* Profit falls short of Wall Street estimates
* Q1 production 4.2 million BOE per day
* Sees Q2 share buybacks lower at $5 bln
* Shares down 2 percent (Recasts first paragraph, updates share prices, adds analyst comment, detail from conference call)
By Anna Driver
HOUSTON, April 30 (Reuters) - Exxon Mobil Corp (XOM.N), the world's largest publicly traded company, posted a 58 percent drop in quarterly profit Thursday, missing Wall Street estimates, as the global recession sliced into demand for crude oil and natural gas and depressed prices.
Shares of Exxon were down 2 percent, compared with a 1 percent decline in the Chicago Board Options Exchange Index of oil companies .OIX.
Oil and gas prices have dropped sharply from peaks last summer as consumption has waned and supplies have swelled. Crude oil averaged just over $43 per barrel in the first quarter, down 56 percent from a year earlier; the average price of natural gas in the United States slid 44 percent.
But Exxon, unlike rivals that have cut budgets or delayed big projects, is still spending more on oil and gas development. In the first quarter it spent $5.8 billion, up 5 percent from a year earlier.
"In spite of the dramatic changes to the global economic environment, Exxon Mobil is maintaining its long-term focus and disciplined approach to capital investment," Rex Tillerson, Exxon's chairman and chief executive officer, said in a statement.
Exxon is sticking to its projected 2009 budget of $29 billion, but executives said on a conference call that spending could rise if the right opportunity came along. They did not clarify what type of opportunity.
The oil major is reducing the amount of money it spends on share buybacks to $5 billion in the second quarter, about 28 percent lower than in the first quarter.
Fred Burke, president of Johnston Lemon Asset Management in Washington, D.C., sees Exxon shares as a stake in the eventual turnaround in the world's leading economies.
"They're going to need energy, and Exxon is the best," he said. "There's people who are going to be buying the stock." Burke forecast the shares -- which stood at $67.07 in afternoon trading -- could reach $85 within six months.
Net profit in the first quarter was $4.55 billion, or 92 cents per share, compared with $10.89 billion, or $2.02 per share, in the same quarter a year earlier.
Analysts on average had expected 95 cents per share, according to Reuters Estimates.
"International upstream (exploration and production) did not see the level of cost reduction that some of the other oil companies did," said Jason Gammel, oil analyst at Macquarie Research.
Oil and gas production in the quarter rose slightly from a year earlier to 4.2 million barrels of oil equivalent per day, in line with analysts' projections.
Upstream earnings slid 60 percent to $3.5 billion, while profit at the company's refining and marketing operations fell 3 percent to $1.13 billion. (Additional reporting by Braden Reddall in San Francisco, editing by Dave Zimmerman and John Wallace)