Exxon's earnings drop 21% on low commodities prices and production costs

The biggest US energy company Exxon Mobil Corp. reported its fourth-quarter profit fell 21%, impacted by lower commodity prices, while it also unveiled plans to slash its share buyback program, says The WSJ.

In the current quarter the company plans to buy back $1 billion in shares, Exxon said, down from its previous level of $3 billion. Shares rallied about 0.5% premarket as earning declined less than expected.

In the latest quarter, earnings in Exxon’s exploration and production business descended to $5.5 billion, hurt by lower production, which declined 3.8% on an oil-equivalent basis.

Exxon’s slumping production in part reflects readiness to stop some less-profitable barrels, such as at a concession in Abu Dhabi that have expired. Exxon Chief Executive Rex Tillerson has made improving profitability one of the company’s highest priorities.

At the same time, refining and marketing earnings declined to $497 million, down $419 million, hurt by weak U.S. margins and higher expenses.

The positive spot was the chemical segment, where earnings grew by $317 million to $1.2 billion, boosted by stronger margins and low feedstock costs.

In all, Exxon reported a profit of $6.57 billion, or $1.56 a share, down from $8.35 billion, or $1.91 a share, a year earlier. Revenue slipped to $87.28 billion from $110.86 billion.

Economists surveyed by Reuters expected a per-share profit of $1.34 and revenue of $87.6 billion. Capital and exploration expenditures increased 5.4% to $10.46 billion.

On Friday, Chevron posted its lowest quarterly profit in five years and said it would trim its ambitious spending plans as the collapse in oil prices erased billions of dollars in cash flow.