As expected, margins at the company's refining operations dragged heavily on the bottom line as the big jump in prices on refined products such as gasoline, while a menace to consumers, failed to keep pace with the rapid increase in crude prices.
Lower production to start the year hurt too.
Exxon Mobil, based in Irving, Texas, said earnings for the first three months of the year rose to $10.9 billion, or $2.03 per share, up from $9.3 billion, or $1.62 per share, a year ago.
Analysts polled by Thomson Financial were looking for a slightly larger profit of $2.13 per share.
Revenue rose to $116.8 billion from $87.2 billion a year earlier. Analysts were looking for higher revenue of about $124 billion.
Given record oil prices, some had speculated Exxon Mobil would top its own record for the biggest quarterly profit for a U.S. company. But the latest results fell short of the record $11.7 billion profit Exxon Mobil earned in the final quarter of 2007.
Its shares fell $3.17, or 3.4 percent, to $89.90 in morning trading.
Exxon Mobil said earnings at its exploration and production, or upstream, business rose 45 percent to $8.8 billion, lifted by higher oil and natural gas prices. Increased natural gas production was more than offset by lower crude volumes.
Overall production fell 5.6 percent from a year ago, in part from natural field declines and maintenance.
On the refining and marketing side, earnings were off 39 percent from a year ago to nearly $1.2 billion. The company said significantly lower worldwide refining margins reduced earnings by about $1 billion in the quarter. Those margins reflect the difference between the cost of crude and what the company makes on refined products such as gasoline.
Crude prices averaged nearly $100 a barrel in the first quarter, up from roughly $58 a barrel a year ago. Analysts have attributed the spike to growing global demand, speculative trading and a weak dollar, among other factors.
Crude has pushed even higher since, reaching a record $119.93 per barrel this week.
Meanwhile, gasoline prices also are reaching new highs -- and creating financial stress for many Americans. The national average price of a gallon of regular gas rose past $3.60 Wednesday.
Already, record crude prices have produced bountiful first-quarter profits for several of the other major oil companies, despite higher costs and lower results from refining.
BP and Royal Dutch Shell, Europe's two biggest oil producers, posted combined profits of $17 billion earlier this week -- $9.08 billion for Shell, $7.6 billion for BP.
BP's earnings surged 63 percent from a year ago; Shell's rose 25 percent.
Last week, ConocoPhillipsreported a 16 percent rise in net income to $4.14 billion. Like BP and Shell, the third biggest U.S. oil outfit far outpaced industry expectations.
Chevron, the No. 2 U.S. oil company, is expected to continue the trend. It is scheduled to report first-quarter results Friday.