Updated from 10:16 a.m. EST

ExxonMobil

(XOM) - Get Report

exceeded Wall Street expectations by 2 cents in the company's first earnings results since

Exxon

and

Mobil

officially merged on Nov. 30, attributing the rise to higher crude oil and natural gas prices.

For the fourth quarter, net income rose to $2.71 billion, or 77 cents a diluted share, from $2.03 billion, or 58 cents a share, a year earlier. This year's number was 2 cents higher than the consensus estimate of analysts polled by

First Call/Thomson Financial

. All figures exclude merger expenses and special items. The year-earlier numbers are pro forma, from when the two companies were still separate entities. The merger agreement was signed on Dec. 1, 1998.

Revenue rose 30% to $56.0 billion from $43.1 billion a year ago.

In early Tuesday trading, shares of the largest publicly traded oil company in the world rose 1 3/16, or 1%, to 85 7/16.

Merger expenses, for closing costs, implementation expenses and employee layoffs, in the fourth quarter came to $425 million. Including those expenses, the Irving, Texas-based company reported net income of $2.28 billion or 65 cents a diluted share.

Crude oil prices are up 138% in the last year because the

Organization of the Petroleum Exporting Countries

set quotas reducing oil production in March 1999. Crude oil closed at $29.43 on Monday and at $12.33 a year ago.

The increase in oil prices benefited ExxonMobil's oil exploration and production business, with U.S. earnings rising to $740 million from $248 million the year before and non-U.S. earnings rising to $1.56 billion from $631 million the year before.

However, its refining business was hurt by the price increase because raw materials were more costly. ExxonMobil lost $48 million in its U.S. refining and marketing business, compared to earnings of $264 million the year before. Non-U.S. refining and marketing earnings were also down from the year before, coming in at $29 million for the quarter and $681 million the year before.

Earnings for the U.S. chemicals business were up 40.7% in the quarter, to $197 million from $140 million a year earlier, while the non-U.S. business saw a rise of 53.5%, to $195 million from $127 million a year earlier.

Additionally, costs for the quarter totaled $95 million and should go down over time because of the merger. "Looking forward, for the next three to four years, we think the cost structure could be reduced by $5 billion to $6 billion, which is a significant amount," said analyst Gene Gillespie of

Howard, Weil, Labouisse

. He rates ExxonMobil an accumulate and his firm has done no underwriting for the company.

Expenses across the board should decrease, but much of the savings will come from employee layoffs. In the fourth quarter, 1,750 employees were laid off, including 1,400 employees in the U.S. By the end of 2002, ExxonMobil expects to lay off 16,000 people as a result of the merger.