Exxon Mobil wrecked the oil industry’s perfect streak of upside profit surprises as the Irving-based oil giant disclosed second-quarter results that failed to live up to analyst forecasts.
Even as Exxon almost doubled net income to $3.35 billion, its per-share profit fell 7 cents short of estimates as oil and gas wells pumped fewer barrels than expected. The global oil explorer is on track to shave its full-year drilling budget by 26 percent as cash conservation took center stage amid a stagnant crude market.
“Tough quarter,” wrote Guy Baber, an analyst at Piper Jaffray & Co. in a note to clients. With Exxon, most of the underperformance was “concentrated in the upstream segment, and weaker-than-expected operating cash flow generation. Production was also a bit disappointing vs. our model.”
Exxon shares fell the most in seven months, down about 2 percent to $79.19 by early afternoon.
Exxon reported second-quarter net income of 78 cents a share, compared to $1.7 billion, or 41 cents, a year earlier, the company said in a statement. Revenue for the quarter rose 9 percent to $62.87 billion from $57.69 billion a year earlier.
Exxon’s oil and natural gas production dropped by almost 1 percent to the equivalent of 3.922 million barrels a day. Analysts had expected output to climb 1.5 percent to 4.015 million barrels. Additionally, profit from chemical plants fell 19 percent to $985 million as margins for the building blocks of plastics and other products shrank.
For Exxon’s Chief Executive Officer Darren Woods, the results add to a catalog of woes casting shadows over the company. Since succeeding Rex Tillerson on Jan. 1, Woods has been faced with accusations of sanctions violations by the U.S. government, state probes into whether Exxon hid data on climate change, and long-term challenges to growing oil output.
And like the rest of the petroleum industry, Exxon is adjusting to the deepest market crash in a generation with extensive budget cuts to conserve cash for dividends and only the most-essential drilling projects. In June, Exxon’s XTO Energy subsidiary announced that it will shift most of its operations from Fort Worth to an Exxon campus outside of Houston, affecting 1,600 jobs and putting six buildings up for sale.
The number of wells Exxon drilled worldwide plunged to 514 last year from 1,210 in 2015, according to company data. This year, the company is boosting drilling activity in the Permian Basin, following a $6 billion purchase of prime acreage from the Bass family.
This article includes material from Star-Telegram archives.