Higher oil prices and margins lift majors

Generous: ExxonMobil is the world’s biggest dividend payer

Profits at two of the world’s biggest oil companies have soared on the back of a rise in crude prices of more than $100 a barrel and higher refining margins, underlining the sector’s broader recovery.

ExxonMobil, the world’s largest company by market capitalisation, on Thursday reported a 69 per cent jump in first-quarter earnings to $10.7bn, its best quarterly performance since 2008 when oil prices were last above $100 a barrel. Rival Royal Dutch Shell announced a 30 per cent rise in underlying first-quarter profit on a current cost of supplies basis, which removes the effect of price changes on inventories and strips out one-off items, to $6.3bn.

Along with BP and Conoco-Phillips, which reported on Wednesday, four of the world’s supermajors have now reported about $25.5bn in profits in the first quarter compared with $18.8bn in the same period last year. Chevron and Total of France report quarterly results on Friday.

Among its peers Exxon is so far the only company to record an increase in production in the quarter, reporting a 10 per cent increase driven mainly by its Qatar natural gas business and global unconventional gas production.

Exxon credited the performance to not only a rise in crude oil and natural gas production but also increased refining margins and a record performance in its chemicals division.

The results prompted a political backlash in the US where Rep. Edward Markey, the top Democrat on the Natural Resources Committee, said “there is absolutely no reason to continue to subsidise the most profitable companies in the history of the world”. He added: “What is good for the biggest oil companies isn’t always what’s good for American taxpayers. The American people are getting tipped upside down at the pump, then asked to fork over whatever change they have left to subsidise these oil behemoths.” However, Ken Cohen, vice-president for public and government affairs at Exxon, stressed that the pain US motorists are feeling was not down to the company profiteering.

The government, he added, was unfortunately “reaching for the political playbook rather than seeking real solutions”.

In the UK, where the high crude prices recently prompted the government to announce a hike in North Sea oil and gas tax, the increase could cost Shell close to $1bn in additional charges next year, the Anglo-Dutch oil group warned.

Simon Henry, chief financial officer, said the company expected to book a charge of $400m in 2012 if oil prices remained at current levels after the Treasury increased the supplementary charge on oil and gas production from 50 per cent to at least 62 per cent.