Big Oil profits in danger as price of crude slides

NEW YORK (Reuters) – Energy stocks have taken a beating as crude oil prices plummeted this week, but oil producers will really feel the pain on the bottom line, threatening to wipe out billions of dollars in profits.

If this week’s $5.50 oil price drop is sustained over the year, Exxon Mobil Corp. (NYSE:XOM – news) would lose nearly $3 billion in profit — about $540 million for every dollar off the price of oil per barrel, analysts said.

Chevron Corp. (NYSE:CVX – news) and ConocoPhillips (NYSE:COP – news), the second- and third-largest U.S. oil companies, would lose about $330 million and $200 million, respectively, for every dollar off the price of oil per barrel per year.

“I don’t think many companies, if any, can offset a 10 percent decline in the average crude price,” said Howard Weil analyst Gene Gillespie, who believes oil company earnings could fall by up to 10 percent this year from 2006.

Reuters