Exxon Mobil Profit Tumbles 58%-- 2nd Update

By Chelsey Dulaney 

Exxon Mobil Corp., the world's largest publicly-traded oil company, said fourth-quarter profit tumbled 58%, to the lowest level since 2002, as the worst oil crash in decades hampered drilling operations.

The Irving, Texas company disclosed plans to put its share buyback plan on hold to preserve cash, an unexpected step after the company spent $3 billion in 2015 to reduce its share count.

Rex Tillerson, chief executive, said the company would slash spending by 25% this year. That is much more than some analysts expected, said Guy Baber, an analyst at Simmons & Company International.

Exxon joins BP PLC and Chevron Corp. in reporting losses or sharply lower profits for the fourth-quarter and full-year of 2015. BP Tuesday announced a $5.2 billion loss for last year, an amount comparable to 2010 when it lost billions after the Deepwater Horizon oil spill in the Gulf of Mexico. The London-based oil giant plans to cut 7,000 jobs by 2017. Chevron Corp. of San Ramon, Calif. said last week it would cut spending by $9 billion and lay off 4,000 workers this year after reporting a surprise fourth-quarter loss of more than half a billion dollars.

Investors took the diminished profits or losses as a sign that the oil rout has battered even the biggest oil companies, which have business models that were more insulated against price crashes in the past. Exxon shares fell 2.5% to $74.38, largely in tandem with crude as U.S. oil prices dropped again to near $30 a barrel. BP's stock lost almost 9% of its value in morning trade.

Mr. Tillerson said the results reflect the challenging environment of low oil and natural gas prices and a supply glut of crude that's built up around the world.

Like many peers that tap shale fields from Texas to North Dakota, Exxon's U.S. production unit lost $538 million in the period, compared with a profit of $1.5 billion in the last three months of 2014. Around the world, profits from exploring for and producing oil and gas plunged to $857 million, down from $5.47 billion in the prior-year period.

One bright spot: Exxon's divisions that create chemicals and turn oil into fuels such as gasoline improved. Profits from refineries and chemical plants more than doubled to $1.35 billion.

The company also pumped more oil and gas in the fourth quarter than in the corresponding period of 2014. Output rose 4.8% from 2014 to the equivalent of 4.25 million barrels of oil and natural gas a day.

Exxon beat analyst expectations, booking a per-share profit that was better than the 63 cents a share in earnings Wall Street had expected. The company earned $2.78 billion, or 67 cents a share, down from $6.57 billion, or $1.56 a share, a year earlier.

This year the oil giant has earmarked $23.2 billion for capital spending, a 40% reduction since 2014 when oil was trading over $100 a barrel.

In the current quarter, Exxon will buy back shares to offset dilution of its stock, but the company doesn't plan to make any repurchases to reduce shares outstanding. In the fourth quarter, the company bought back $500 million in stock for that purpose.

Exxon last year began scaling back its quarterly buybacks, which used to total about $3 billion every 90 days. Stock repurchases are popular with investors because they shrink the number of shares available and tend to make them more valuable.

Write to Bradley Olson at [e-mail] and Chelsey Dulaney at [e-mail]

(END) Dow Jones Newswires

February 02, 2016 11:29 ET (16:29 GMT)

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