Exxon Mobil posted the smallest profit since 1999 as Canadian wildfires shut some production and a global glut of oil spread to motor fuels, dragging down refinery margins.
Exxon’s second-quarter per-share result of 41 cents was 23 cents lower than the average of 20 estimates from analysts in a Bloomberg survey, the biggest miss in at least a decade. Exxon pumped the equivalent of 3.957 million barrels a day during the quarter, according to a statement on Friday, almost 3 percent below the 4.069-million average of four analyst estimates.
The world’s biggest oil explorer by market value said wildfires that ravaged the oil-sands region of western Canada as well as aging wells negatively impacted output. Exxon’s U.S. oil and natural gas wells lost an average of $5.6 million a day during the quarter. Net income declined to $1.7 billion from $4.19 billion, or $1 a share, a year earlier.
“While our financial results reflect a volatile industry environment, ExxonMobil remains focused on business fundamentals, cost discipline and advancing selective new investments across the value chain to extend our competitive advantage,” Rex W. Tillerson, chairman and chief executive officer, said in the statement.
Crude and natural gas prices dropped during the quarter compared to the same period last year in markets overburdened with supplies. With diesel and gasoline prices also slumping, Exxon and other major oil companies were deprived of the tempering effect oil refining typically provides during times of low crude prices. Margins from refining oil into fuels at U.S. refineries, based on futures prices, plunged 30 percent to a second-quarter average of $17.12 a barrel from $24.42 a year earlier.
The Exxon earnings statement was issued before the opening of regular U.S. stock trading. Shares slumped 2.4 percent as of 9:03 a.m. in New York.
Imperial Oil Ltd., Exxon’s Canadian affiliate, reported a loss of C$181 million ($138 million) in the second quarter from a profit a year earlier. The wildfires forced Imperial to shut in production, resulting in 60,000 barrels per day of lost output, the company said Friday.
Exxon followed Royal Dutch Shell and BP in posting lower profits as crude’s collapse continued to batter the industry. Shell reported its weakest quarterly result in 11 years and missed analysts’ estimates by more than $1 billion. BP said earnings tumbled 45 percent as poor refining margins exacerbated the impact of falling oil prices. Chevron later reported a $1.47 billion loss, its third straight.
Tillerson has been looking beyond the current downturn in energy markets to augment the company’s gas and oil portfolios from the South Pacific to Africa. The company also is plowing money into expanding refining and chemical complexes from Singapore to The Netherlands, betting that regional demand for products used in automobile tires, engine oil and plastics will grow over the long term.
Exxon agreed last week to pay as much as $3.6 billion for Papua New Guinea-focused gas explorer InterOil Corp. The final price is dependent on how much gas resides in InterOil’s Elk-Antelope field. Exxon already operates a $19 billion plant on the Papuan coast that liquefies gas for export on tankers.