Exxon quarterly profit falls, output tumbles

Thu Nov 1, 2012 12:25pm EDT

A view of the Exxon Mobil refinery in Baytown, Texas September 15, 2008. REUTERS/Jessica Rinaldi

A view of the Exxon Mobil refinery in Baytown, Texas September 15, 2008.

Credit: Reuters/Jessica Rinaldi

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(Reuters) - Exxon Mobil Corp, the world's largest publicly traded oil company, reported a quarterly profit on Thursday that topped expectations, as higher margins from its refining arm countered a 7.5 percent decline in oil and gas output.

Exxon and other global oil producers are buying oil and gas assets in North America as they struggle to raise production in a sector where vast energy resources are tightly controlled by countries like Brazil.

Earlier this month, Exxon agreed to buy Celtic Exploration Ltd for $2.64 billion. That deal will give Exxon access to some of the most promising shale oil and gas region in Western Canada.

And in September, Exxon said it planned to buy 196,000 acres in the Bakken shales in North Dakota and Montana in a $1.6 billion deal.

"The (earnings) beat definitely came from the refining side of the business," said Brian Youngberg, energy company analyst at Edward Jones in Saint Louis. "The production decline was more than expected. It has been a recurring challenge for Exxon."

Refining margins have improved as companies benefit from processing cheaper grades of crude oil from Canada as well as shale basins like the Eagle Ford in south Texas.

Earnings from Exxon's global refining business more than doubled to $3.2 billion. The company's exploration and production business had a profit of $5.97 billion, down 29 percent.

Natural gas prices in the United States fell about 30 percent from a year-ago in the quarter as huge supplies weighed. Brent crude prices in the quarter were also declined, pinched by worry about global demand.

Those lower prices cut into Exxon's profitability.

The Irving, Texas company said its third-quarter earnings had fallen to $9.57 billion, or $2.09 per share, from $10.33 billion, or $2.13 per share, a year earlier.

Analysts on average had expected a profit of $1.95 per share, according to Thomson Reuters I/B/E/S.

Exxon's revenue fell 8 percent to $115.7 billion.

Oil and gas output declined 7.5 percent to 3.96 million barrels oil equivalent per day, Exxon said.

Analysts at Houston-based energy investment bank Simmons & Co had expected Exxon to report a production decline of 5 percent.

The company said it had bought back 58 million shares of its own stock for $5.1 billion in the third quarter.

Shares of Exxon were up 10 cents at $91.27 in mid-morning trade on the New York Stock Exchange trading.

(Inserts dropped word "percent" in first paragraph)

(Additional reporting Ernest Scheyder in New York; Editing by Lisa Von Ahn, Gerald E. McCormick and Leslie Gevirtz)

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Comments (3)
HDSS wrote:
Amazing…what would happen if the US remove the Future Trading floor and move back to the ‘Supply and Demand’ model of the past? Would gasoline drop to its real pricing of 1.64 – 1.85 dollars per gallon? That the Obama staff would open the world’s largest known reserves from Alaska to the midwest to pump more oil into this region and finally turn off the foreign oil imnports? Exxon would not be near the top ten profitable business in America. LOL

Nov 01, 2012 9:02am EDT  --  Report as abuse
apk44 wrote:
raise gas up to 5.00 that should fix things ..for the gas companies

Nov 01, 2012 9:14am EDT  --  Report as abuse
americanguy wrote:
Output dropped because there is a world glut of oil and gasoline, and they can’t store the stuff, so they dropped output themselves. That’s the real reason. While this story is not a lie, it is kind of a half truth. Maybe one day our government will enforce the laws it has against RICO, price fixing, and price manipulation.
Remember where gas prices were 4 years ago. US gas prices were at average 1.99 a gallon. (Sept. 15, 2008—The barrel continues to drop below $100 a barrel for the first time in six … 3, 2008—U.S. Gas prices drop to $1.72 a gallon.”
“Jul 16, 2012 – China’s implied oil demand fell 0.4 percent in June from a year earlier, contracting for the second time in three months as refineries scaled back …”
“(Reuters) August 2012 – U.S. crude oil demand fell to its lowest in nearly four years in July as the middling U.S. economy and fuel efficiency gains weighed on consumption, the American Petroleum Institute said on Friday.”

Nov 01, 2012 10:35am EDT  --  Report as abuse
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