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LONDON/NEW YORK (Reuters) - Exxon Mobil broke its own record for the highest-ever quarterly profit for a U.S. company on Thursday, but it was lower than Wall Street expected largely due to lost output from Venezuela and Nigeria and lower yields from some oil fields.
The average price of a barrel of oil was slightly less than $125 in the quarter, nearly double last year, which also increased earnings reported by three of Europe's largest oil companies, Royal Dutch Shell, Eni and Repsol.
Exxon's second-quarter net income rose 14 percent to $11.68 billion (5.88 billion pounds), or $2.22 a share, in the quarter.
However, after excluding one-time items, Exxon earned $2.27 a share, more than 10 percent below analysts' expectations, according to Reuters Estimates. The miss led to a 4.7 percent slide in Exxon's shares, a major factor in a decline in U.S. stocks on Thursday.
Shell, the world's second-largest non-government controlled oil company by market value, reported a 5 percent rise in second-quarter earnings to $7.9 billion, and said that excluding one-time items, it beat analysts' forecasts.
The companies' oil and gas exploration and production units were the main profit drivers because of high oil prices.
But despite billions of dollars in capital spending in the quarter, oil and gas production was sluggish. That, along with weak profit margins from refining, restrained the companies' earnings somewhat.
Western oil companies' output has fallen in recent years and oil producing countries now prefer to award their richest fields to their own national oil companies.
"The problem is that all these companies have no place to go to drill and no place to put their money," said Oppenheimer analyst Fadel Gheit. "Access to resources is closing very, very fast."
Exxon's oil and gas production fell 8 percent from a year earlier, mostly due to the loss of assets taken over by Venezuela, a labour strike in Nigeria, and contracts that give host countries a larger share of production as oil prices rise.
Shell said output fell 1.6 percent in the second quarter to 3.126 million barrels of oil equivalent per day (boepd) compared to the same quarter last year, while Repsol's production fell 19.7 percent to 335,000 boepd in the first half.
The enormous profits drew criticism from politicians because of the high gasoline prices being paid by consumers.
U.S. presidential candidate Barack Obama termed Exxon's earnings "outrageous" and called for an end to the "tyranny of oil."
"We are making very large profits, I know that," Shell Chief Executive Jeroen van der Veer told reporters on a conference call. "But we are making very large investments," he said, referring to investments in exploration and production.
Italy's Eni SpA posted a 4.4 percent rise in second-quarter adjusted net profit, below analysts' forecasts, as higher taxes weighed on its results.
Eni said second-quarter production was 1.77 million boepd, up 2.1 percent from the year before, and added that based on lower oil prices output would rise 2 percent in 2008, compared to an earlier forecast of 3.7 percent.
Adjusted net profit strips out gains from changes in the value of inventories and non-recurring items.
Spain's Repsol YPF said its first-half adjusted net profit rose 15 percent to 1.883 billion euros (1.4 billion pounds), well ahead of analysts' forecasts, because of high oil prices.
Downstream refining and marketing profits fell sharply at most of the companies, as crude processing margins tightened, and retailers found it hard to pass on full price increases to motorists.
Exxon's downstream profits dropped about 54 percent and Shell's downstream results fell 70 percent. Eni said refining and marketing profits fell 23 percent in the quarter, while Repsol's downstream profits fell 2 percent in the first half.
Exxon's shares closed down $3.95 at $80.43 on the New York Stock Exchange. Shell's "A" shares closed down 2 percent at 1799 pence, Eni shares fell 1.4 percent to 21.74 euros and Repsol shares fell 0.5 percent.
Editing by Paul Bolding, Toni Reinhold