Exxon Mobil profit tumbles as energy production tapers

(Reuters) - Exxon Mobil Corp , the world's largest publicly traded oil company by market value, posted lower-than-expected quarterly profit on Thursday as it failed to offset declining production with fresh reserves.

The problem has become endemic for multinational energy groups, with legacy oil and natural gas wells producing much less. That has fueled massive and risky exploration projects in an attempt to find new wells in remote regions.

Exxon's oil and natural gas production fell 1.8 percent from

year-ago levels, with natural gas production falling around the world and oil output slipping in half the regions where the company operates.

The results reflected a "mediocre quarter" for Exxon, especially in international production, Edward Jones analyst Brian Youngberg said.

"They've lost momentum already, reverting back to declining production and stagnant earnings," Youngberg said.

Exxon rival Royal Dutch Shell Plc said on Thursday the fourth quarter was its least profitable in five years as production slipped.

To assuage Wall Street, Exxon Chief Executive Officer Rex Tillerson promised in a statement that the company will ramp up exploration projects over the next two years to find newer reserves.

Meanwhile, smaller rivals, including Continental Resources Inc , have aggressively developed shale fields in the United States and elsewhere and proved more nimble than their behemoth siblings at finding new reserves. They've also been more attractive for shareholders.

For the fourth quarter, Exxon Mobil posted net income of $8.35 billion, or $1.91 per share, compared with $9.95 billion, or $2.20 per share, in the year-ago period.

Analysts expected earnings of $1.92 per share, according to Thomson Reuters I/B/E/S.

Earnings fell in all of the company's units, including refining, where weaker margins eroded profit.

Refiners make more money when the price difference between various types of crude oil is wide. When the gap narrows in the price difference between West Texas Intermediate crude oil and Light Louisiana Sweet crude oil, as it has in recent months, costs tend to rise.

Shares of Exxon fell 1.1 percent to $94.02 in premarket trading.

(Reporting by Ernest Scheyder in New York; Additional reporting by Anna Driver in Houston; Editing by Jeffrey Benkoe)

WhatsAppFacebookTwitterLinkedinBeloudBluesky