Record oil price to boost oil majors' profits

By Tom Bergin

LONDON (Reuters) - Exxon Mobil (XOM.N: Quote, Profile, Research, Stock Buzz), Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz) (RDSa.L: Quote, Profile, Research, Stock Buzz) and BP (BP.L: Quote, Profile, Research, Stock Buzz) are expected to report bumper first-quarter profits next week, thanks to record crude prices, but $110 per barrel oil will also squeeze refining profits and delay a return to oil production growth.

Brent and benchmark U.S. crude prices rose around 70 percent in the first quarter compared with the same period last year, to average almost $97/bbl and $98/bbl, respectively, while gas prices also rose.

Earnings growth, though generally strong, is lagging behind.

"The profitability of the industry is clearly not as robust as the headline oil price might at first imply," Lucas Herrmann, analyst at said Deutsche Bank said.

London-based BP, which is undergoing a restructuring under Chief Executive Tony Hayward who took over a year ago, is expected to be the strongest gainer in the industry's top tier.

Nine analysts polled by Reuters said, on average, they expect BP to report a 31 percent rise in net replacement cost profit, which is comparable to U.S. net income, to $5.3 billion, excluding one-off items.

The world's largest non-government-controlled oil company by market value, Exxon, is expected to see net income rise around 22 percent to over $11 billion in the first quarter.

Industry number 2, Shell, is expected to report only a 4 percent rise to $6.8 billion in current cost of supply net profit, its measure, which is also comparable to U.S. net income as it strips out gains in the value of inventories, excluding one-offs.