Exxon profit up 41 percent, misses Street
Exxon Mobil Corp reported a higher quarterly profit that missed Wall Street estimates as maintenance slowed its international refining and production, and its shares closed down 2 percent.
Some of Exxon's refineries in Asia-Pacific and its international oil and natural gas production -- including from its liquefied natural gas project in Qatar -- were affected by downtime, the world's largest publicly traded oil company said."The second quarter was a big maintenance and turnaround quarter for us in general across the regions," David Rosenthal, an investor relations executive, told analysts on a conference call.
Now, the bulk of the company's maintenance work is finished, he added. "The culprit was downstream, more specifically international downstream," said Pavel Molchanov, an oil analyst at Raymond James. Exxon's refining operations had a profit of $1.36 billion in the quarter. Molchanov expected a profit of $2 billion for the unit. Even with the earnings miss, Exxon's profit was the highest in nearly three years, lifted by a jump in crude oil and higher natural gas prices.Improvement in the world's economies has driven up demand for fuel, especially in developing countries such as China. That demand and other factors helped push WTI crude prices up 32 percent from a year-earlier in the second quarter to an average of about $102 per barrel.
Rivals ConocoPhillips said earlier this month it plans to spin off its refining business into a stand-alone company, while BP Plc has some of its plants for sale. Exxon's Rosenthal told analysts, however, that his company is sticking with the integrated model, keeping the refining and chemicals business because they deliver value and competitive advantage.
Exxon's second-quarter profit rose 41 percent to $10.68 billion, or $2.18 per share, up from $7.56 billion, or $1.60 per share a year ago.Wall Street analysts on average expected Exxon to report a profit of $2.33 per share, according to data compiled by Thomson Reuters I/B/E/S.Oil and gas output rose to 4.4 million barrels oil equivalent per day, up 10 percent from 4 million barrels oil equivalent per day a year earlier. Gains were fueled by the company's projects in Qatar and natural gas. "It looks like the international businesses were a little bit short, but they may blame that on foreign exchange," said Argus oil analyst Phil Weiss. "Production was also a little light."
A number of Exxon's peers, including ConocoPhillips reported lower production this quarter, but Exxon's 2010 purchase of XTO Energy helped boost its output. Profit in the company's exploration and production unit rose 60 percent to $8.54 billion. Chemicals income fell 3.4 percent to $1.32 billion. Exxon said it spent a record $10.3 billion in the quarter. That figure included a $1.7 billion purchase of 317,000 acres in the Marcellus Shale in June.Exxon's revenue rose to $125.49 billion from $92.47 billion. Exxon shares closed $1.85 lower at $81.46 on the New York Stock Exchange. That compares with a nearly flat CBOE index of oil companies.
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