Exxon Mobil reports $11 billion profit

HOUSTON -- Don't expect motorists to sympathize, but Exxon Mobil Corp. says gasoline prices didn't do it any favors in the first quarter.

Still, the world's largest publicly traded oil company said Thursday it earned $10.9 billion to start 2008, the second-biggest U.S. quarterly profit ever.

The smaller Marathon Oil Corp. said its profit rose 2 percent to $731 million, well ahead of Wall Street forecasts.

As in the past, the extraordinary results from Exxon Mobil prompted critics to insist the company and other major oil producers were profiting at the expense of frustrated consumers, who are paying more than ever to drive. Indeed, retail gas prices on Thursday rose to a new high above $3.62 a gallon.

But because gasoline prices have not kept pace with oil's stunning ascent to triple digits, Exxon Mobil and other big oil companies have seen far lower margins from refining and selling gasoline and other petroleum products.

That's because Exxon Mobil and others don't produce enough oil to satisfy their refining operations, so they have to buy crude at market prices, too.

Exxon Mobil said earnings at its refining and marketing arm were off 39 percent in the most recent quarter, one reason overall results fell well short of Wall Street's lofty forecasts.

Year over year, however, earnings for the Irving, Texas-based company rose 17 percent, lifted largely by record crude prices. The only higher total in a three-month period was the $11.7 billion Exxon Mobil posted in the final three months of 2007.

"In an environment of high commodity prices, Exxon Mobil's outstanding portfolio of integrated businesses performed well, allowing us to deliver record first-quarter results," Henry Hubble, the company's vice president of investor relations, said on a conference call.

In March, Exxon Mobil said it expects to invest between $25 billion and $30 billion on capital and exploration projects this year, up from about $21 billion in 2007. The company said it expects to maintain that level of spending through at least 2012, as it tries to tap new reserves in all corners of the globe -- an increasingly difficult and expensive endeavor.

Citigroup analyst Doug Leggate said in a note to clients that while Exxon Mobil's results were lower than expected, a "good suite of new projects" will likely keep its production stable -- a positive note given the challenge of finding new sources of fossil fuel.