The Irving, Texas petroleum giant said its second-quarter net income rose 49 per cent to $15.9 billion. But most of the gain came from $7.5 billion in asset sales.
Otherwise, it was a challenging quarter. Exxon Mobil produced less oil and natural gas, and it sold both at lower prices. Exxon's chemical factories also posted weak sales in Asia and Europe, where the economy slowed. All told, Exxon's operating profit of $8.4 billion was the lowest since the third quarter of 2010, and it fell well short of Wall Street expectations.
Shares rose more than 1 per cent Thursday, but that was due to an increase in oil prices for the day.
The fortunes of Exxon Mobil and other petroleum companies mostly swing with the price of oil and natural gas. And the second quarter was tough for every one of them. Benchmark U.S. crude prices fell 8.8 per cent in the period while natural gas prices dropped by 46.2 per cent.
Declining prices also lowered second-quarter profits at Royal Dutch Shell, Occidental Petroleum Corp. and ConocoPhillips. Chevron Corp. will release its financial results on Friday, and BP will report next week.
Exxon said it will press ahead with its aggressive plan to explore for more oil and gas, even though prices are falling. Exxon announced earlier this year that it plans spend $37 billion annually over the next five years to find new energy sources around the world.
Exxon and other oil companies expect oil demand to rise, even though the current global economy is sputtering. New sources of oil are tough and expensive to find, and Exxon and others are not letting up on the throttle yet.
"Despite global economic uncertainty, we continue to invest throughout the business cycle taking a long-term view of resource development," Chairman and CEO Rex Tillerson said.
Exxon expects production to fall in 2012. But output should rise again next year as Exxon's Kearl oil sands project comes online in Canada, Raymond James analyst Pavel Molchanov said.
In the second quarter, Exxon's financial results were propped up by a big gain from the sale of its stake in a Japanese fuel and lubricants business. The $3.9 billion deal, announced in January, boosted profits for Exxon's international refining and chemicals businesses in the second quarter.
Overall, Exxon Mobil's net income amounted to $3.41 per share for the April-June period. A year earlier, Exxon earned $10.7 billion, or $2.18 per share. Revenue increased during the quarter by 1.5 per cent to $127.4 billion.
Meanwhile, Exxon's core oil and natural gas production business suffered. Total production fell by 5.6 per cent, when compared with the same part of 2011.
Lower oil and natural gas prices did help some parts of Exxon's global operation. Its refineries were able to buy cheaper oil, and lower natural gas prices made it less expensive to power some of their equipment. The company also was able to sell gasoline at higher prices in some parts of the U.S.
Exxon's U.S. downstream business, which includes refineries, increased profits by 14 per cent in the period. Profits fell for its U.S. chemical manufacturing business by 21 per cent.Suggest a correction