Global Business

Exxon Earnings Double But Miss Estimates

Oil and natural gas production dropped by almost 1% in Q2, adding to the challenges facing new CEO Darren Woods.
Matthew HellerJuly 28, 2017

Exxon’s quarterly earnings doubled over the same period last year but missed analysts’ expectations due in part to a dip in oil and gas production.

The company reported second-quarter net income of $3.35 billion, or 78 cents a share, compared to $1.7 billion, or 41 cents, a year earlier. Revenue for the quarter rose 9% to $62.87 billion from $57.69 billion a year earlier.

Analysts had expected Exxon to report earnings of 84 cents a share on $61.9 billion.

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“These solid results across our businesses were driven by higher commodity prices and a continued focus on operations and business fundamentals,” CEO Darren W. Woods said in a news release. “Our job is to grow long-term value by investing in our integrated portfolio of opportunities that succeed regardless of market conditions.”

But on news of the earnings, Exxon shares fell as much as 2.6% to $78.76, the lowest price for the oil giant since February 2016.

“Tough quarter,” Guy Baber, an analyst at Piper Jaffray & Co., wrote in a note to clients, adding that most of the underperformance was “concentrated in the upstream segment, and weaker-than-expected operating cash flow generation.”

Exxon’s oil and natural gas production dropped by almost 1% to the equivalent of 3.922 million barrels a day in the second quarter. Analysts had expected output to climb 1.5% to 4.015 million barrels, based on the average estimate.

Additionally, profit from chemical plants fell 19% to $985 million as margins for the building blocks of plastics and other products shrank.

For Woods, “the results add to a catalog of woes casting shadows over the world’s biggest oil company by market value,” the Dallas Morning News said. “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.”

Exxon, though, is continuing to drive down costs amid a tough oil price environment, with spending on capital expenditures and exploration falling 24% to $3.9 billion in the second quarter.