Exxon Mobil Profit Sinks

By Jennifer Hiller
Monday, August 5, 2019

Exxon Mobil Corp on Friday reported a 21% drop in quarterly profit, its third period in a row of weaker year-over-year results, as sharply higher oil production was offset by weaker refining and chemicals business.

Shares slipped 1.6 percent to $71.34 in early trading even though its 73 cents a share profit topped analysts' recently-lowered estimates. Analysts had reduced estimates to 66 cents per share after Exxon last month guided to lower year-over-year profit.

Exxon’s weaker earnings mirrored those at rivals Royal Dutch Shell, Equinor and Total SA. Shell posted its smallest profit in 30 months on weaker margins in chemicals, a loss in refining and tumbling natural gas prices. Total also cited weaker natural gas and refining operations for earnings that fell 19% from a year ago, while Equinor’s profit fell 27% on weaker oil and gas prices.

A bright spot for Exxon was oil and gas production rising 7% to 3.9 million barrels per day. Output in the top U.S. shale field, the Permian Basin, rose to 274,000 barrels of oil and gas per day, up 90% from a year ago.

"Three of our businesses were at lows in their cycles," said Neil Chapman, an Exxon senior vice president, adding the company historically invests during downturns for long-term returns.

The largest U.S. oil producer's net income fell to $3.13 billion, or 73 cents per share, in the second quarter, from $3.95 billion, or 92 cents per share, last year.

"Pretty weak quarter from them once again," said Jennifer Rowland, analyst with Edward Jones. After capital spending and dividends, Exxon had a free cash flow shortfall of $2.7 billion, similar to last quarter, Rowland added.

Exxon has made "limited progress on asset sales," though, analysts at Tudor, Pickering, Holt & Co said in a note to clients.

Exxon's Chapman said the company remains committed to selling $15 billion worth of assets through 2021.

The sales are needed to finance shareholder returns and major projects, but Exxon reported just $33 million in asset sales for the period, the lowest in at least 12 quarters. That follows proceeds from sales of $107 million in the first quarter.

Exxon's chemicals business fell to a loss in the United States for the first time in at least three years.

Lower margins and downtime drove refining profits down 88 percent over last year.

Exxon had been investing in major projects to boost production at a time when investors have been pressing oil companies to cut back on spending and increase returns to shareholders. The company said it has its best portfolio since the merger of Exxon and Mobil and does not "have to do anything" in terms of adding assets, Chapman said.

But in the Permian Basin, where the company holds 1.6 million acres and plans to use its size and scale as a competitive advantage, Chapma said it remains, "eyes wide open" about mergers and acquisitions.

Exxon boosted its estimated recoverable reserves in its offshore Guyana project to more than 6 billion barrels of oil equivalent, from 5.5 billion barrels.


(Reporting by Jennifer Hiller, Arathy S Nair; Editing by Bernard Orr, Nick Zieminski and Bernadette Baum)

Categories: Energy Industry News Production

Related Stories

Russia Targets 2028 for Sakhalin-3 Gas Project Start Up

Hanwha Ocean's Tidal Action Drillship Starts Maiden Job with Petrobras

PV Drilling Takes Ownership of Noble Corporation’s Stacked Jack-Up Rig

DOF Secures Moorings Hook-Up Job in Asia Pacific

Saipem Bags $1.5B Contract for Türkiye Largest Offshore Gas Field

Floating Offshore Wind Test Center Planned for Japan

Synergy Marine Group Completes Conversion of LNG Vessel to FSRU

CNOOC Brings Online Another Oil and Gas Project in South China Sea

China Starts Production at Major Oil Field in Bohai Sea

BP Expands Oil and Gas Scope in Azerbaijan with New Projects and Exploration Rights

Current News

Ventura Offshore’s Semi-Sub Rig to Keep Drilling for Eni in Asia

SBM Offshore, SLB to Optimize FPSO Performance Using AI

MODEC Ramps Up Hammerhead FPSO Work After ExxonMobil's Go-Ahead

Aesen, DOC JV Targets Subsea Cable Logistics

Timor Gap Boosts Stake in Finder Energy’s Timor-Leste Oil Fields

SBM Offshore Starts Construction of FSO for Trion Oil Field off Mexico

Russia Targets 2028 for Sakhalin-3 Gas Project Start Up

Seatrium Secures ABS Backing for Deepwater FPSO Design

MDL Secures Cable Laying Job in Asia Pacific

Hibiscus Petroleum Starts Drilling at Teal West Field off UK

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com