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Exxon Profit Beats Expectations on Refining, Output

Thursday, 30 Apr 2015 08:35 AM

Exxon earned $4.94 billion in the first quarter, a huge sum but only about half of what the company made last year. Lower oil prices depleted both Exxon's top and bottom lines.

It was the lowest first-quarter profit for Exxon Mobil Corp. in six years, although the results still beat Wall Street expectations.

When world oil prices collapsed from about $100 a barrel to less than $50 over the second half of last year, it made some drilling projects unprofitable. Exxon is beginning to cut costs — the company said last month that it would trim capital spending this year by 12 percent, to $34 billion, and the CEO expects relatively low oil prices to stick around.

First-quarter profit also fell at BP PLC and France's Total SA. Royal Dutch Shell reported an increase because last year's results were weighed down by one-time charges.

Exxon's production in the first quarter rose 2 percent compared with a year ago, as energy flowed from new projects from the U.S. to Papua New Guinea, so the profit plunge was entirely from lower prices.

Exxon lost money on exploration and production in the U.S. — it earned $1.2 billion from that drilling a year ago. Production outside the U.S. remained profitable, but the earnings fell by more than half. Refining and marketing earnings rose.

The profit worked out to $1.17 per share, down from $2.10 per share a year earlier. The average estimate among 11 analysts surveyed by Zacks Investment Research was 80 cents per share.

Revenue fell 36 percent, to $67.62 billion.

With the collapse in prices, outfits that help drill have laid off thousands of workers. The oil companies are adjusting their techniques to pull even more oil and gas out of wells, some of which were drilled just a few years ago.

Fundamental changes could be necessary because industry officials don't expect energy prices to surge anytime soon. Exxon CEO Rex Tillerson said at an industry conference last week that low prices are "going to be with us for a while."

The slump in oil prices has hurt the stock market valuation of some companies, and could add to pressure from Wall Street for Exxon to boost production with an acquisition that would match Shell's announced purchase of BG Group PLC.

Exxon continues to return money to shareholders. On Wednesday, it announced a 6 percent increase in its dividend that will cost around $168 million per quarter.

Tillerson called the diminished results solid. "Regardless of current market conditions, we remain focused on business fundamentals and competitive advantages that create long term shareholder value," he said in a press release statement.

Shares of the Irving-based company were up 15 cents to $88.02 in morning trading. The shares were down 5 percent in 2015 at Wednesday's closing price.

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Exxon Mobil Corp. on Thursday reported a 46 percent decline in quarterly earnings as a steep drop in crude prices cut into profits at the world's largest publicly traded oil company.
exxon, oil, earnings, profit
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2015-35-30
Thursday, 30 Apr 2015 08:35 AM
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