Exxon profit dips on natgas price weakness
NEW YORK (Reuters) - Exxon Mobil Corp. (XOM.N) posted a 1 percent drop in quarterly earnings on Thursday, missing expectations, as weaker natural gas prices and output offset higher margins from gasoline and chemicals.
The company's shares fell 4 percent to $89.08 on the New York Stock Exchange, weighing on the Dow Jones industrial average, of which it is a component.
Still, it was another enormous quarter for Exxon Mobil, the world's largest publicly-traded company, which has ridden the energy boom to previously unforeseen levels of profitability.
The company posted record earnings of $39.5 billion in 2006 and is just under pace to match that mark this year.
The company's production dipped 1 percent on an oil equivalent basis from last year due to field decline and lower European demand for natural gas.
Net income in the second quarter decreased to $10.26 billion, or $1.83 a share, from $10.36 billion, or $1.72 a share, last year. Earnings per share rose because the number of Exxon's outstanding shares dropped nearly 7 percent through the company's aggressive buyback program.
The average forecast of Wall Street analysts was $1.96 a share, according to Reuters Estimates.
"Europe had a warm winter, so European natural gas prices were down in the first half for Exxon, Royal Dutch Shell (RDSa.L) and other companies that sell into that market," said McDep Associates analyst Kurt Wulff.
"European natural gas has been one of their biggest areas of profits over the years, but the market's working in the other direction right now," he said.
Wulff noted that benchmark gas prices in Europe have turned upwards in recent weeks.
REFINING STILL STRONG
Earnings from its exploration and production segment fell over 16 percent to $5.95 billion.
The company's European natural gas prices fell nearly 14 percent to $6.67 per thousand cubic feet, while its price for other natural gas sales outside the U.S. fell 10 percent to $6 per thousand cubic feet.
Exxon's U.S. natural gas prices were up 8 percent from last year.
The company's profit from its downstream unit -- which includes its refineries and service stations -- rose 36 percent to $3.39 billion. Continued...
