Exxon Mobil earned $4.94 billion in the first quarter, a huge sum but only about half of what it made last year as lower oil prices depleted both the top and the bottom lines.
It was the lowest first-quarter profit for Exxon Mobil in six years, although it beat Wall Street expectations.
When world oil prices collapsed from about $100 a barrel to less than $50 in 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 and France’s Total. Royal Dutch Shell reported an increase because last year’s results were weighed down by one-time charges.
Exxon’s first-quarter production rose 2 percent from a year ago as energy flowed from new projects from the U.S. to Papua New Guinea, so the profit plunge was almost entirely from lower prices.
Exxon, which owns Fort Worth-based XTO Energy, lost money on exploration and production in the U.S., compared with a $1.2 billion profit 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 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. Companies are adjusting their techniques to pull even more oil and gas from 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.”
Analysts have pressed Exxon executives for years to increase production. The company’s huge size, geographic and business diversity, conservative management and high earnings have favored a go-slow approach.
But in the first quarter, overall production rose 2 percent despite a dip in natural gas output.
“This company has been growth-challenged for quite some time,” said Brian Youngberg, an analyst for Edward Jones. “To see some production growth and exceeding volume expectations was a good sign.”
The slump in oil prices has hurt the stock market valuation of some companies and could add to Wall Street pressure for Exxon to boost production with an acquisition that would match Shell’s announced purchase of BG Group.
Exxon, however, didn’t get the boost it expected from its last big acquisition, the 2010 purchase of natural gas producer XTO, because of stubbornly low gas prices.
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.
Exxon shares (ticker: XOM) lost 50 cents to close at $87.37.