Exxon Mobil Corp. said Monday its annual income of $19.3 billion was the smallest in seven years as higher oil prices squeezed profit margins in its refining business.
The results for the world's largest publicly traded oil company reflect the volatility in the price of crude oil over the past years and the impact of the global recession.
When oil spiked above $147 a barrel in mid-2008, Exxon became the king of corporate profits, setting ever-higher marks for earnings by a U.S. company. Then oil prices plummeted late last year, and Exxon suffered a yearlong hangover that included the smallest quarterly earnings in several years.
The Irving, Texas company finished 2009 with a 23 percent decline in fourth-quarter income. Exxon earned $6.05 billion, or $1.27 a share, for the final three months of 2009. That compares with $7.82 billion, or $1.54 a share, a year earlier. Revenue increased 6 percent to $89.8 billion.
Exxon now has posted lower profits for five straight quarters after setting a record of $14.83 billion in the third quarter of 2008.
The fourth-quarter results still beat analysts expectations of $1.19 a share and shares rose $1.30, or 2 percent, to $65.73 in morning trading.
For the full year, Exxon earned $3.98 a share. That compares with a record-breaking year in 2008, when Exxon recorded the highest profit ever for a U.S. company with earnings of $45.2 billion, or $8.66 a share. As dramatic as the decline is, Exxon is still expected to post the largest annual profit for a company in the S&P 500 index.
The company said its refineries were hit hard in the fourth quarter as oil prices rebounded and outpaced increases at the pump. Losses widened to $287 million at Exxon's U.S. refineries, and profits from its international downstream business dropped 96 percent.
As the recession crimped demand, Exxon responded by cutting back on production of gasoline, diesel and other fuels in 2009. The company didn't reduce capital spending and exploration, however. It boosted spending by 4 percent in 2009 to $27.1 billion.
In December, Exxon announced plans to buy XTO Energy in an all-stock deal that was worth about $29 billion at the time. XTO is a major holder of natural gas assets in the U.S., and the deal would make Exxon a major player in what is expected to be a robust market for the cleaner-burning fuel.
The deal, which is subject to approval by the government and XTO shareholders, would be Exxon's largest since its $75 billion purchase of Mobil Corp. in 1999.