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Originally published Friday, October 31, 2008 at 12:00 AM

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Exxon profit beats its record again

Exxon Mobil reported another blowout quarter Thursday, as oil prices hit a record over the summer and gasoline soared well above $4 a gallon across the nation.

The New York Times

In what will probably be the high-water mark for corporate profits for a while, the oil giant Exxon Mobil reported another blowout quarter Thursday, as oil prices hit a record over the summer and gasoline soared well above $4 a gallon across the nation.

Exxon and other oil companies have seen their profits soar, thanks to rising oil prices, but the last quarter may signal the end of the boom years. Oil prices have plummeted recently, falling 53 percent from their peak three months ago, because of slowing economies and lower oil demand.

Still, the past quarter extends a staggering run for Exxon. As the nation's most profitable company, it has routinely set records only to beat them. Exxon's profits have exceeded $10 billion in nine of the last 12 quarters.

In the third quarter, Exxon's profit rose 58 percent, to $14.8 billion, or $2.86 a share, from $9.41 billion, or $1.70, in the quarter a year ago.

While the record earnings were well above analysts' expectations, they also masked a growing problem for Exxon, which has seen its production sag because of contractual terms in places like Nigeria and falling output from mature fields.

Exxon's oil and gas production dropped 8 percent in the third quarter compared with the year-earlier period, to 3.5 million barrels a day of oil equivalent. That included disruptions from hurricanes in the Gulf of Mexico.

Exxon is the latest oil giant to report stellar earnings. Royal Dutch Shell, Europe's biggest oil company, said earlier Thursday that its third-quarter profit rose 22 percent to $8.45 billion, from $6.9 billion in the period a year ago.

At the same time, Shell's crude-oil and natural-gas output declined 6.6 percent, prompting concerns among investors about future earnings growth.

Earlier this week, BP, ConocoPhillips and Occidental Petroleum have all reported big jumps in their earnings for the quarter. Chevron reports its earnings today.

The turnaround in oil prices has been swift. It could have a long-lasting impact on the world's energy supplies as some companies cut their spending and slash costs.

In the third quarter, oil prices in New York averaged $118 a barrel, compared with $75 a barrel in the same quarter last year. On Wednesday, oil traded at $68 a barrel, after rising above $145 a barrel in July.

Recently, energy executives have become concerned that companies would be forced to lower their investments in production and exploration.

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"Given the fall in the oil price, an issue for all oil and gas companies is current levels of capital expenditure," said Tony Shepard, an analyst at London-based broker Charles Stanley.

Shell's chief executive, Jeroen van der Veer, said the company had decided to delay a decision to invest in the second expansion phase of its oil-sands project in Canada.

"We are watching the world economic situation closely. Shell is robust across a wide range of energy prices."

Information from New York Times reporter Julia Werdigier is included

in this report.

Copyright © 2008 The Seattle Times Company

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