The huge full-year profit wasn't a surprise given crude's unprecedented rise during the first half of last year, peaking near $150 a barrel in July. Since then prices have fallen roughly 70 percent amid a deepening global recession.
Triple-digit price swings for a barrel of crude have scattered oil majors along divergent paths as each adjusts to seismic changes in the market.
ConocoPhillips, for example, is cutting jobs and spending after posting a massive fourth-quarter loss. Royal Dutch Shell had a big loss too, but it hopes to ride out the downturn with flat spending and few, if any, layoffs.
Exxon, on the other hand, is sitting on $31 billion in cash and can spend as it sees fit. Some analysts have predicted Exxon will get even bigger by snapping up smaller competitors, or looking for joint ventures.
The timing is ideal as assets based on the price of oil have grown relatively cheap. Also, large producers like Exxon Mobil are finding it increasingly difficult to secure new sources of fossil fuels the old-fashioned way
- exploring and drilling for them.
"If something comes along that they think is priced right and would help them on the production side, I think they'd take a look at it," said Brian Youngberg, an energy analyst with Edward Jones.
In recent years, the company has spent huge amounts buying back its own shares, and 2008 was no exception. The Irving, Texas-based company said Friday it distributed $40.1 billion to shareholders last year in the form of dividends or share buybacks. For the same period, it spent $26.1 billion on capital and exploration projects, up 25 percent from 2007.
Company share repurchases give individual shareholders a bigger stake in the company, yet some critics say Big Oil focuses too much on boosting stock price, especially when compensation for executives often is tied to its value.
Exxon makes no apologies for how much it's spent on share buybacks.
"Exxon Mobil remains well positioned for the future as the direct result of our financial strength, long-term focus, effective approach to risk management and capital discipline," David Rosenthal, the company's vice president for investor relations, said in a conference call Friday.
Still, the company didn't escape 2008 unscathed, as oil prices slid 60 percent in just the final three months of the year.
Net income slid to $7.8 billion, or $1.55 a share, in the October-December period, the slimmest quarterly profit since 2005. The company earned $11.7 billion, or $2.13 a share, during the same period in 2007.
Quarterly revenue fell 27 percent to $84.7 billion.
But both the per-share and revenue results topped Wall Street forecasts. On average, analysts expected the company to earn $1.45 a share in the latest quarter on revenue of $69.1 billion, according to Thomson Reuters.
As expected, Exxon's exploration and production arm took a beating because of falling crude prices, plunging 31 percent in the quarter to $5.6 billion and cutting into the source of two-thirds of its earnings.
Overall output for Exxon, which produces about 3 percent of the world's oil, fell 3 percent.
The company has yet to announce its capital expenditure budget for 2009, but some analysts believe it could be the only oil major in a position to ratchet up spending significantly.
Analysts and investors keep close tabs on capital spending plans because that's what producers use, in part, to find new sources oil and natural gas. Many smaller oil and gas companies are cutting budgets by 50 percent or more as they prepare for a prolonged recession that's already crushed energy demand.
