Exxon shares delivered another quarterly earnings miss on Friday as its refinery business was hit by “significant” maintenance costs and oil and gas production dipped by 7%.
While Exxon’s profits jumped 18% to nearly $4 billion in the second quarter, earnings per share of 92 cents fell well short of consensus estimates for $1.27 as the company undertook a heavier schedule of refinery maintenance than analysts expected.
On news of the earnings, Exxon’s stock price fell 3.2% to $81.54. “We had an enormous amount of planned maintenance in our business in the quarter, largely affecting our refining business,” Neil Chapman, ExxonMobil senior vice president, told CNBC.
Exxon undertook maintenance in Saudi Arabia, France, Texas, and Alberta, Canada during the quarter. The company also saw capital expenses and spending on exploration for oil and gas surge 69% to $6.6 billion, driven by investments in the Permian basin of West Texas, Brazil and Indonesia.
According to CNBC, “Exxon’s earnings have been steadily improving as oil prices continue to recover from a prolonged slump. However, the company’s profits have fallen short of Wall Street’s expectations in three of the last four quarters.”
The company’s oil and gas production has declined in eight of the past nine quarters even as the U.S. pumps more oil than ever before. “Exxon’s production [in the second quarter] was very, very weak. It’s been declining virtually nonstop. A 7% decline is really quite extreme,” Pavel Molchanov, an energy analyst at Raymond James, told CNN.
As CNN reports, Exxon “was late to capitalize on the shale revolution in its own backyard … The good news for Exxon is that it’s now investing heavily in shale — and it’s starting to see some results.”
Exxon said its production in the Permian basin and Bakken of North Dakota soared 30% last quarter.
Exxon’s investments “are positioning us well to meet the objectives we outlined in our long-term earnings growth plans,” CEO Darren Woods said in a news release. “The high quality of these resources, combined with our strengths in project execution and innovation, will generate strong value over time.”