Energy Sector Roundup: Stronger dollar hits crude futures

NEW YORK—Following is a summary of top stories in the energy sector Thursday afternoon.

Dollar Drives Down Oil

Oil prices fell again, as speculators who drove crude futures to nearly $120 a barrel pulled out of the market.

Light, sweet crude for June delivery fell 94 cents to settle at $112.52 a barrel on the New York Mercantile Exchange, after trading as low as $110.30.

The dollar's rise against the euro and other currencies drained away some of oil's appeal to investors who have bet for months that the greenback would continue to slide. When the dollar gains ground, commodities such as oil lose value as a hedge against inflation, prompting selling.

At the pump, the average national price of a gallon of regular gasoline rose 0.6 cent to a record $3.623, according to a survey of stations by AAA and the Oil Price Information Service. Diesel prices inched 0.1 cent higher to a record $4.251 a gallon.

June gasoline futures fell 2.81 cents to settle at $2.8782 a gallon on the Nymex, and June heating oil futures lost 4.03 cents to settle at $3.1177 a gallon. June natural gas futures gave up 28.2 cents to settle at $10.561 per 1,000 cubic feet.

The Energy Department said natural gas inventories rose by 86 billion cubic feet last week, more than many analysts expected.

Exxon Mobil Misses Analysts' 1Q Estimates

Exxon Mobil Corp.'s first-quarter profit climbed 17 percent to $10.9 billion. That is the second-biggest U.S. quarterly corporate profit ever. Only Exxon Mobil's fourth-quarter profit last year was bigger at $11.7 billion.

Earnings for the first three months of the year came to $2.03 per share, up from $9.3 billion, or $1.62 per share, a year ago.

Analysts polled by Thomson Financial were looking for $2.13 per share. With crude sliding, investors headed for the door after earnings missed the forecast. Shares lost $3.30 or 3.6 percent, at $89.77 in afternoon trading.

Revenue rose to $116.8 billion from $87.2 billion a year earlier. Analysts expected revenue of about $124 billion.

Exxon Mobil earnings from its upstream exploration and output business rose 45 percent to $8.8 billion with help from higher oil and natural gas prices. The company said higher natural gas production was offset by lower crude volume. Overall production fell 5.6 percent from a year ago.

In a note to clients, Citi Investment Research analyst Doug Leggate said Exxon Mobil's results "clearly disappointed versus expectations," but noted a "good suite of new projects" will likely keep its production stable in the future.

In March, the company said it will invest $25 billion to $30 billion in capital and exploration projects this year.

On the downstream refining and marketing side, earnings fell 39 percent from a year ago to nearly $1.2 billion. The company said significantly lower worldwide refining margins reduced earnings by about $1 billion in the quarter.

Strong Quarter for Marathon Oil

Marathon Oil Corp.'s first-quarter profit rose 2 percent. The company earned $731 million, or $1.02 per share, in the January-March period compared with $717 million, or $1.03 per share, for the same quarter in 2007.

Revenue jumped 39 percent to $18.1 billion from $13 billion last year.

Excluding one-time items, Marathon posted an adjusted profit of $767 million, or $1.07 per share. Analysts polled by Thomson Financial expected profit of 82 cents per share.

On the exploration and production side, earnings rose to $684 million from $385 million a year ago, as higher prices outweighed rising exploration costs.

But refining, marketing and transportation swung to a loss of $75 million in the quarter from earnings of $345 million in the first quarter of 2007.

In addition to lower margins, the company said downstream results were hurt by more planned maintenance at refineries in Detroit, Garyville, La., and Robinson, Ill.

"We believe they (Marathon) are likely to outperform their peers and the S&P 500 in the next 12-18 months," said Oppenheimer & Co. analyst Fadel Gheit. "Benefits from strong production growth, from 2007 depressed levels, as a result of new projects and restored volume from existing projects, should more than offset the impact from lower downstream results due to weak margins."

Marathon shares rose $1.65, or 3.6 percent, to $47.22 in afternoon trading.

Oilfield Services Shares Drop on Earnings and Crude Price

Shares of oilfield service companies declined as crude prices fell and Cameron International Corp. issued a disappointing earnings outlook for the second quarter.

Cameron's first quarter net income of $126.3 million, or 55 cents per share, beat the Wall Street forecast of 54 cents a share. The 34 percent revenue increase to $1.34 billion also topped analysts' estimates.

But Cameron forecast second-quarter earnings of 60 to 62 cents per share. Analysts surveyed by Thomson Financial forecast 62 cents per share. The company raised its full-year earnings outlook based on rising orders and backlog, but some analysts wondered if it was raised enough.

The sector was also pulled down by Rowan Cos. Inc. Excluding a gain from an asset sale, the contract driller posted earnings of 84 cents a share and revenue of $485.5 million. The analysts' average estimate called for profit of 85 cents a share on revenue of $517.4 million.

Rowan shares lost 90 cents, or 2.3 percent, at $38.09 in afternoon trading. Cameron gave up $2.08, or 4.2 percent, at $47.17.

ATP to Sell Offshore Stakes

ATP Oil & Gas Corp. plans to sell part of its stake in offshore oil production sites in the Gulf of Mexico and the North Sea. The sale covers a number of holdings that combined account for about 80 percent of ATP's total proved and probable reserves.

The energy production company hired Scotia Waterous (USA) Inc. to help with the sale.

Exxon Mobil Nigeria Production Resumes as Strike Ends

Nigerian oil workers ended a strike that cut the country's oil output over the last several days. The head of the union at an Exxon Mobil Corp. unit said members would return to work after negotiators reached an agreement with management about pensions.

Exxon Mobil said in a statement that it was restarting production.

Nigeria produces about 2.1 million barrels of crude a day. It is not clear how much effect the strike had on output.

Royal Dutch Shell PLC's local unit also has shortfalls after militants blew up transport pipelines. Shell has said it may not be able to meet supply contracts totaling 169,000 barrels per day through May.

Nigeria is Africa's biggest producer and supplies about a million barrels of crude a day to the U.S., according to the Energy Department.

--Compiled by AP Business Writer Greg Stec. Questions or comments can be directed to gstec@ap.org.