Exxon Mobil said Thursday its third-quarter earnings declined 10 percent, missing expectations on sharply dropping profits from the production of gasoline and lower natural gas prices.
Donna Mcwilliam
(AP Photo/Donna McWilliam)
Exxon's shares fell about 2 percent before the bell and weighed on the wider market, pushing S&P futures to session lows.
Margins to produce and sell gasoline and other refined products fell sharply during the quarter, accounting for more than two-thirds of the drop-off in profits from last year.
Net income at the world's largest publicly traded company fell to $9.41 billion, or $1.70 a share, from $10.49 billion, or $1.77 a share, a year earlier.
Analysts, on average, had expected the company to earn $1.74 a share, according to Reuters Estimates.
Refining margins plummeted by as much as 90 percent from record highs reached in May as the summer driving season ended, oil prices surged and gasoline prices did not keep up with the price increases.
These reduced profits have also dragged down earnings at Exxon's largest competitors BP, Royal Dutch Shell, and ConocoPhillips , offsetting oil prices that were much higher than a year before.
The margins have remained tight in the fourth quarter, threatening to hold back earnings even as U.S. crude prices have surged over $90 a barrel.
"There's a real blood bath in refining margins right now and that will largely offset the higher upstream earnings," said John S. Herold analyst Lysle Brinker.
Earnings from the company's exploration and production operations slipped 3 percent to $6.3 billion on lower natural gas prices and higher expenses.
Profits from the company's refining and marketing unit fell 27 percent to $2 billion on the lower margins.
Through Wednesday's close, Exxon's shares were up about 20 percent this year, underperforming the Chicago Board Options Exchange's Oil Index which rose about 29 percent over the same period.
