Exxon Mobil output, chemicals unit dampen earnings
By Anna Driver and Matt Daily
(Reuters) - Exxon Mobil Corp, the world's largest publicly traded oil company, posted lower-than-expected quarterly earnings on Thursday as its oil and gas output sagged and weak margins hurt its chemicals business.
Weaker global oil prices have weighed on earnings across the sector and Exxon also felt the sting of decade-low U.S. natural gas prices, especially in the United States where it is the largest producer of the fuel.
The company, which has pledged to spend a record $37 billion this year as it brings new projects on line in countries including Canada, Papua New Guinea and the Gulf of Mexico said oil and gas output fell 5.6 percent to 4.15 million barrels oil equivalent per day during the quarter.
"I think the big issue for the oil majors is they need high oil prices for all these exploration costs to pay off," said Michael Yoshikami, CEO of investment advisor Destination Wealth Management. "At $100 to $110 (per barrel), I think they are fine."
Exxon is hoping those new projects will boost its long-term oil and gas output, since Wall Street has long pointed to weak growth as a problem for the oil majors.
Analysts honed in on those figures again, but saw other issues as well.
"Production was a little light," Pavel Molchanov, analyst at Raymond James, said. "The real swing versus our estimates was chemicals."
Chemical demand in Europe was weak and commodity margins were pinched in Europe and Asia, David Rosenthal, an investor relations executive with Exxon, told investors on a conference call. Continued...