Rising oil prices pushed second-quarter profit at Exxon Mobil Corp. up 18 percent to $3.95 billion, but the results Friday fell short of Wall Street expectations, and the shares fell nearly 3 percent.
The price of benchmark international crude is up more than 50 percent from a year ago. But Exxon's production of oil and natural gas slid 7 percent, so it didn't fully take advantage of the higher prices.
Rival Chevron Corp., by contrast, boosted production 2 percent and more than doubled its second-quarter profit from a year ago.
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"The second quarter results were well below market expectations," Neil Hansen, Exxon's vice president of investor relations, acknowledged at the start of a call with analysts. He said the company was making progress with key investments that will pay off in the long term.
Exxon boosted its capital spending sharply -- a reversal from the cutting that Exxon and other major oil companies did after the price collapse that started in 2014. It has major projects underway off the coast of South America, in Africa and Papua New Guinea.
Neil Chapman, a senior vice president who oversees Exxon's exploration and production business, said the second quarter was the low point and production will increase over the rest of the year.
Exxon, however, now expects to fall short of a forecast Chapman made in March -- that 2018 production would match last year. Exxon predicted Friday that it will produce the equivalent of 3.8 million barrels a day including natural gas, down from 4 million barrels a day in 2017.
Among the reasons Chapman gave for the miss were an earthquake that interrupted operations in Papua New Guinea and the company's retreat on natural gas in the U.S. because of relatively low prices. He said the company would focus on the most profitable production.
Exxon's oil production has fallen three straight quarters and five of the last seven quarters, compared with results from a year earlier. Until mid-2016, the company regularly boosted output.
Exxon's second-quarter profit worked out to 92 cents per share. Analysts were looking for $1.26 per share, according to a survey by Zacks Investment Research. Exxon does not adjust results based on one-time events such as asset sales, which totaled $307 million in the quarter.
Revenue jumped 27 percent to $73.50 billion, despite the decline in oil and gas output. The bright spots in Exxon's portfolio included the Permian Basin of Texas and the Bakken field in North Dakota, where production rose 30 percent.
Capital spending climbed 69 percent to $6.63 billion, with exploration and drilling rising notably in Brazil, the Permian Basin and Indonesia.
The Irving, Texas-based company spent most of its profit on shareholder dividends -- $3.5 billion. The value of Exxon shares, however, has gained only a few dollars since a low point in September 2015 even though crude has risen more than 50 percent since then.
Exxon shares dropped $2.32, or 2.8 percent, to $81.92. That left the shares down 2.1 percent so far this year -- they began the day up less than 1 percent in 2018.