Exxon Mobil Corporation (NYSE:XOM) posted disappointing financial results for the second quarter, mainly due to low oil prices. The company reported earnings of $4.19 billion, or $1 per share for the quarter, well below $8.78 billion, or $2.05 per share one year ago. Analysts had predicted earnings of $1.11 per share.
The energy company slashed share repurchases in half to $500 million for the third quarter, as compared to the second quarter. The company said that refinery earnings surged on lower expenses for crude, but the weaker results in its oil and natural gas production segment hurt the overall results. XOM’s U.S. wells reported a loss of $47 million.
Exxon lowered investment on key projects, such as gas-export terminals and floating crude platforms, by 20 percent to $6.746 billion in April-to-June period. International crude prices plummeted 42 percent from last year to an average of $63.50 per barrel.
The company’s CEO Rex Tillerson was one of the first chiefs of oil-industry, who reduced spending, as oil prices started falling about one year ago. After slashing the budget by 9.3 percent last year, this year’s cutback may surpass the original 12 percent goal, according to the company.
Tillerson is not hopeful about the oil-market rebound in the near future. A couple of months ago, he stated in a conference that the low oil prices and supply glut will persist for at least next couple of years. The remarks from Tillerson apparently seems true as international crude prices, which increased 45 percent between 13th of January and 6th of May have plummeted 21 percent since then.
Exxon is cutting costs and reassessing whether few multi-billion dollar projects will be economically beneficial at the current oil prices. The company recently found a field off the coast of Guyana, which may have the equivalent of 700 million barrels of crude, but such an award would be worth $40 billion approx. at prevailing oil prices.
