Exxon’s profit dips 16 percent in fourth quarter

01/30/2014 9:42 AM

01/30/2014 9:43 AM

Irving-based Exxon Mobil said profits in last year’s fourth quarter fell 16 percent as its total production dipped and profits in its refining operations fell.

Exxon said it earned $8.35 billion, or $1.91 per share. That matched Wall Street’s forecast, but revenues fell 3.3 percent to $110.9 billion, short of expectations. A year earlier, Exxon earned $9.95 billion, or $2.20 per share.

Altogether, Exxon’s production fell 1.8 percent despite $42.5 billion in capital spending during the year, up 7 percent from a year ago. Production of crude oil rose marginally while natural gas output dipped about 5 percent in the year’s last three months.

Exxon’s shares (ticker: XOM) fell $1.12, or about 1 percent, to close at $93.99.

Also Thursday, Royal Dutch Shell said it earned $1.78 billion in the quarter, down 74 percent from a year earlier, as its production fell 5 percent and refining profits slipped.

During a conference call Thursday morning, financial analysts quizzed David Rosenthal, Exxon’s vice president of investor relations, about when the company’s spending would see a payoff in higher production. The company has several megaprojects, often with partners, that consume tens of billions of dollars before completion.

“We have been in a very capital-intensive mode,” Rosenthal said. The company looks for “the best opportunity to delivery long-term value” to its properties, he said, rather than having an annual goal of replacing reserves.

“The reserve additions will be the fallout of that” strategy, Rosenthal said.

In prepared remarks, Exxon CEO Rex Tillerson said projects in the works will produce profits and lift the business. Exxon has said it aims to increase total production 2 to 3 percent by 2017.

“Over the next two years, Exxon Mobil will start up numerous major projects delivering profitable new supplies of oil and natural gas while strengthening our refining and chemicals businesses,” Tillerson said.

In the fourth quarter the company averaged 2.235 million barrels of crude oil and natural gas liquids daily, up 32,000 barrels a day. Natural gas production declined by 654 million cubic feet a day, to 11.9 billion cubic feet.

Rosenthal summarized for investors the company’s efforts: A liquefied natural gas (LNG) project in Papua New Guinea, should begin deliveries by September; an oil sands project in Canada is proceeding, as is an oil project in Abu Dhabi. The company has moved to boost its production of crude oil and natural gas liquids, stepping up activities in West Texas’ Permian Basin, the Bakken Shale in North Dakota and the Woodford-Ardmore, he said.

“We’re bringing a lot of wells into sales every quarter,” Rosenthal said.

Exxon became the largest producer of U.S. natural gas with its 2010 acquisition of Fort Worth-based XTO Energy, a $41 billion deal that failed to produce immediate results due to stubbornly low gas prices. Rosenthal said the company is making “good progress” boosting drilling and operating efficiencies stemming from the XTO deal, although he stopped short of predicting when recent years’ steady declines in natural gas production would reverse.

“We know all these plays. When the market needs the gas, we’ll provide it,” he said.

For all of 2013, Exxon earned $32.6 billion on revenues of $438 billion. That compared to 2012’s earnings of $44.9 billion on revenues of $481 billion.

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