US oil giant Exxon Mobil reported another round of disappointing results on Friday, sending shares sharply lower at it moved to address rising criticism of its communications and operations.
The company’s share price fell 2.8 percent to $81.92 following the report, the third quarter in a row that has seen Wall Street punish the company for weak results.
“This quarter was a low point in terms of volumes in the upstream and downstream,” senior vice president Neil Chapman said on a conference call.
Chapman said some of the decline in oil and natural gas production was due to the sale of low-quality projects and made sense as a strategy to boost profitability”There are some plays that are more productive… easier to extract and at lower cost,” he said. “Volume is not our focus. Value is our focus.”
Related to this strategy, Exxon Mobil has shifted its emphasis in US shale investment from natural gas to oil because of better returns, he said.
Net income at Exxon Mobil jumped 18 percent in the second quarter to $4.0 billion compared to the same period a year earlier. That translated into 92 cents a share, well below the $1.27 expected by analysts.
Revenues rose 26.6 to $73.5 billion, the company announced.
Rival oil giant Chevron reported quarterly profits had more than doubled to $3.4 billion, while revenues had climbed 22.5 percent to $42.2 billion.
Investors rewarded the company, as Chevron shares climbed 1.6 percent to $125.97.
The results follow jumps in profits reported Thursday for Royal Dutch Shell and Total and illustrate the bounce from oil prices. US crude futures mostly traded in a range of $65 to $75 a barrel during the quarter, up from the $45 to $50 range in the year-ago period.
– Output and refining drop –
But Exxon Mobil reported another significant slide in oil and gas production, which fell seven percent to 3.6 million barrels a day of oil-equivalent.
The company said natural gas output was especially weak, diving 10 percent, due in part to downtime in Qatar, Australia and Papua New Guinea, which returned to normal output levels in April after a February earthquake hit production for more than a month.
Downtime in refining also affected results, due mostly to an unusually high number of planned refining outages at various plants and some unplanned maintenance following incidents at facilities in the first quarter, the company said.
Chaplan said the company was not happy with the downstream results but operations should return to normal in the second half of 2018.
“We’re all over it in terms of getting to our normal reliability performance,” Chaplan said.
– Transparency drive –
Chaplan’s appearance on Exxon Mobil’s conference marked a shift from the oil company’s longstanding practice of only staffing the call with the corporate secretary, a low-ranking executive compared with the practice at most large companies.
Chief executive Darren Woods has pledged more transparency to Wall Street, a point reiterated by Chapman on the call.
Exxon Mobil has also taken steps to address longstanding criticism by environmentalists of its policy on climate change, appointing climate scientist Susan Avery to its board of directors.
This year’s annual meeting was the first in more than a decade that Exxon Mobil did not face a shareholder vote on climate change on a proposal from critics after the company agreed to publish a report on the effect of climate policies on the company’s business.
But Andrew Logan, director of oil and gas programs at environmental nonprofit Ceres, said Exxon Mobil had still not allowed the group to meet with Avery and that Exxon Mobil had yet to articulate a viable plan for transitioning its business to one that is more climate-friendly.
“They’re moving in a positive direction, but still lagging behind peers and with a long way to go to sort of build trust,” he said.