Exxon Mobil, the world's largest oil company, yesterday unveiled the biggest ever annual profit from a quoted corporation, breaking through the $40bn (£20bn) barrier for the first time.
The oil giant broke its own previous record of $39bn, achieving a 4 per cent increase in its annual earnings to $40.6bn. The results were boosted by a particularly strong fourth quarter, during which profits rose by around 14 per cent to $11.7bn, helped by a strong increase in the price of crude oil.
Chevron, the US's second largest oil company, also unveiled a sharp rise in its annual profits yesterday – up 9 per cent to $18.7bn. The companies' announcements follow Thursday's results from Royal Dutch Shell, which posted the largest ever annual profits by a UK company, totalling $27.6bn for the year.
The oil companies all profited from a near 50 per cent increase in the price of crude oil in 2007, a year in which prices momentarily touched $100 a barrel for the first time.
In the UK, the bumper profits have sparked calls by environmental groups and workers' unions for a windfall tax to be imposed on energy companies.
However, Exxon was unapologetic for its success, boasting that it "reflected strong results in all business segments".
"We continued to supply crude oil and natural gas volumes to meet the world's energy needs through disciplined development and operation of our globally diverse resource base," said Rex Tillerson, Exxon Mobil's chairman. "Our long-term investment programme, in projects often far from major consuming nations, continued to provide resources essential to the increasingly interdependent global energy supply network. Operations reliability in our global downstream and chemical businesses continued to supply the important products consumers require around the world."
Analysts accepted Exxon's performance had been strong across the board, but warned the long-term outlook for the oil sector was clouded by supply issues.
"The only negative thing I see going forward is production, they just can't grow production," said Chris MacDonald, a portfolio manager with WHG Funds in Dallas. "If they are spending $21bn a year on [capital expenditure] and they can't grow production, with their technology ... it does not bode well for the industry in general."
Although profits at Chevron were up significantly overall, the group sustained a fall in earnings in its downstream division – which incorporates the refining, marketing and transportation arms of the business – due to an unexpected increase in the amount of time that some of the group's refineries were closed for maintenance.
"Fourth-quarter earnings for our upstream business benefited from a significant increase in the price of crude oil," said Dave O'Reilly, Chevron's chairman and chief executive.
"However, downstream profits were off sharply because of planned and unplanned refinery downtime in the United States, as well as the impact of higher crude oil costs that were not fully recovered in the sales price of refined products."