Exxon Mobil Corp reported a better-than-expected 53 percent increase in quarterly profit, helped by a lower tax rate and a surge in natural gas production in the United States and Qatar.
The oil company's results and a spike in crude oil prices helped push Exxon shares to the highest level in two years.
Exxon, the world's largest publicly traded oil company, also saw its results lifted by higher profits in its chemicals and refining units. A recovering global economy has sparked a bigger appetite for chemicals and fuels including diesel and gasoline.
Oil demand rose last year and the U.S. government expects another 1.5 percent gain this year.
The global economy appears to be stabilizing with signs of modest growth in the United States and Europe and continued strong growth in the developing world, mainly in the Asia-Pacific and Latin America regions, David Rosenthal, Exxon's head of investor relations, told analysts on a conference call.
Exxon's exploration and production results were also lifted by higher oil prices, which climbed 12 percent from a year earlier to average around $85 per barrel in the fourth quarter.
Still, the company's bottom line was also helped by lower taxes, an analyst said.
A lot of the beat looks like it was on a lower effective tax rate, Phil Weiss, oil analyst at Argus Research, said on Monday. Production was really strong, but the beat really was on gas, which is not as profitable as liquids.
Weiss had expected a tax rate of 46 percent. Exxon said its fourth-quarter rate was about 43 percent, down from 45 in the third quarter due to changes in where taxes were collected and on what products, the company said on its earnings call.
Exxon's purchase of U.S. gas producer XTO Energy Inc in June has been a drag on the company's shares. But the rally in oil prices has helped the stock in recent months. Shares of Exxon are trading at the highest level in about two years.
Brent crude oil prices jumped above $100 per barrel for the first time since 2008 on Monday on concern that the unrest in Egypt could spread to the Middle East.
Exxon, based in Irving, Texas, reported a fourth-quarter profit of $9.25 billion, or $1.85 per share, compared with $6.05 billion or $1.27 per share in the same quarter a year earlier.
Analysts on average had expected a profit of $1.63 per share, according to Thomson Reuters I/B/E/S.
Oil-equivalent production rose 19 percent from the year-ago quarter, lifted by liquefied natural gas operations in Qatar and volumes from the XTO acquisition, the company said.
Exxon has such big exposure to refining and chemicals that they really benefit when the economy gets better, said Allen Good, an oil analyst at Morningstar. And their production was huge, driven by volumes from Qatar and the XTO acquisition.
Earnings in Exxon's exploration and production unit climbed 29 percent from the year-earlier quarter to $7.48 billion while chemical earnings soared 49 percent to $1.07 billion. Refining profit rose sharply to $1.15 billion from $189 million a year ago.
Revenue soared to $105.2 billion from $89.8 billion a year earlier.
For the year, Exxon said its capital expenditures were a record $32.2 billion and the company spent $5 billion to buy back its shares in the fourth quarter.
Shares of Exxon were up 2.1 percent at $80.63 on Monday afternoon, off an earlier high at $80.71. Its shares have risen 17 percent so far this year. That compares with a 16 percent increase in the CBOE index of oil companies.
(Reporting by Anna Driver in Houston, editing by Dave Zimmerman and Matthew Lewis)