I suppose it's my own predilection resulting from having spent a significant time in and around the energy business, but when the members of Big Oil step up to report their quarterly results, I'm imbued with the notion that earnings season has reached its zenith. You may have noticed that ExxonMobil (NYSE: XOM) and ConocoPhillips (NYSE: COP) have just released differing results, so while a myriad of companies from other industries have already reported, I can't help feeling that we're off to the races in what may be the market's key sector.

Exxon's back on top
Let's look first at Exxon's results, even though Conoco led off the Big Oil parade. After all, as we all learned on the schoolyard, size has its privileges.

For the quarter, Exxon's profits reached $10.33 billion, or $2.13 per share. Those figures virtually dwarfed the company's earnings of $7.35 billion, or $1.44 per share for the third quarter of 2010. Revenues for the quarter totaled $125.33 billion, a 32% increase year over year. The analysts who specialize in the major oil companies had anticipated earnings of $2.12 per share on revenues of $113.56 billion.

Upstream earnings for the quarter were $8.39 billion, $2.93 billion higher than the comparable quarter of 2010. The increase was due entirely to higher price realizations in both liquids and natural gas, which accounted for a $3 billion earnings increase. Conversely, the company's production mix and volumes reduced earnings by about $660 million, while gains on asset sales aided the sector's earnings increase by approximately $600 million, despite the necessity of contending with higher expenses.

From the perspective of production for the quarter, ExxonMobil's oil-equivalent output was down 4% from the third quarter of 2010. However, if entitlement volumes, the effects of OPEC quotas, and divestments are taken into account, 2011 production was essentially unchanged from a year ago.

The company's downstream operations earned $1.58 billion, up $419 million from the third quarter of 2010. The most significant aspect of the improvement was the $1 billion that resulted from higher refining margins. However, the impacts of foreign exchange and asset sales reduced the earnings from the segment by about $710 million. In a related area, earnings from the chemical operations were $1.00 billion, down $226 million from the same quarter a year ago.

Another Vietnam skirmish?
Late in the quarter, ExxonMobil, working in a partnership with PetroVietnam, apparently made a potentially major gas discovery off the coast of Danang, in central Vietnam. Although the company did not comment on the potential size of the find, it appears to lie in an area also claimed by China. As a result, a Chinese newspaper, the Global Times, noted earlier in the week that those involved in disputes with China should "mentally prepare for the sounds of cannons."

Finally, it appears that ExxonMobil has passed technology manufacturer Apple (Nasdaq: AAPL) as the biggest U.S. public company. Apple had assumed the top position for a time, but at midday on Thursday, ExxonMobil's market capitalization was approximately $395 billion to about $377 billion for Apple.    

Conoco's continuing diet
Largely as a result of asset sales, ConocoPhillips' net income declined to $2.62 billion, or $1.91 per share, versus $3.06 billion, or $2.05 a share, for the same quarter in 2010. However, backing out items like asset sales and increased taxes in the U.K., the company earned approximately $2.52 a share, compared with the $2.18 a share that constituted the consensus among the analysts who follow the company.

Conoco, the third largest member of the U.S.-based Big Oil contingent is in the process of jettisoning in the vicinity of $15 billion to $20 billion worth of its assets by the conclusion of next year. Through this juncture, about $8 billion of its assets have been unloaded, with up to another $2 billion expected to be sold during the fourth quarter.

During the third quarter, adjusted earnings from the company's upstream operation exceeded those of the third quarter of 2010, largely on the basis of higher commodities prices. Backing out the effects of the civil war in Libya, production for the most recent quarter was about 90,000 barrels of oil equivalent lower than in the year-ago quarter. On a per-share basis, however, production increased about 2% above the third quarter of 2010.

The company's downstream operations generated adjusted earnings that were $928 million higher than in the same quarter of 2010. Conoco is proceeding with plans to spin off its refining operations in the first half of 2012. Such a trimming down will permit the company to expand its worldwide concentration on locating and producing oil and natural gas.

Foolish bottom line
We will shortly describe the quarterly results of Royal Dutch Shell (NYSE: RDS-B), Chevron (NYSE: CVX), Petrobras (NYSE: PBR), and Total (NYSE: TOT). In the meantime, however, I continue to believe that its geographic spread and technological leadership render ExxonMobil a company that should be included among the Watchlist that all Foolish investors should maintain.