For the three months ended Dec. 31, Exxon's profit shot up 14% to $11.7 billion, or $2.13 a share -- also a record for the company. Net income for the full year was equal to $7.28 a share.
The flood of cash came thanks to the soaring cost of crude oil, which in early January passed the $100-a-barrel mark for the first time and has stayed above $90 for most of the time since then. On Friday, the price of light, sweet crude for March delivery fell $2.79 to $88.96 a barrel on renewed concerns about the U.S. economy.
In Exxon's flagship business of exploring for and developing oil and natural gas, fourth-quarter income soared 30% to $8.2 billion compared with a year earlier.
"As long as oil is $90-plus a barrel, you're going to see a lot of money rolling in," said Todd Petzel, who advises pension funds and endowments with $5 billion under management as chief investment officer at Offit Capital Advisors in New York. "Growth in demand globally is expected to rise by 2 million more barrels a day next year, so while everyone is working hard to increase supplies, they're being outpaced by demand."
Exxon's refining and marketing business produced 13% higher net income in the fourth quarter, as strong earnings overseas more than offset declines in the U.S., where gasoline makers and sellers are seeing their profits shrink.
Revenue for the fourth quarter swelled 30% to $116.6 billion. Worldwide production of oil and natural gas was up about 1% for the quarter and down about 1% for the full year, Exxon said.
Chevron, the nation's second-largest oil company, posted a fourth-quarter net income of $4.9 billion, or $2.32 a share, up 29% from the year-ago quarter's profit of $3.8 billion, or $1.74 a share.
As with Exxon, Chevron's performance reflected strong earnings from the production and sale of oil and natural gas. That business brought in quarterly profit of $4.8 billion, up 66% from a year earlier.
Chevron, a leader in California's gasoline market, said profit at its refining and marketing business plummeted during the fourth quarter because of refinery downtime and other factors. The company lost money on those operations in the United States and had worldwide net income of $204 million for the quarter, down nearly 79%.
The company's worldwide production fell 1.6% for the quarter and 1.8% for the year. Chevron said it spent $20 billion in 2007 on capital projects and $7 billion more on share repurchases.
Oil expert Amy Myers Jaffe said that barring a recession, oil companies would continue to collect eye-popping profits for the foreseeable future. And if they do, they should brace themselves for a legislative assault from angry politicians.
"The bigger the profits, the higher the likelihood that there will be a windfall profits tax if the composition of the Congress changes," said Jaffe of Rice University's James A. Baker III Institute for Public Policy in Houston. "They're an easy mark, and they need to consider that in their strategy."
Shares of Exxon fell 45 cents Friday to $85.95, and Chevron's declined 76 cents to $82.49.
elizabeth.douglass@latimes.com
Bloomberg News was used in compiling this report.
