Exxon Mobil Earnings Cut In Half Amid Lower Crude Prices--3rd Update

By Chelsey Dulaney 

Exxon Mobil Corp., the biggest and richest U.S. oil company, reported its lowest earnings in six years on Friday as bigger profits from refining couldn't offset plunging earnings in its exploration and production business.

Shares of Exxon Mobil tumbled as much as 5% on Friday to their lowest level since mid-2012. Recently, shares were down 4.7% to $79.11.

Exxon also said it would again scale back its share buybacks during the current quarter to a level of $500 million. Exxon bought back $1 billion in shares in the second quarter, which was down from its previous level of about $3 billion in buybacks each quarter. Stock repurchases are popular with investors because they shrink the number of shares available to the public and tend to make them more valuable.

In a news release, Chief Executive Rex Tillerson said results in the latest quarter "reflect the disparate impacts of the current commodity price environment."

Profit in the exploration and production, or upstream, business plunged 74% to $2.03 billion in the latest quarter, as its U.S. division swung to a loss.

The average price Exxon realized in the U.S. for crude fell to $54.06 a barrel from $98.55 a barrel a year earlier. For natural gas, average U.S. price fell to $2.31 per thousand cubic feet from $4.46 a year ago.

Exxon's production improved 3.6% to 4 million oil-equivalent barrels a day.

But the Irving, Texas, company was again been helped by fatter profits in its downstream and chemicals divisions, which are being boosted by low prices for oil and gas. In the latest quarter, Exxon made more from those divisions than from pumping oil and gas for the first time since at least 2000.

Refining and marketing earnings, or downstream, more than doubled to $1.51 billion from $711 million a year earlier. Exxon cited stronger margins for the increases. The chemical segment earnings improved 48% to $1.25 billion as lower feedstock costs boosted margins.

In all, Exxon reported a profit of $4.19 billion, or $1 a share, down from $8.78 billion, or $2.05 a share, a year earlier. Revenue fell 33% to $74.11 billion.

Analysts polled by Thomson Reuters expected a per-share profit of $1.11 and revenue of $72.48 billion.

Capital spending fell to $8.26 billion from $9.8 billion a year earlier.

Exxon has moved to conserve cash in a sign that it doesn't expect a quick rebound in crude prices. The company has announced it would slash its capital spending by this year and reduce its stock buybacks in the near term.

Chevron Corp., the second-biggest U.S. oil company in market value behind Exxon, on Friday said its profit tumbled to its lowest level since 2002 in the second quarter as the oil company took more than $2 billion in impairments and charges to suspend projects amid lower crude-oil prices.

Shares of Chevron fell 4.6% to $88.75 a share in morning trading.

Write to Chelsey Dulaney at [e-mail]

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