Connect to share and comment

Exxon 2Q earnings fall on refining results, lower production; lowest profit since 1Q of 2010

PlacardEnlarge
(Globalpost/GlobalPost)

NEW YORK, N.Y. - Exxon Mobil reported its lowest quarterly profit in more than three years, as the oil and gas giant again struggled to boost production and results from its refining operations weakened.

Net income fell 57 per cent in the second quarter. Exxon said Thursday that it earned $6.86 billion, down from $15.9 billion in the year-ago quarter, which included a gain from the sale of a Japanese lubricants division and other assets. Even without those year-ago gains, Exxon's net income fell 19 per cent.

On a per-share basis Exxon earned $1.55. Analysts polled by FactSet expected Exxon to earn $1.90 per share.

Exxon shares fell $1.03 to close at $92.72, on a day when 24 of the 30 stocks in the Dow Jones industrial average moved higher.

Exxon's revenue fell 16 per cent in the second quarter to $106.47 billion from $127.36 billion a year earlier.

Exxon pointed a finger at the global economy, saying growth in the U.S. remained sluggish, the Chinese economy grew slower than expected and Europe remained weak. This helped lower the average price of Brent crude, a benchmark used to price international oil used by many U.S. refineries, by $10 per barrel compared with last year, Exxon said.

Exxon last posted earnings of less than $7 billion the first quarter of 2010, when oil prices averaged $79 per barrel. In this year's second quarter, prices averaged $94 per barrel.

Exxon's lower earnings reflect higher drilling costs at a time of flat or declining production, analysts said. Exxon said oil and gas production fell 1.9 per cent in the quarter, making it the ninth straight quarter production has declined compared with the year earlier.

Michael Kay, an analyst at S

Exxon's refining operations suffered in the second quarter because oil prices rose faster than wholesale gasoline prices. That narrowed the profit Exxon's refineries made because input costs rose faster than the prices received for the refined fuel.

These narrower margins reduced Exxon's refining profit by $510 million in the quarter, the company said. The company also manufactured less fuel because refineries were undergoing maintenance. That reduced earnings by $370 million.

"Refining stuck out the most, but they missed across the board," said Brian Youngberg, an analyst at Edward Jones.

David Rosenthal, vice-president of investor relations, said on a call with investors that the refinery maintenance outages were largely planned, and will allow Exxon to produce more fuels in the future.

"We're looking forward to the third quarter and getting these things again back up and running and producing product," he said.

Follow Jonathan Fahey on Twitter at http://twitter.com/JonathanFahey .

http://www.globalpost.com/dispatch/news/the-canadian-press/130801/exxon-2q-earnings-fall-weak-refining-results-lower-productio