining earnings were responsible for the lower year-over-year figures for the parent division of the company's convenience stores.

"Whether there will be another golden age of refining is a moot point," Henry said during the company's conference call this morning. "Weaker refining margins are prevalent throughout the industry."

There were strong aspects of Shell's downstream division, though, Henry remarked. "LNG demand is increasing, especially in Asia," he said. "Also, U.S. gas demand is rising."

Regarding Shell as a whole, 2012 fiscal first-quarter earnings were strong. The petroleum purveyor earned $7.7 billion, compared to a profit of $6.9 billion during its 2011 first quarter. If not for one-time charges, Shell would have earned $7.3 billion.

"We are making good progress against our targets to deliver a more competitive performance," said Peter Voser, Shell's CEO. "Our profits pay for Shell's dividends and substantial investments in new energy products, to ensure affordable, reliable energy supplies for our customers, which create value for our shareholders."

Henry did caution, however, that the "economy remains uncertain, especially in Europe. Analysts predict the possibility of another recession [there]," he said.