ExxonMobil earnings badly miss expectations as profits sink 59%

Exxon Mobil reports disappointing earnings
Exxon Mobil reports disappointing earnings

ExxonMobil reported its quarterly profit fell nearly 60 percent from a year ago as commodity prices remained low and its refining margins were weak.

The world's largest publicly traded integrated oil company earned $1.7 billion, or an adjusted 41 cents per share in the second quarter, compared with $4.2 billion, or $1 per share, in the year ago period.

Analysts polled by Thomson Reuters had expected earnings per share of 64 cents.

The stock was 2.6 percent lower in premarket trading (See what shares are doing now.)

"While our financial results reflect a volatile industry environment, ExxonMobil remains focused on business fundamentals, cost discipline and advancing selective new investments across the value chain to extend our competitive advantage," CEO Rex Tillerson said in a statement.

Revenues were $57.694 billion, versus $74.11 billion in the second quarter of 2015.

Earnings in ExxonMobil's upstream exploration and production business fell by $1.7 billion as the company's liquids and natural gas products fetched a lower price.

The Irving, Texas-based company produced 4 million barrels of oil equivalent per day, with liquids output up 1.7 percent and natural gas production down 3.6 percent.

Downstream earnings were down $681 million, due to weaker refining margins.

Refiners have seen their profit margins squeezed this year as prices rise for crude oil, the feedstock for gasoline. U.S. crude prices rebounded about 85 percent from the lows of January through the end of the second quarter.

Earlier in the oil price downturn, integrated oil companies' refining operations offset battered production segments.

The amount of gasoline sitting in storage in the United States is about 15 percent above the five-year average, RBC Capital Markets said in a note ahead of earnings. As such, the firm expects weak profit margins from refining crude oil into gasoline to persist at least through the spring of 2017.

ExxonMobil left its quarterly dividend unchanged at 75 cents per share ahead of earnings on Wednesday. The company hasn't raised its dividend since the second quarter of 2014.

Dividend distributions for the quarter totaled $3.1 billion.

ExxonMobil announced last week it would purchase exploration and development company InterOil in a deal worth $2.5 billion. The oil major operates a project to develop and produce liquid natural gas in Papua New Guinea. The acquisition gives ExxonMobil access to Interoil's resource base, including Elk-Antelope, one of the largest gas fields in Asia.

Earlier in the quarter, ExxonMobil said drilling results in its offshore Guyana assets yielded significant discoveries, estimated at 800 million to 1.4 billion recoverable barrels of oil equivalent resources.