Exxon Mobil Profit, Revenue Slide Again -- 2nd Update
October 28 2016 - 9:44AM
Dow Jones News
By Bradley Olson and Anne Steele
Exxon Mobil Corp., which is under state and federal
investigation for how it accounts for the value of its oil and gas
wells, said Friday that it may be forced to recognize that as much
as 4.6 billion barrels of its reserves are no longer profitable to
produce.
The disclosure came as the oil producer reported a 38% decline
in quarterly profit.
The vast majority of Exxon's holdings under scrutiny are in
Canada's oil sands, an area that has been devastated by low prices
and environmental concerns as countries around the world seek to
reduce high-emitting forms of energy. The company also said it
plans to examine its assets to determine whether their value should
be written down.
The U.S. Securities and Exchange Commission and New York
Attorney General Eric Schneiderman are investigating the company
over its accounting practices and how the value of its future oil
and gas wells could be impacted by government action from climate
change.
The Exxon release came as the company reported third-quarter
earnings of $2.7 billion, a 38% decline from the same period last
year, as revenue slid more than expected amid the prolonged swoon
in oil prices.
Shares lost 1.7% premarket to $85.65 as the oil giant reported
its eighth straight quarter of year-over-year profit declines and
its ninth straight quarter of falling revenue.
Chief Executive Rex Tillerson said the operating environment
"remains challenging."
For the September quarter, Exxon, the largest U.S. oil company,
reported earnings fell to $2.65 billion, or 63 cents a share, from
$4.24 billion, or $1.01 a share, a year earlier. Analysts polled by
Thomson Reuters were looking for 58 cents a share.
Revenue slipped 13% to $58.68 billion, below analysts' forecast
for $63.85 billion.
Profit in the exploration and production, or upstream, business
fell 16% to $620 million. Volumes declined 3% from a year ago, due
to unplanned downtime, primarily in Nigeria, and new projects
unable to fully offset declines at existing properties, the company
said. In the U.S., the upstream division widened its loss to $477
million from $442 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, or
downstream, earnings were $1.2 billion, $804 million lower than in
the year-earlier period. Exxon said weaker margins, mostly in
refining, weighed on earnings by $1.6 billion while volume and mix
effects lifted earnings by $170 million.
Chemical earnings, meanwhile, were comparable with last year's
quarter, as higher maintenance costs, were offset by increased
specialty product sales.
Exxon slashed its capital and explorations spending 45% from a
year ago to $4.19 billion, bringing 2016's decline to 39%.
Write to Bradley Olson at Bradley.Olson@wsj.com and Anne Steele
at Anne.Steele@wsj.com
(END) Dow Jones Newswires
October 28, 2016 09:29 ET (13:29 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Exxon Mobil (NYSE:XOM)
Historical Stock Chart
From Mar 2024 to Apr 2024
Exxon Mobil (NYSE:XOM)
Historical Stock Chart
From Apr 2023 to Apr 2024