Major oil stocks Exxon Mobil Corp. (XOM) and ConocoPhillips Corp. (COP) reported earnings this morning, with independent oil stock Occidental Petroleum Corp. (OXY) also reporting earnings alongside these heavyweights. All reported higher profits in their earnings reports due to higher crude oil prices.

Exxon reported earnings for the first quarter with EPS of $1.33, up 38% from a year-ago’s EPS of $0.92. Revenue rose by 41% to $90.25 billion. Big XOM earnings numbers, but lower than analysts expectations of EPS of $1.41 and revenues of $96.41 billion.

Conoco’s first quarter earnings report was also strong. COP earnings showed EPS more than doubled, from $0.54 a year ago to $1.40 in 2010. Revenues totaled $45.76 billion compared with $30.7 billion a year ago. Analysts were looking for EPS of $1.38 on revenues of $47.57 billion.

Occidental earnings nearly tripled EPS from a year ago, up from $0.45 to $1.31. OXY earnings also showed revenues came in at $4.77 billion. Analysts had estimated EPS of $1.35 on revenue of $4.8 billion.

The tale of the tape for the supermajors is the effect of refining on revenues. Exxon noted that downstream earnings were off $1.1 billion compared with last year, and US refining and marketing actually lost $60 million. Conoco’s refining and marketing group lost $4 million in the quarter, compared with a $205 million profit in the first quarter a year ago.

Occidental, which has no refining operations, took a hit in its chemical segment, where its earnings report showed profits fell from $169 million a year ago to $30 million in the first quarter of 2010. The company attributed the decline to weakness in the US market, particularly in housing and construction, coupled with declining margins.

Production at both Exxon and Oxy was up 4.5%, while production at Conoco was down about 4.4%, including the company’s share of Lukoil. Conoco attributed the drop to normal declines, fewer barrels from its production sharing agreements, and weather-related downtime in the US.

Exxon said that it was on track to complete its acquisition of XTO Energy Inc. (XTO) by the end of the second quarter. Conoco noted that it was on track to shed the $10 billion in assets it has already promised to get rid of by next year.

Both Conoco and Oxy reported significant gains in realized prices for liquids production. Conoco’s prices rose from $40.37/b in the first quarter last year to $71.86/b, and Oxy’s rose from $39.29/b to $71.88/b this year. Even natural gas price realizations were higher this year.

As profits rise on higher prices for crude, refining takes the pain. Both Exxon and Conoco noted that spreads are increasing between light, sweet crude and heavy, sour crude. As those spreads widen, the refineries will go for the cheaper heavy crudes in an effort to boost margins. If refinery capacity utilization stays around 90%, both companies should see a nice increase in refining margins next quarter and for the rest of the year.

Of course, if the US economy slows down, and crude prices fall back below $80/b, refiners could find that demand will also slow down. Alternatively, if the economy continues to grow and especially if unemployment falls, demand for refined products is likely to increase, raising crude prices again and very likely tightening the spreads and putting pressure on refining margins.

For now though, E&P is driving the profits and as long as prices continue above $80/b, all that oil company executives need to do is make sure that their banks are open to accept deposits.

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