Texas Flag. Image: Klobetime, via Wikimedia Commons

With a GSP of just over $1.4 trillion, Texas' economy is the second largest in the nation. It's so large, in fact, that it outranks most of the world's countries -- excluding the United States, only 12 other countries have economies larger than Texas'.

It's no surprise, then, that so many of the world's most profitable firms reside in Texas. Below is a list of the top 10 most profitable firms in Texas ranked by their last reported annual net income.

Company Ticker Net Income (latest annual, in millions USD) Net Profit Margin (latest annual)
ExxonMobil (NYSE:XOM) 32,520 7.9%
ConocoPhillips (NYSE:COP) 6,869 12.37%
AT&T (NYSE:T) 6,224 4.7%
Phillips 66 (NYSE:PSX) 4,762 20% 
Valero Energy (NYSE:VLO) 3,630 2.77%
Halliburton (NYSE:HAL) 3,500 10.65%
Marathon Oil (NYSE:MRO) 3,046 27.05%
EOG Resources (NYSE:EOG) 2,915.50 16.16%
American Airlines (NASDAQ:AAL) 2,882 6.8%
Texas Instruments (NASDAQ:TXN) 2,821 21.54%

Energy dominates the list
Seven of the ten -- ExxonMobil, ConocoPhillips, Phillips 66, Valero Energy, Halliburton, Marathon Oil, and EGO Resources -- are energy companies primarily focused on oil and gas, which shouldn't be particularly surprising to anyone familiar with the Texan economy.

ExxonMobil tops the list, with an annual net income larger than almost all the other companies combined. ExxonMobil is among the most profitable firms in the world, a title that it has held continuously since its formation in 1999. In 2008, it reported the largest annual earnings in U.S. history, raking in just over $45 billion. That figure has yet to be beaten (though after two record quartersApple may come close to topping it later this year). The price of oil has fallen since then, and ExxonMobil's earnings have likewise declined, but it remains the most profitable firm in Texas.

ExxonMobil is the only integrated oil company on the list. The rest are focused on exploration and production or transportation and refining.

ConocoPhillips comes in a distant second, with Phillips 66, once one of its segments, at number four. ConocoPhillips, in an effort to become a pure-play oil and gas exploration and production company, completed the spin-off of its transportation and refinery assets in 2012, creating Phillips 66 in the process. Marathon Oil and EOG Resources also focus on exploration and production exclusively -- the former spun off its downstream assets in 2011. Like Phillips 66, Valero Energy, at number five, is another refining giant, headquartered in San Antonio.

Halliburton doesn't produce or refine oil, instead providing services to oil rigs and fields. It moved its corporate headquarters to Dubai in 2007, but still maintains a base of operations in Houston. If and when it completes its planned acquisition of rival Baker Hughes, it should jump up a few notches on this list, as Baker Hughes' last annual net income was just over $1.7 billion.

Technology and transportation
But there's more to the Texas economy than oil. AT&T, American Airlines, and Texas Instruments are all headquartered in the Dallas-Fort Worth area, and serve to highlight other important aspects of the Texas economy.

The airline industry is notorious for low profit margins and frequent bankruptcies. In fact, American Airlines was born out of a merger between the old bankrupt American Airlines and US Airways, and its net profit margin (6.8%) is the third lowest on this list. Yet the massive size and scope of its business results in significant total earnings.

Chip-maker Texas Instruments isn't the only technology firm in Texas, but it is the most profitable. It doesn't attract as much attention as the bigger, more consumer-facing technology firms, but it's been a consistent winner for shareholders, outperforming the S&P 500 over the last five years and returning a steady stream of dividends.

Telecom giant AT&T is a firm that should be familiar to most. It's a major player in the U.S. wireless industry, and a provider of high-speed Internet and television services. Notably, it's the most profitable company on the list that isn't involved in the oil industry.

Foolish thoughts
One thing from this list is clear: the Texas economy remains one of the largest and most vibrant in the world.

However, focusing strictly on a company's total net income, or even net profit margin, doesn't tell investors much. Owning shares of a highly profitable company is ideal, but there's no telling whether or not that profitability will continue in the future. Rather than use this list for buy or sell recommendations, investors interested in Texas should use it as a jumping off point for more research.