By Justin Blum
Washington Post Staff Writer
January 31, 2006

Exxon Mobil Corp. yesterday reported the highest profit in U.S. history: $10.71 billion for the fourth quarter of 2005 and $36.13 billion for the entire year.

Propelled by record-high oil prices, the oil company's earnings sparked renewed calls from some lawmakers on Capitol Hill for new taxes on oil company profits and for Exxon to spend more on alternative sources of energy.

Exxon, of Irving, Tex., and other oil companies have benefited from unusually high market prices for crude oil, gasoline and natural gas -- the result of tight supplies and high demand. Hurricanes Katrina and Rita, which disrupted domestic production and refining last fall, contributed to those conditions and pushed prices higher. In recent weeks, oil markets have sent prices even higher because of concern about tension between Western countries and oil power Iran over its nuclear program.

At Exxon, the world's largest publicly traded oil company, profits rose despite a drop in production across 2005. For the year, combined oil and natural gas production was down 3.6 percent from 2004. Removing the impact of Katrina and Rita and other factors, the company's annual production was down 1 percent compared with 2004.

The company is massive, operating in almost 200 countries and territories; there are more than 13,000 Exxon and Mobil service stations in the United States. Analysts said the scale of Exxon, coupled with high commodity prices, help explain the record numbers. Exxon and other oil companies are likely to continue making record profits this year because of sustained high oil prices, analysts said.

Exxon's fourth-quarter profit rose 27 percent from the same period a year earlier; its annual profit climbed 43 percent from 2004. The company's 2005 revenue was $371 billion, higher than the gross domestic product of Belgium.

Exxon's earnings beat analysts' expectations. Shares of Exxon Mobil yesterday rose $1.82, or nearly 3 percent, to $63.11 on the New York Stock Exchange.

The profit growth is in line with, if not exceeded by, earnings jumps at other major oil companies.

Last week, Chevron Corp. reported that its fourth-quarter profit was up 20 percent from the year before. Also last week, ConocoPhillips reported a 51 percent increase in fourth-quarter profit and Marathon Oil Corp. said that its fourth-quarter profit nearly tripled. Oil giants BP PLC and Royal Dutch Shell PLC have yet to report their profits.

Exxon has about $33 billion cash on hand, the company said yesterday, and has been returning some of its proceeds to investors by increasing dividends and buying back shares. The company last year increased spending on exploration and development. Analysts said they expected another increase this year, though at a much slower rate than profits have grown.

In a statement, Exxon chief executive Rex W. Tillerson said: "There is a great deal of public interest in global energy prices. . . . Our strong financial results will continue to allow us to make significant, long-term investments required to do our part in meeting the world's energy needs."

Exxon's earnings broke U.S. records for net income, set by Exxon, according to Standard & Poor's Corp.

http://www.washingtonpost.com/wp-dyn/content/article/2006/01/30/AR2006013000261.html