Exxon Mobil Corp. saw profit fall 60%, and Chevron reported a third-straight quarterly loss on Friday, capping off a week of lackluster results for the biggest Western oil companies and underscoring the continued challenge they face as crude prices fall to just above $40 a barrel.

Shares of both companies fell Friday morning, following a pattern that began when BP PLC and Royal Dutch Shell PLC earlier this week reported results that failed to meet investor expectations.

The decline in Exxon's net income to $1.7 billion, compared with $4.19 billion in the same three-month period a year earlier, far exceeded the fall in oil prices, which were down by about 26% over the same time.

Exxon, Chevron, BP, Shell and French oil major Total SA have cut spending by almost $50 billion since 2013 and slashed tens of thousands of jobs, but those efforts haven't been enough. Crude remains mired well below the level the companies have said they need to fund spending and dividends with cash from operations.

"The second-quarter results reflected lower oil prices and our ongoing adjustment to a lower oil price world," said Chevron Chairman and Chief Executive John Watson.

Exxon's profit was the lowest since 1999, a year when it nearly doubled in size by acquiring rival Mobil in an $80 billion deal. Shares recently fell 2.4% to $88.06 as the company posted its seventh straight quarter of year-over-year profit declines and eight straight quarters of falling revenue, according to FactSet data.

Revenue dropped 22% to $57.69 billion, below analysts' forecast for $60.64 billion. The company also continued to struggle in its U.S. drilling operations, losing $514 million compared with $47 million a year ago. During the quarter, Exxon slashed its capital and explorations spending 38% $5.16 billion.

Exxon Chairman and Chief Executive Rex Tillerson said the results "reflect a volatile industry environment."

The company continues to look for deal opportunities after its announcement of plans to buy InterOil Corp. for at least $2.5 billion earlier this month, the company's biggest acquisition since 2010. Any potential deal would have to measure up to Exxon's current investment opportunities, Jeff Woodbury, the company's vice president, told investors Friday.

"We've got to have confidence that we can bring value to it," he said.

Chevron's loss of $1.47 billion was its largest since 2001. Shares fell 1.4% to $100.35. Revenue slid 27% to $29.28 billion. Analysts had projected earnings of 32 cents a share on $28.54 billion in revenue.

Upstream operations, which include exploration and drilling, meanwhile, were hit even worse by the plunge in energy prices. In the U.S., the segment's loss deepened to $2.46 billion from $2.22 billion a year ago.

Mr. Watson said the upstream business recorded impairment and other charges on certain assets where revenue from expected oil and gas production is expected to be insufficient to recover costs.

Both companies saw profits decline markedly from their refining units, businesses that had helped make up for losses from producing oil and gas in the two years since oil prices began falling. 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.

Exxon's refining and marketing operations earnings were $825 million, down 45% from the year-earlier period. Chevron saw profits from that business unit plunged 57% to $1.28 billion.

Write to Bradley Olson at Bradley.Olson@wsj.com and Anne Steele at Anne.Steele@wsj.com

 

(END) Dow Jones Newswires

July 29, 2016 12:15 ET (16:15 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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