Exxon: The world's 18th-largest economy?
Posted
Apr 28 2008, 07:01 PM
by
Charley Blaine
Rating:
Earnings from Royal Dutch Shell and BP today just about guarantee that ExxonMobil is going to report some truly gaudy first-quarter revenue and profits on Thursday.
And they're only going to get bigger as the year rolls along. So big, in fact, that Exxon's revenue by the end of the year may be greater than the gross domestic product of Sweden, the world's 18th-largest economy.
Here's how the numbers could work:
Wall Street is expecting the oil giant to report $121 billion in revenue for the quarter, about 40% higher than a year ago. But BP reported a 44% revenue increase to $89 billion, and Royal Dutch Shell reported a 56% revenue gain to $114 billion.
In the first quarter of 2007, crude oil averaged $58.07 a barrel. In the first quarter of 2008, it averaged about $97 a barrel, a 67% change. If Exxon simply sold what it sold a year ago at this year's prices, it's possible to see revenue hit $130 billion. That would be larger than the gross domestic product of New Zealand in 2007. One analyst contacted by BusinessWeek thinks it could hit $135 billion. (By the way, Shell's revenue was roughly the size of the gross domestic product of Egypt.)
Plus, Exxon will get a boost for both revenue and profit from converting sales outside the United States back into dollars. Remember, the dollar is down.
Meanwhile, net income should be north of $12 billion, or $2.11 a share. If it hits $13 billion, that would be as large as the gross domestic product of, say, Brunei. That's the oil-rich nation on the island of Borneo whose sultan, Haji Hassanal Bolkiah, according to Forbes magazine, is worth at least $20 billion.
Now, how does Exxon get to be the size of Sweden's economy? Let's say first-quarter revenue comes in at $130 billion when crude oil averaged more than $97 a barrel. So far in April, crude has averaged $112 a barrel and looks like it will soon top $120. So, it's possible Exxon's revenue for the second quarter could be $140 billion, maybe more. If it hits $150 billion, that would be bigger than the GDP of the Philippines.
Four quarters of numbers like that would mean the company could gross $480 million -- more than the GDP of Sweden and slightly less than No. 17, Turkey. In fact, Wall Street analysts now expect Exxon's revenue to top $550 billion in both 2008 and 2009.
If you're purely interested in the money, you should be thrilled. But not everyone is interested in just the money.
Descendants of oil baron John D. Rockefeller, who in the 19th century put together what would become Exxon, want the company to bar the chief executive officer from serving as chairman so management can't delay action on climate change. Family members will announce their support on Wednesday for a shareholder resolution to split the positions. The proposal won support of 40% of shareholders in 2007 and 34.3% of shareholders in 2006.
Exxon opposes the proposal.
