Exxon Mobil earned $9.25 billion in the last three months of 2010, its most profitable quarter since the record third quarter of 2008.
The largest publicly traded oil company said Monday that net income grew 53 percent in the fourth quarter as it produced more oil to take advantage of higher prices.
Global consumption of petroleum products increased during the quarter and oil prices rose 12 percent to an average of $85.14 per barrel. Higher prices made production operations more profitable. Increased demand boosted margins at refineries.
Exxon joined Chevron and ConocoPhillips in reporting vastly improved results.
On a per-share basis, Exxon's net income was $1.85 per share. In the year-ago quarter, the company earned $6.05 billion, or $1.27 per share. Exxon set a record for quarterly net income by a publicly traded company of $14.83 billion in the July-September period in 2008.
Revenue increased 17 percent to $105 billion. The results beat Wall Street expectations of $1.62 per share on revenue of $99.1 billion, according to FactSet.
Shares rose 2.1 percent to $80.68 and are at their highest level in two years. Exxon is the biggest U.S. company by market cap, trailed by Apple Inc. and Microsoft Corp.
According to the U.S. Energy Department, total world consumption increased 2 percent to 86.9 million barrels per day in the last three months of 2010 from 85.1 million barrels per day a year earlier.
Exxon cranked up production by 19 percent in the quarter. Its exploration and production operations posted income of $1.3 billion in the U.S. and $6.2 billion internationally. Downstream operations, which include refineries, reported earnings of $1.2 billion after losing money a year ago. Exxon's chemicals business reported profits of $1.1 billion.
It was a different story with natural gas. Drillers have used new technology to unlock vast underground gas deposits, but increased production has hurt the U.S. price, which fell 13 percent in the fourth quarter.
Exxon's natural gas operation was greatly expanded last year with the acquisition of XTO Energy. Its gas production rose about 37 percent in the fourth quarter. The bet is that natural gas demand will pick up as utilities rely less on coal, which releases more greenhouse gases, for power generation. But the advantages aren't yet evident on Exxon's books. Profit at XTO tumbled 78 percent to $120 million in the fourth quarter, said David Rosenthal, vice president of investor relations.
"Exxon says natural gas is undervalued," said Argus Research analyst Phil Weiss. "But if they keep ramping up production, it'll stay that way."
Rosenthal expects the natural gas business will eventually rebound in the U.S.
For the full year, Exxon Mobil Corp. earned $30.5 billion, or $6.22 per share, compared with $19.3 billion, or $3.98 per share, in 2009. Annual revenue increased 32 percent to $383 billion.