The major western oil companies will set new earnings records when they publish 2006 profits over the coming weeks, but they are also likely to indicate that profits have peaked and 2007 will be tougher, analysts forecast.
High oil prices and refining margins were well above historical averages last year, outweighing lower oil and gas production at most majors.
Analysts polled by Reuters expect industry leader Exxon Mobil Corp. to post annual net profits of $38 billion, beating a record $36 billion in 2005.
Record profits are also predicted for Royal Dutch Shell Plc, the second-largest western oil company by market capitalisation, at $25 billion and for London-based BP Plc at more than $22 billion.
The profits exceed the gross domestic product of most developing nations, according to World Bank figures. By turnover, all three companies would rank among the top 50 economies in the world.
Analysts and investors will be focussing on the fourth quarter, however, which is expected to paint a less robust picture of the industry's health.
"We expect the earnings momentum (in the fourth quarter) for the international oil companies to decline 22 percent quarter-on-quarter, and year-on-year momentum (to be) down 12 percent," analysts at Credit Suisse said in a research note, putting most of the blame on falling crude prices.
(Reuters)