Exxon Mobil profit slides as oil market extends slump
Oct 29 2016
(XOM) on Friday reported a 38 percent decline in profit for the third quarter from a year ago, reflecting lower crude oil and natural gas prices as well as weaker refining margins. On an earnings-per-share basis that came out to 63 cents versus $1.01 a year ago. Capital spending fell 45% and oil production fell 5.1% with natural gas production up 0.8%.
Chevron shares surged on its first profit after three successive quarters in the red, while Exxon retreated after it warned it may be forced to slash its economically viable petroleum reserves estimate by almost 20 percent due to low oil prices.
Meanwhile, the company's downstream, or refining and marketing earnings declined 39 percent from past year to $1.23 billion, reflecting weaker refining margins. The U.S. Securities and Exchange Commission is investigating how Exxon reports the value of oil and gas wells. However, it marked Chevron's first profitable quarter of 2016, and earnings beat Wall Street estimates.
Revenues at Exxon fell 12.9 percent to $58.7 billion and 12.2 percent at Chevron to $30.1 billion.
The 4.6 billion barrels Exxon mentioned as at risk on Friday represent 19 percent of the 24.8 billion oil-equivalent barrels on its books at the end of 2015. They are up 4 percent over the past year. Falling oil prices also ignited merger talks in the industry.
Chevron, America's second-largest oil company, returned to making money after three-straight quarters in the red.
Chemical earnings, meanwhile, were comparable with last year's quarter, as higher maintenance costs, were offset by increased specialty product sales.
XOM stock pays a quarterly dividend of 75 cents per share, or $3 annually. Meanwhile, the 10-year Treasury yield pays out just 1.85 percent.
Exxon's revenue slumped 13 percent to $58.68 billion, well below the analysts' prediction of $60.41 billion.
Rex Tillerson, Exxon's chief executive, said that the "operating environment remains challenging", although he and other oil executives recently have pointed to signs of improvement. Equitec Proprietary Markets added XOM to its portfolio by purchasing 1,225 company shares during the most recent quarter which is valued at $106,465.
If energy prices remain subdued well into 2017, however, that number will have to come down significantly - and Exxon's ugly streak of revenue and profit declines may continue indefinitely.