Exxon Mobil Profit Tumbles 58%-- 2nd Update
February 02 2016 - 11:44AM
Dow Jones News
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 Bradley.Olson@wsj.com and Chelsey
Dulaney at Chelsey.Dulaney@wsj.com
(END) Dow Jones Newswires
February 02, 2016 11:29 ET (16:29 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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