Oil majors' profits to soar on record crude

By Tom Bergin

LONDON (Reuters) - The world's five largest fully publicly traded oil companies are expected to, yet again, report record profits next week, thanks to high oil prices, even as investors fret over the recent pullback in crude.

In addition to earnings, investors will also be watching for news on controversial, long-delayed service agreements with Iraq and for signs soaring costs are easing.

Oil prices averaged over $120 a barrel in the second quarter -- almost double the level in the same period of 2007 -- before rising to a record high above $147/barrel on July 11.

Analysts predict this will push sector earnings up around 30 percent in the quarter compared to the same period in 2007, and is likely to attract further criticism from politicians and hard-pressed motorists.

Exxon Mobil Corp (XOM.N), the world's largest non-government controlled oil company by market value, is predicted to post quarterly net income of over $13 billion on Thursday, according to Reuters calculations, compared to $10.3 billion last year.

Earlier the same day, industry No. 2, Royal Dutch Shell Plc (RDSa.L) is forecast to report a 20 percent rise in current cost of supply (CCS) net income, excluding one-off items, of $8.3 billion, according to a Reuters poll of 9 analysts.

BP Plc (BP.L) is forecast to post a 44 percent rise in replacement cost (RC) net income, excluding one-offs such as field sales, to $7.7 billion, on Tuesday.

CCS and RC net income both strip out unrealized gains from changes in the value of inventories, making them comparable with net income under U.S. accounting rules.

The forecast results would be the highest quarterly profits ever for all three companies. Exxon's result would be a U.S. corporate record, while Shell's would be a European record, analysts said.

OUTPUT STABLE, REFINING WEIGHS

Oil and gas production across the sector is expected to be stable in the second quarter, after sliding in recent years, although it will be a mixed picture.

BP is forecast to lift output 0.4 percent to 3.82 million barrels of oil equivalent per day (boepd) but Shell is predicted to suffer a fall of 2.5 percent to 3.10 million boepd due to a dearth of big startups.

Earnings from refining crude will be hit in the quarter.

Average refining margins were the highest for almost three years in Northwest Europe and the Mediterranean but halved in the U.S. compared to the same period last year, according to figures from BP.

Shell, Exxon and BP have been selling refineries in Europe so they will feel the full force of this trend but even industry No. 4, and Europe's largest refiner, Total (TOTF.PA) is forecast to see downstream earnings sag due to a weaker dollar and an outage at a refinery.