Exxon Mobil Posts Smallest Profit Since 1999 Merger--2nd Update
April 29 2016 - 10:02AM
Dow Jones News
By Bradley Olson and Anne Steele
Exxon Mobil Corp., the world's largest publicly traded oil
company, saw its profit plunge 63% to the lowest level since 1999,
a year when it nearly doubled in size by acquiring rival Mobil in
an $80 billion deal.
The sharp decline came amid a loss from its business producing
oil and natural gas, one that largely came from flagging operations
in U.S. shale basins. Profits from refining oil into products such
as gasoline and diesel, an area that had helped the company weather
the blow of lower prices in the past 18 months, also fell by almost
half.
Investors shrugged off the declines, reflecting optimism
stemming from a recent rally in crude prices as the company beat
analyst expectations. Shares of Exxon edged up 0.3% in premarket
trading to $88.25 and are up more than 10% this year.
"The market is already looking past these results since oil is
up almost 80% from earlier lows," said Brian Youngberg, an energy
analyst with Edward Jones. "The expectation was that earnings were
going to be really bad for the entire sector, but many companies
did better."
Chevron Corp., the second-largest U.S. oil company after Exxon,
reported a loss of $725 million, was wider than analysts expected.
Shares initially fell 1.6% in premarket trading to $100.74 after
the San Ramon, Calif.-based company reported its second-straight
quarterly loss.
Irving, Texas-based Exxon reported a profit of $1.81 billion, or
43 cents a share, down from $4.94 billion, or $1.17 a share, a year
earlier. Analysts polled by Thomson Reuters expected a per-share
profit of 31 cents. Revenue dropped 28% to $48.71 billion. Analysts
had forecast revenue declining to $48.14 billion.
Profit in the exploration and production, or upstream, business
swung to a $76 million loss. In the U.S., the upstream division
widened its loss to $832 million from $52 million a year
earlier.
Exxon also was hurt by declining profit in the downstream
division, which had previously been a boon amid lower prices for
oil and gas.
In the latest quarter, refining and marketing earnings, or
downstream, plunged 46% to $906 million. Exxon said weaker margins
decreased earnings by $860 million while volume and mix effects
increased earnings by $10 million.
Exxon said it cut its capital spending by 33% from the prior
year to $5.13 billion.
Exxon has moved to conserve cash as oil and gas prices languish
at their lowest levels in more than a decade.
Oil companies around the world have been battered by a price
crash that has left crude and natural gas stubbornly low. Producing
countries such as Saudi Arabia and major international oil
companies like Chevron have all continued to pump more fuel in the
face of the crisis -- a standoff that shows no signs of
abating.
Write to Bradley Olson at Bradley.Olson@wsj.com and Anne Steele
at Anne.Steele@wsj.com
(END) Dow Jones Newswires
April 29, 2016 09:47 ET (13:47 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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