IRVING, Texas -- Exxon Mobil Corp. cut spending on oil exploration, helping drive earnings up to $3.35 billion in the second quarter, doubling its historically low profit of a year ago.
Profit rose for both production of oil and gas and Exxon's refining business. The results, however, still fell short of Wall Street expectations.
West Texas Intermediate crude for September delivery rose 67 cents to settle Friday at $49.71 a barrel on the New York Mercantile Exchange. Oil prices are up about 18 percent from a year ago. That's good for the finances of Exxon and other oil and gas companies.
The Irving, Texas-based oil giant said Friday that it earned 78 cents per share, which was not adjusted for one-time items such as asset sales. Nine analysts surveyed by Zacks Investment Research expected 83 cents per share on average.
Revenue rose 9 percent to $62.88 billion, beating the $61.16 billion forecast of four analysts in the Zacks survey.
"Tough quarter" for Exxon, wrote Guy Baber, an analyst at Piper Jaffray & Co., in a note to clients. With Exxon, most of the underperformance was "concentrated in the upstream segment, and weaker-than-expected operating cash flow generation. Production was also a bit disappointing vs. our model."
Exxon said higher prices it got for oil and gas helped offset a 1 percent decline in production of oil and gas.
Exxon's exploration and production side earned $1.2 billion, an increase of $890 million from a year ago, despite a narrow loss in U.S. production. That profit matched the amount that Exxon cut from capital and exploration, a 24 percent reduction from a year earlier.
The company posted a $1.4 billion profit from refining and selling petroleum products, up $560 million from a year earlier on higher margins.
Chairman and Chief Executive Officer Darren Woods said in a statement that the results were driven by higher commodity prices and "a continued focus on operations and business fundamentals."
While cutting exploration spending, Exxon is pushing ahead with drilling off the coast of Guyana in South America, with production expected to begin by 2020. The company has said that test wells hit high-quality oil reservoirs.
At home, the company is under investigation by state officials, who accuse it of misleading the public about oil's role in climate change. In May, shareholders voted to ask the company for a report on how climate change will affect the oil and gas business.
Last week the Treasury Department fined Exxon for violating sanctions against Russia during Secretary of State Rex Tillerson's tenure as CEO by signing contracts with a Russian oil mogul who was on a U.S. blacklist. Exxon went to court to challenge the fine.
Exxon shares fell $1.23, or 1.5 percent, to close Friday at $79.60.
Chevron, the second-largest U.S. driller behind Exxon, swung to a second-quarter profit of $1.45 billion, or 77 cents a share, compared to a loss of $1.47 billion, or 78 cents, a year earlier, the company said Friday in a statement. The 77 cents a share was a dime less than the average of 21 estimates relying on generally accepted accounting principles. Excluding noncash costs related to unidentified asset impairments and other items, the per-share result was 91 cents, on an adjusted basis. Oil and gas production surged 10 percent, the most in more than seven years.
'We're delivering higher production with lower capital and operating expenditures," Chief Executive Officer John Watson said in the statement.
Watson, in his eighth year at the helm, has resorted to job cuts, project cancellations and billions of dollars in asset sales to cope with an industry downturn that erased $50 billion from Chevron's market capitalization. While the company reported higher-than-expected output from wells in the quarter, turning its upstream unit from a year-ago loss to profitability, returns on refining crude into fuels shrank.
Chevron shares rose $2.01, or 1.9 percent, to close Friday at $108.12.
Information for this article was contributed by staff members of The Associated Press; and by Joe Carroll and Jessica Summers of Bloomberg News.
Business on 07/29/2017