Exxon Mobil Profit Falls to a New Low--2nd Update
July 29 2016 - 10:21AM
Dow Jones News
By Anne Steele
Exxon Mobil Corp. said its quarterly profit dropped 60%, again
plumbing a new low since the 1999 merger of Exxon and Mobil, as the
oil giant remains racked by low energy prices.
Shares slipped 2.4% to $88.06 as results came in sharply below
expectations. The company has now posted seven straight quarters of
year-over-year profit declines and eight straight quarters of
falling revenue, according to FactSet data.
Chief Executive Rex Tillerson said the results "reflect a
volatile industry environment" and that the company "remains
focused on business fundamentals, cost discipline and advancing
selective new investments."
For the June quarter, Exxon, the largest U.S. oil company,
reported a profit of $1.7 billion, or 41 cents a share, down from
$4.19 billion, or $1 a share, a year earlier. Analysts polled by
Thomson Reuters were looking for 64 cents a share.
Revenue dropped 22% to $57.69 billion, below analysts' forecast
for $60.64 billion.
In the previous quarter, Exxon's profit had plunged to the
lowest level since 1999, a year when it nearly doubled in size by
acquiring rival Mobil in an $80 billion deal. Investors shrugged
off the decline, reflecting optimism stemming from a recent rally
in crude prices. Friday's results represent a new low since the
merger.
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, or
downstream, earnings were $825 million down 45% from the
year-earlier period. Exxon said weaker margins decreased earnings
by $850 million while volume and mix effects increased earnings by
$130 million.
Vast new supplies of gasoline around the world, combined with
the overproduction of oil, has sent crude prices sliding.
Refineries have been on a buying spree since crude-oil prices began
their descent two years ago, giving them cheap feedstock to make
gasoline, diesel and other fuels. But while demand for gasoline has
been strong, particularly in the U.S., consumption hasn't been
enough to mop up all the fuel spilling out of refineries.
Profit in the exploration and production, or upstream, business
plunged by 85% to $294 million. In the U.S., the upstream division
widened its loss to $514 million from $47 million a year
earlier.
During the quarter, Exxon slashed its capital and explorations
spending 38% from a year ago $5.16 billion.
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 Corp. have all continued to pump more fuel
in the face of the crisis -- a standoff that shows no signs of
abating.
On Friday, Chevron, the No. 2 energy company in the U.S. by
revenue, swung to a loss in the latest quarter -- its third
straight period in the red -- as depressed prices continued to drag
results, though the company's revenue decline was less than
anticipated.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
July 29, 2016 10:06 ET (14:06 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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