Exxon Mobil, the largest U.S. oil company, earned $14.8 billion, or $2.86 per share, a 58% increase from the $9.41 billion, or $1.70 per share it earned in the third quarter of 2007. Exxon Mobil’s record-setting profit was enough to beat analyst expectations of $2.38 a share, according FactSet Research data.

Exxon Mobil beat its own record for the largest quarterly profit for a U.S. company, which it had previously set in the second quarter of 2008 with a gain of $11.68 billion.

Royal Dutch Shell PLC (ADR: RDS.A, RDS.B) also announced third quarter earnings today, beating Bloomberg’s average analyst estimates. Europe’s largest oil company saw a 22% increase in profit to $8.45 billion from $6.9 billion in the same period the year prior.

During the quarter, oil averaged $118 per barrel. But crude prices have since slipped nearly $80 from a record high of more than $147 per barrel in July, which means Exxon Mobil’s string of record-setting profits could end in the fourth quarter.

While profits will likely dip in the near-term, analysts remain bullish on the long-term prospects of oil majors.

“The oil majors are coming all above expectations, which means they have resilient qualities,” Jason Kenney, an analyst at ING Wholesale Banking in Edinburgh, told Bloomberg News. “They show the benefit of being an integrated company, and they have the flexibility to weather the storm.”

High oil prices helped the oil majors to beat Wall Street expectations, despite production declines during the quarter. Exxon Mobil’s production dropped 8.2% during the quarter, while Shell’s output slumped 6.6%.

“This is a good outcome but some investors will be disappointed by the sluggish production volumes,” Tony Shepard, an analyst at London-based broker Charles Stanley, told the International Herald Tribune, speaking of Shell’s results. “Given the fall in the oil price, an issue for all oil and gas companies is current levels of capital expenditure.”

Exxon Mobil reaffirmed its capital spending budget of $25 million over the next five years, regardless of the subsequent trend of oil prices. However, Shell announced it would delay moving forward with developing its Athabasca oil-sands project in Alberta, Canada due to increased costs.

Source: Exxon Mobil Posts Record $14.8 Billion Profit, Shell Tops Estimates

There are about 12,000 gas stations with the Exxon sign at the entrance, though the company owns about 2,220 of them. And Exxon plans to sell those over the next few years, Reuters reported.

Texas leads the states with the most company-owned gas stations with 190. Florida has 170, the Associated Press reported.

“We are in a very, very challenging market. Margins are reduced,” Exxon spokeswoman Prem Nair said in a statement. “We feel the best way for us to grow and compete is through our distributor network.”

Exxon stations may be everywhere but retail gasoline sales are only a small portion of the company’s revenues. And with gasoline costing 31% more than a year ago and crude oil prices at record levels, it’s also one of the most unprofitable.

This doesn’t mean we’ll stop seeing the ubiquitous blue signage across the country. Exxon will continue selling fuel to station owners who pay to use the company’s brand name.

Oppenheimer & Co. (OPY) analyst Fadel Gheit estimated the stations’ profit margin was between 10% and 15% (the company doesn’t release margins for its retail division), which is about one-third of its margin for crude oil production.

“I think the decision came that it’s more of a headache than it’s worth,” Gheit said.

Gas stations can’t pass higher prices onto consumers as easily as oil companies pass prices onto them. On top of that, car owners nationwide are taking serious steps to curb gasoline and energy usage, doing everything from using other forms of transportation to buying more fuel-efficient vehicles such as hybrids.

Exxon’s decision follows that of competitors Royal Dutch Shell PLC (ADR: RDS.A, RDS.B) and BP PLC (ADR: BP), who are also moving away from station ownership.

“They can actually point their attention to some other area where you can make money,” Jeff Lenard, a spokesman for the National Association of Convenience Stores, told The AP. “Retail is incredibly volatile. This way, they can (sell gasoline) wholesale and count on a fairly predictable income.”

Source: Exxon Plans to Sell 2,220 Profit-Squeezed Gas Stations

Retail gas hit its 22nd consecutive daily high yesterday (Thursday), according to AAA’s Daily Fuel Gauge Report.

The average nationwide cost for a gallon of regular unleaded was $3.952, while the average cost for a gallon of diesel was $4.787.

According to the AAA survey, gas prices have increased nearly 10% from a month ago and are up almost 24% from one year ago, CNNMoney.com reported.

Connecticut has the highest average by state at $4.223 for a gallon of regular, while Missouri has the lowest at $3.761.

The average cost of gas has crossed the $4 threshold in 11 states and Washington, D.C.

The cost of gas has climbed steadily higher, following in the wake of soaring oil prices. Oil reached a record high of just above $135 per barrel on May 22, but since then the price has dropped.

Crude oil for July delivery fell $4.31, or 3.3%, to $126.72 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange, according to Bloomberg data, as the high cost of gas is finally acting to curb consumer demand.

“There’s a lot of demand destruction taking place,” Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York, told Bloomberg News. “We are probably headed for $120 in the near term.”

But the slight reprieve we’re currently experiencing is likely to reverse itself just as quickly as we head into the summer driving season and speculators continue to push up the price of “black gold.”

Both Goldman Sachs Group Inc. (GS) and JPMorgan Chase & Co. (JPM) recently released reports that have oil soaring over $200 a barrel within the next two years.
Money Morning Investment Director Keith Fitz-Gerald – one of the first investment gurus to predict triple-digit oil prices – has boosted his own target, suggesting that oil could go as high as $225 a barrel.

“The math is really simple here,” Fitz-Gerald said in a recent e-mail interview from China. “We are burning through supplies at a rate that’s four times to five times faster than we’re discovering new reserves. Throw in a few [surprises]… perhaps a terrorist event… and add in the accelerating use of oil and gasoline in Third World countries, and we have the recipe for far higher prices.”

Source: Gas Prices Roar to a New Record for the 22nd Straight Day

Indonesia, the only OPEC member in Southeast Asia, will pull out of the group as aging fields and declining production force the region’s biggest economy to boost imports.

Energy Minister Purnomo Yusgiantoro will sign a decree today to exit the Organization of Petroleum Exporting Countries, he told reporters in Jakarta. The nation, a member since 1962, has been considering leaving the body in the past three years.

As OPEC shrinks in numbers, there’s a new oil rush going on in Alberta, Canada.

“Alberta’s oil sands are the largest known reserve of oil on earth containing between 1.7 and 2.5 trillion barrels,” says Alex Green in InvestmentU. (Saudi Arabia, by comparison, has only 262 billion barrels of proven reserves. In fact, all OPEC nations combined have less than 900 billion barrels.)

“For decades, these sands weren’t even considered part of the world’s oil reserves because the oil there wasn’t economically extractable at prevailing prices using then-current technology. But times have changed… And the new gold rush is on.

“Here’s the kicker: Exploration of Alberta’s oil sands is virtually risk-free. You can’t drill a dry hole here. There’s no drilling at all. It’s a mining operation – and the reserves are thoroughly outlined. So what you really need is a company with plenty of machinery, money and manpower to dig it up and process it as quickly as possible.”

Read on here to find out the one undisputed blue-chip play on Alberta’s oil sands.

The good news is that there is new oil production capacity in the pipeline this year and next,” says Dan Denning in The Daily Reckoning Australia.

“Keep in mind that the final investment decision on the projects entering into production this year was made anywhere from 3-6 years ago. That shows you how far in advance you have to plan for new production (assuming you’ve even found oil in the first place).

“There are some massive LNG and natural gas projects coming on-stream between 2011 and 2015. Gazprom, Shell, BP, and ExxonMobil all look like big winners, should oil prices stay high and pass through to higher LNG prices.”

• The U.S. Treasury Department announced yesterday (Wednesday) that it would bring back the one-year Treasury bill at its next quarterly refunding auction, MarketWatch reported. “The majority of members believe that the addition of the year bill combined with increases to the size and frequency of existing coupon debt over coming quarters will still not be sufficient to satisfy the increased financing needs of the Treasury over the intermediate and longer term,” a panel of experts said in a government report, stating the next option could be to bring back the 3-year note as well.

• United Online Inc. (UNTD), the owner of Internet service providers NetZero and Juno, announced it would acquire online florist FTD Group Inc. (FTD) for about $456 million in cash, stock and notes, The Wall Street Journal reported. “This transaction will meaningfully diversify our revenue base within a large global market experiencing significant migration to the Internet,” said United Online Chief Executive Mark R. Goldston.

• Descendents of oil scion John D. Rockefeller, the founder of Standard Oil from which both Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) can trace early roots, have called upon Exxon to be more environmentally conscious, despite the company’s record recent profits, Forbes reported. Neva Rockefeller Goodwin, a great-granddaughter of John D. Rockefeller, said yesterday (Wednesday), “The truth is that Exxon Mobil is profiting in the short term from investments and decisions made many years ago, and by focusing on a narrow path that ignores the rapidly shifting energy landscape around the world, including developing nations.”

• Slowing demand and increasing competition are to blame for Garmin Ltd. (GRMN), navigation device maker, to miss market estimates for the first quarter. Garmin’s shares dropped as much as 14.4% on the day to its 52-week low of $39.75 a share as it posted a profit of $147.8 million, or 67 cents a share. Analysts expected the company to earn 74 cents a share, according to Reuters Estimates.

• Soft-drink titans PepsiCo. Inc. (PEP) and The Coca-Cola Co. (KO) continue to push their battle into uncharted waters, as Pepsi announced it acquired V Water, Britain’s vitamin-enhanced bottled water, for an undisclosed amount. V Water is very similar to vitaminwater, which Coca-Cola bought last year for $4.1 billion. Sales of non-carbonated drinks are growing considerable faster than carbonated beverages, and Pepsi already owns SoBe Life Water, Gatorade sports drink and Aquafina bottled water. 

• Brazil’s Bovespa stock index jumped to a record after Standard & Poor’s unexpectedly raised the country’s credit rating to investment grade. The Bovespa Index of the most-traded stocks on the Sao Paul exchange surged 6.38% to 67,896.13 at 3:32 pm EST, its biggest gain in three months.

• Kraft Foods Inc. (KFT) reported first-quarter profit of $608 million, a 13% drop from a year ago, yesterday (Wednesday). Though sales improved 21% despite economic pressures and rising commodities prices, as Kraft raised prices on 90% of its products.

• Kellogg Co. (K) reported yesterday (Wednesday) that first-quarter profit fell 2% despite recent price increases. Net earnings fell to $315 million compared with $321 million a year ago. Earnings per share increased from 80 cents a share to 81 cents a share because of a $650 million share-repurchase program, the Associated Press reported.