July 28, 2017 / 6:09 PM / 25 days ago

Exxon Mobil profit disappoints Wall Street, Chevron shines

FILE PHOTO: The logo of Chevron Corp is seen in its booth at Gastech, the world's biggest expo for the gas industry, in Chiba, Japan April 4, 2017.Toru Hanai/File Photo

HOUSTON (Reuters) - Exxon Mobil Corp (XOM.N) posted a rare earnings miss on Friday, the only international oil producer to do so last quarter, as production slipped in its African and Canadian operations.

Exxon's results were overshadowed by rival Chevron Corp (CVX.N), which easily exceeded Wall Street's expectations with a double-digit percentage increase in production.

Royal Dutch Shell Plc (RDSa.L), Total SA (TOTF.PA) and Statoil ASA (STL.OL) this week delivered profits that topped expectations also.

Chevron for years has downplayed profits to spend heavily on megaprojects in Australia, the U.S. Gulf of Mexico and elsewhere.

That spending now is boosting Chevron's profit, whereas Exxon has fewer projects about to come online and many of its older assets require more capital to maintain.

While profit rose sharply from a year earlier, the Irving, Texas-based company's production slipped about 1.0 percent.

"Exxon continues to really struggle on getting its output up," said Edward Jones analyst Brian Youngberg.

"Chevron is going from a cash spender to a cash generator, even without commodity prices improving," he said.

Shares of Exxon fell about 2.0 percent to $79.17 in Friday afternoon trading while shares of Chevron gained more than 2.0 percent to $108.53 per share. Oil prices CLc1 rose on Friday to a two-month high.

Exxon's stock was the worst drag on the Dow Jones industrial average .DJI, while shares of Chevron led the index higher.

Both companies said they would continue to deploy drilling rigs and other equipment to the Permian Basin, the largest U.S. oilfield.

That expansion, along with similar plans by other U.S. shale peers, is likely to further irritate the Organization of the Petroleum Exporting Countries, which have tried with mixed success this year to tame an oversupply of crude oil.

Exxon posted second-quarter net income of $3.35 billion, or 78 cents per share, compared to $1.7 billion, or 41 cents per share, a year earlier. Analysts expected earnings of 84 cents per share, according to Thomson Reuters I/B/E/S.

In Africa, where Exxon produces in Nigeria, Angola and elsewhere, production slipped 16 percent due to declining fields rates and project delays.

Imperial Oil Ltd (IMO.TO), which is majority controlled by Exxon and operates in Canada's oil sands region, posted a net loss, denting Exxon's results from that country.

Exxon's Kearl oil sands operations in Alberta were partly offline, hurting Canadian production.

Still, Exxon sought to highlight the positive, stressing its growth opportunities in liquefied natural gas (LNG), especially in Qatar, where it has invested billions.

Despite a recent diplomatic row with its Gulf Arab neighbors, Qatar "is a very important partnership for us" and Exxon is "very interested" in expanding operations there, company executive Jeff Woodbury told investors on a Friday conference call.

Any expansion would be years away from boosting Exxon's results. Reuters reported earlier this month that Exxon Chief Executive Darren Woods has been lobbying Qatar to take part in LNG expansions.

CHEVRON SHINES

San Ramon, California-based Chevron boosted output by 10 percent and cut its costs, part of what executives called a pivot to earnings growth.

The company reported second-quarter net income of $1.45 billion, or 77 cents per share, compared to a net loss of $1.47 billion, or 78 cents per share, in the year-ago quarter.

Excluding one-time items, the company earned 91 cents per share. By that measure, analysts expected earnings of 87 cents per share, according to Thomson Reuters I/B/E/S.

Chevron's cash flow dropped more than Exxon's, when compared to the same quarter last year, but with a steady stream of projects coming online, nearly all Wall Street analysts have said they prefer Chevron more than its Texas-based rival.

Chevron's Gorgon LNG project in Australia had suffered setbacks since coming online, including several temporary shutdowns earlier this year.

But those appear to be behind the company, and Chevron said its second LNG project in Australia, at Wheatstone, should be operational later this year, further boosting profit.

Reporting by Ernest Scheyder

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