HOHN

I thought it was quite interesting-- I paid newsstand price to read it and am glad I did.

Here's the cliff's notes version:
-- We have a bunch of oil reserves that have recently been discovered, and are constantly improving ways to make existing fields more productive
-- Technology is making heretofore inaccessible oil available to be used.
-- "Peak oil" is most likely not here yet, and still 20-35 years away.

Hooray for the free market.

People complain about the "record profits" but when you are an oil company operating rigs that cost thousands of dollars a MINUTE to operate, you better hope it's all worthwhile.

Now, here's the question no one wants to ask: WHERE IS ALL THE MONEY coming from that finances these new technological breakthroughs that are making oil more available?

Why yes-- it IS from all those "record profits"!

No one else is investing in new oil-related technology besides the oil companies. Who would without a financial incentive? People aren't drilling test wells out of charity!


I've always thought it odd that people didn't see the paralles of oil companies to big drug companies. Yes, the make tons of money, but they also spend a huge wad on R&D, and they make product that we NEED.

So everyone moans about $4 diesel fuel, but where's the outrage at a $200 monthly cholesterol med bill?

hmmmmm.

06RAM2500

3 million to drill and complete a well.

Lil Dog

Not including any equipment after the fact for lifting and transport. Its not cheap.

But oil companies would make good money at $50 BBL and now are loosing money at $100 bbl? I don't get it and I work in the industry...

eddiebob

We just finished drilling an exploration well in the Deepwater Gulf of Mexico. The operator spent $123 million and that was for a dry hole. The oil companies are similar to the stock market. High risk/high gain, no risk/no gain. Ed B

MikeyB

Last I heard from a buddy that handles off shore rigs said it cost about $500,000 a day just to rent a platform. That was a few years ago. It's probably higher today.

MikeyB

Purplezr2

Doesn't profit come after expenses, so what they make is after they deducted the cost of explorations(expense right). So what they make in profits is just that. Someone correct me if I'm wrong.

eric13

Thats what I always thought profit was,money made after all expenses which to me would include R&D, and operating costs. I am usually wrong about this kind of stuff though.

MikeyB

There's gross and net profits. Gross is the overall money made. Net is whats left after taxes, operating expenses, etc...
The media tends to banner the gross numbers because it just looks better to the uninformed.

MikeyB

eric13

I found exxon mobil's net profits. If you read there report they state their net profits were $40,610 million which translates to 40.6 billion I think. That sounds like a pretty good chunk of change for NET profits. I know I am uninformed but I just dont understand what changed so drasticly that gas and diesel has went up in price so much over the past few years. I know nothing about economics so I am not asking these questions to be a smart allek I would just like to be educated on the subject. In mine and about half of the countries eyes when the oil companies are making record net profits and the price at the pump keeps going up it looks like greed comes in to play a little. I understand the oil companies are in business to make a profit but the price of fuel is really hurting some people.Here is the link to exxon mobils site where I got my info from. http://www.businesswire.com/portal/s...Id=-2147483648

HOHN

I don't think anyone implied they are losing money at all

AFK

http://finance.google.com/finance?fstype=ba&q=XOM

Click on 'Income Statement'

BarryG

Oh Boy I jsut spent ten minutes making sure the cloumns were halfway lined up from the cut & paste and they just went to heck in the post not sure what happend here.


The point about revenues, gross profit and net profit are good points and I tend to agree that the media equates income to gross profit which is a far cry from net profit. Below is from a quick search on Shell Oil Income statement. Sorry about the lack of neatness in it. It didnt cut and paste very well at all and I didnt want to spend too much time making it look all pretty. However you can see they are not hurting at all. Net Profit of almost 9% after taxes is not bad at all. The company I work for would kill for a 9% net. It does look like they need to take a serious look at how they are investing their money since they lost 14bil in that endeavor. And I seriously doubt that investing for them means investing in the business ie r&d. It should be financial investments like stocks, mutual funds, investment portfolio etc so they can maximize the cash they have laying around.

Financials (In millions of USD)
Income Statement
(Dec '07) QTR (2007) Annual (2006)Annual
Total Revenue 106,704.00 355,782.00 318,845.00
Gross Profit 16,101.00 59,085.00 55,856.00
Operating Income 13,389.00 48,986.00 44,349.00
Net Income 8,468.00 31,331.00 25,442.00

So For 2007 the had a 31.3 billion net profit. Net profit is after taxes

Balance Sheet
Total Current Assets 115,397.00 115,397.00 91,885.00
Total Assets 269,470.00 269,470.00 235,276.00
Total Current Liabilities 94,384.00 94,384.00 76,748.00
Total Liabilities 145,510.00 145,510.00 129,550.00
Total Equity 123,960.00 123,960.00 105,726.00

Cash Flow
Net Inc Starting 8,633.00 31,926.00 26,311.00
Cash from Operating 5,293.00 34,461.00 31,696.00
Cash from Investing -5,996.00 -14,570.00 -20,861.00
Cash from Financing -3,783.00 -19,393.00 -13,741.00
Net Change in Cash -4,436.00 654.00 -2,728.00

Key Stats & Ratios
Net Profit Margin 8.09% 8.97% 8.97%
Operating Margin 12.55% 13.77% 14.22%
Return on Average Assets13.29% 12.65% 12.65%
Return on Average Equity 28.05% 27.28% 27.28%
Employees 104,000

So at least anyone at shell moaning about how they are losing money is just plain full of it(the previous poster did not single out shell as the one losing money). Now I personally have no problem with them making a profit even a 9% net. No I dont like the high price fuel. Now I dont doubt that they are running "fat" with little heed to expense but by the same token when oil was 25 a bbl they surely were so I dont have a problem with that. However I do have a problem with the subsidies they get with our taxes. If you cant make decent money on over 355bil in revenue then you probably shouldnt be in the oil business or any other for that matter.

Speculation, refining capacity and increased worldwide consumption have more to do with the high price of fuel than the oil companies profits. And lets not forget that most of the oil companies are owned by the average joe in their stocks, mutual funds, 401ks and other financial instruments. And any stockholder would cry foul if their investment was losing money.

AFK

Found this too, looks like Bill Gates should be testifying before Congress too.

http://www.techvat.com/5-tech-compan...xon-mobil.html

eric13

I agree but I along with alot of other people can get to work everyday without using a Microsoft product. I need gas to get to get to work everyday. I just realized how I am sitting here typing on a computer with a Microsoft operating system. I can live without it though. I am not really trying to complain about the prices because I am going to keep paying it because I have to get to work to keep giving my money back to the oil companies. I just wish it would level out sometime soon.

MikeyB

Yes, Exxon did clear $40B after paying $30B in taxes on a total revenue of $404B.
But they are still operating on a 10% margin which is average.

The company (not oil related) I work for made $104B for the year. Cleared $7.3B after paying $2B in taxes.

MikeyB