The shares of Exxon Mobil fell rapidly after the oil major reported quarterly profit that fell short of Wall Street’s expectations which added another disappointment to a string of earnings misses.
The Shares of the Irving, aa Texas-base company, were down more than 3 percent following the release.
While the profits of Exxon jumped from 18 percent to nearly $4 billion in the second quarter with earnings per share of 92 cents fell short of consensus estimates for $1.27 as the company undertook a heavier schedule of refinery maintenance than analysts expected.
According to the Key Metrics:
- Exxon Mobil earnings: 92 cents per share vs $1.27, according to Thomson Reuters
- Exxon Mobil Revenue: $73.50 billion vs $72.58 billion, according to Thomson Reuters
Exxon reported that the earnings of the company were primarily impacted by proper maintenance to support the integrity of its operations. The company was also affected due to extended recoveries from incidents in the prior quarter in Exxon’s downstream business, which focuses on refining crude oil into fuels like gasoline.
The senior vice president of Exxon, Neil Chapman, said that the company would have anticipated that earnings would have been up by more than $1 billion based on the boost from higher oil prices alone.
On Friday, Chapman told to the sources, “What the analysts would not have understood is we had an enormous amount of planned maintenance in our business in the quarter, largely affecting our refining business.”
The company posted a profit of $29 million in its international downstream business, down significantly from more than $1 billion a year ago. That weighed on profits in the global refining and marketing business, which was down by nearly a half to $724 million.
The company,however, undertook maintenance in Saudi Arabia; Port-Jér me, France; Baytown and Beaumont, Texas; and Alberta, Canada during the quarter.
Exxon also saw capital expenses and spending on exploration for oil and gas surged 69 percent to $6.6 billion in the quarter, driven by investments in the U.S. Permian basin, Brazil and Indonesia.
Exxon CEO and Chairman Darren Woods said in a statement, “Key projects in Guyana, the U.S. Permian Basin, Brazil, Mozambique and Papua New Guinea are positioning us well to meet the objectives we outlined in our long-term earnings growth plans. The high quality of these resources, combined with our strengths in project execution and innovation, will generate strong value over time.”
Profits in the company’s upstream business — which focuses on exploring for and developing oil — more than doubled to over $3 billion. Exxon’s total production fell by 7 percent from a year ago, due to falling natural gas output as it shifts its focus to oil in its U.S. shale assets and downtime in Qatar, Australia and Papua New Guinea.
Earnings for Exxon’s chemicals business were also down, falling to $890 million from $985 million a year ago, mostly due to weaker profit margins and higher costs.
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.