By Ernest Scheyder and Terry Wade

HOUSTON, Oct 28 (Reuters) - Exxon Mobil Corp, whose oil field assets are being investigated by the U.S. government, warned on Friday it may need to slash proved reserves on its books by nearly 20 percent if oil prices stay low for the rest of 2016.

The news pushed the company's share price down 2.3 percent to $84.93 in afternoon trading, on an otherwise upbeat day that saw Exxon and Chevron post quarterly profits that beat Wall Street expectations.

Results were helped by cost cutting, though refining margins narrowed from previous quarters.

Exxon, as part of its reserves announcement, said it would perform an assessment of its major long-lived assets during its annual budgeting process, similar to one carried out in 2015.

"Quantities that could be required to be de-booked as proved reserves on an SEC basis amount to approximately 3.6 billion barrels of bitumen at Kearl, and about 1 billion oil-equivalent barrels in other North America operations," the company said in a statement.

The comments are significant because a more than 50 percent drop in oil prices since mid-2014 to near $50 a barrel now has forced many integrated oil producers around the world to write down the value of their assets. Exxon is essentially the only major producer that has held off doing so thus far.

Despite the warning, Exxon said any write-downs to reserves it can profitably extract would not affect the outlook for future production volumes.

Exxon has repeatedly said it uses very low price assumptions when booking reserves, though it acknowledged in September that the U.S. Securities and Exchange Commission is investigating how it has valued its reserves in the wake of low prices.

The long-term inflation-adjusted price of oil since 1946 is around $40 a barrel.

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.

REFINING

The refining earnings shift at Chevron and Exxon could mark a transition in the oil industry as companies have adjusted their operations to lower prices and are indeed expecting prices to stay in their current range around $50 per barrel through the end of the decade.<0#CLCAL:>

Refining, which kept the oil industry afloat the past three years as crude prices fell sharply, has been hammered so far in 2016 by an oversupplied fuel market that hurt what had been lucrative margins. A slight uptick in crude prices during the third quarter also ate into industry margins.

The pain was especially pronounced at Chevron, where earnings from its downstream division, which refines fuel, fell more than 50 percent to $1.06 billion.

The profit drop comes at a time when Chevron is investing $1 billion to renovate its Richmond, Calif., refinery.

But in the company's upstream division, which pumps oil and natural gas, earnings jumped more than sevenfold to $454 million.

Chevron executives said the improvement was due to a cheaper tax bill as well as cost cuts, both of which helped offset lower prices. Also, Chevron did not try to boost production early in the quarter as prices marched slowly higher, echoing an industry trend to focus on cost.

"While growing production is important, we are focused on expanding margins by increasing efficiencies in our operations," Bruce Niemeyer, head of Chevron's mid-continent division, told investors on Friday.

For all of Chevron, the company posted a drop in quarterly profit that still beat expectations. It said earlier this week it would raise its quarterly dividend by a penny.

The dividend boost and Chevron's earnings beat helped push the stock up 3.6 percent to $103.51 in afternoon trading.

At Exxon, earnings from pumping oil and natural gas fell 54 percent to $620 million, as low commodity prices took a bigger toll at the company than they did at Chevron.

Earnings at Exxon's refining division, to which the company owed much of its financial stability in recent years, fell 40 percent to $1.2 billion, harmed by many of the same industry factors that dented Chevron's refining arm.

Exxon's chemical division was a bright spot for the company this quarter, with earnings falling only 4 percent to $1.2 billion due to larger sales volumes. (Reporting by Ernest Scheyder and Terry Wade; Editing by Chizu Nomiyama)