Exxon Mobil and Royal Dutch Shell on Thursday reported sharply lower quarterly earnings, as improved profits from marketing and refining were offset by the impact of the plunge in oil prices since last summer.
The results were somewhat better than expected by analysts, and executives expressed optimism about their companies' futures.
"Regardless of current market conditions, we remain focused on business fundamentals and competitive advantages that create long-term shareholder value," Rex W. Tillerson, Exxon Mobil's chief executive, said in a statement.
Exxon Mobil, the largest American oil company, reported a 46 percent decline in earnings: $ 4.9 billion for the first quarter, compared with $ 9.1 billion in the year-ago quarter. Revenue fell to $ 67.6 billion, from $ 106.3 billion, a 36 percent decline.
In a sign of strength, Exxon, which is based in Irving, Tex., cut capital and exploration expenses by almost 10 percent to $ 7.7 billion, but oil production rose anyway by more than 2 percent to 2.3 million barrels a day, or about 3 percent of global daily production. The company benefited from new production in the Gulf of Mexico, Angola and Russia.
Oil Prices' 'Spectrum of Pain'
As the price of crude oil fluctuates, why some countries are faring much better than others.
Photo by Carlos Garcia Rawlins/Reuters.
The company announced a 5.8 percent increase in its stock dividend to 73 cents a share this week.
Royal Dutch Shell's profit, excluding inventory changes and one-time items, was $ 3.2 billion, compared with $ 7.3 billion in the same period a year earlier.
The principal reason for the decline in earnings at Exxon Mobil and Royal Dutch Shell, Europe's largest oil company, was the 50 percent decline in oil prices from last summer. Natural gas prices also fell in the United States and abroad. But both companies benefited from strong refining earnings driven by lower feedstock costs and improved global demand.
Oil Prices: What's Behind the Drop? Simple Economics
"Refining saved the day for Big Oil," said Fadel Gheit, a senior oil company analyst at Oppenheimer & Company.
Oil prices have increased about 20 percent in recent weeks, in part because of turmoil in Yemen, so earnings should improve in the second quarter. But oil prices could swoon again, at least for a time. United States oil inventories continue to mount, reflecting a domestic glut. And companies are drilling wells without completing them, waiting for prices to rise. That means that as soon as pumping more oil is profitable, there could be a flood of new crude on the market.
In a conference call, Jeffrey J. Woodbury, Exxon Mobil's vice president for investor relations, acknowledged that the company was "very alert" to opportunities for acquisitions now that low oil prices have brought down asset values, particularly in American oil shale fields.
Related Coverage of Oil and Its Economic Impact
No comments:
Post a Comment