said its profit in the first quarter jumped 10% from the same period a year ago as strength in its refinery business overcame setbacks on the oil and gas production side.
For the quarter, the world's biggest oil company made $9.28 billion, or $1.62 a share, up from $8.4 billion, or $1.37 a share, a year earlier. It generated $87.22 billion in revenue, down from $88.98 billion a year ago.
The earnings handily beat analysts' average estimate of $1.52, according to Thomson Financial.
Exxon's downstream refining and marketing businesses earned $1.91 billion in profits, an increase of $641 million compared with the first quarter of 2006. The improvement was due to increased product sales and higher refining margins, the company said in a press release Thursday.
Refinery utilization rates in the U.S. have been abnormally low this spring, increasing the margins, or "crack spreads," between crude oil and derivative products such as motor gasoline. Exxon clearly reaped the benefits of the higher refining margins during its first fiscal quarter.
Exxon's success in its downstream businesses made up for weaknesses on the upstream exploration and production side. The company earned $6.04 billion globally through the exploration, production and selling of oil and natural gas, but that was $342 million less than Exxon made during the same period last year.
The upstream setback was partly caused by record warm temperatures in Europe, which put downward pressure on natural gas demand there, according to Henry Hubble, vice president of investor relations, who spoke on a conference call.
The near-term natural gas contract reached a low near $3.40 in December in London. Natural gas on the New York Mercantile Exchange didn't go below $6.40. Europe accounts for 25% of Exxon's upstream earnings, while the Americas make up 34%, according to the company's 2006 figures.
However, the relatively small exposure to low natural gas prices was enough to slow earnings growth in Exxon's upstream operations.
During the quarter, Exxon's earnings per share rose 18%. Contributing to the improvement was $7 billion in share repurchases, which reduced dilution. Exxon also paid out $1.8 billion in dividends to its shareholders, worth 32 cents a share. The company plans to pay 35 cents a share in dividends next quarter, according to Hubble.
The firm's capital expenditures during the quarter were $4.27 billion, down from $4.82 billion a year ago. The cutback was attributable not to a reduction in overall capital spending but rather to the timing of Exxon's planned investments this year, Hubble said.
Hubble mentioned various notable projects from the first quarter. One was its Z-11 well on Russia's Sakhalin Island in the northern Pacific Ocean. At 37,016 feet long, the well is the deepest ever drilled. The well will tap into a field that could produce 2.3 billion barrels of oil and 17.1 trillion cubic feet of gas, Exxon believes.
Another is Exxon's $5 billion joint-venture with China's Sinopec and Saudi Aramco that was announced in March. It is the first fully integrated refining and chemical plant with foreign participation in China.
During the conference call's question and answer session, Hubble was asked if Exxon has decided whether to continue its operations in Venezuela after next month's repatriation of foreign oil assets takes place. He said that Exxon is committed to making the transaction smooth and effective but that compensation issues related to the transaction haven't been resolved yet.
Shares of Exxon gained 78 cents, or 1%, to $80.70 late Thursday.