--Exxon's output falls 7.5%, or 2.9% excluding OPEC quotas,
divestitures and entitlements
--Results beat analysts' expectations due to large refining
profits
--Exxon shares down 0.69% at $90.54.
(Updates with context, analyst comments and details about
production drop)
By Angel Gonzalez and Tom Fowler
HOUSTON--Exxon Mobil Corp.'s (XOM) third-quarter earnings fell
7.4% as it fetched lower prices for its oil and gas and production
fell to its lowest level in three years.
Profits in its refining segment nearly doubled, however,
enabling the world's largest publicly traded oil company to beat
Wall Street expectations.
Exxon posted a profit of $9.57 billion, or $2.09 a share, down
from $10.33 billion, or $2.13 a share, a year earlier. Revenue
decreased 7.7% to $115.71 billion.
Analysts polled by Thomson Reuters most recently projected
earnings of $1.95 on revenue of $112.4 billion.
While the entire oil industry has suffered from unstable prices
for crude and natural gas in recent quarters, Exxon's production
woes underscore how challenging it is for the biggest oil companies
to grow production in a meaningful way despite massive
investments.
The Texas oil giant's output fell 7.5% to an average of about 4
million barrels a day, the lowest level since the third quarter of
2009. Excluding the effect of divestitures, production sharing
contracts and quotas set by the Organization of the Petroleum
Exporting Countries, production fell 2.9%, a number that analysts
consider disappointing.
"Clearly chronic production declines are not what we want to
see," said Pavel Molchanov, an analyst with Raymond James.
However, some of the production decline involved relatively
unprofitable U.S. natural gas, said analysts with Simmons & Co.
Exxon is also the largest natural gas producer in the U.S. after
its acquisition in 2010 of XTO Energy Inc. for about $26
billion.
Exxon has recently sought to boost its reserves and production,
especially of profitable crude oil, by buying assets in the
prolific Bakken shale in North Dakota from Denbury Resources Inc.
(DNR). It also has struck ambitious joint ventures with giants like
OAO Rosneft to tap massive quantities of Arctic resources, but that
is an effort that could take many years.
Last month, Exxon said it agreed to buy Canadian oil and
natural-gas producer Celtic Exploration Ltd.(CEXJF) for 2.59
billion Canadian dollars (US$2.63 billion)--its largest such deal
since it acquired XTO--as the company remains optimistic about
long-term prospects for the sector.
Exploration and production earnings declined 29% to $5.97
billion amid lower prices for liquids and natural gas and lower
production.
Refining and marketing earnings more than doubled to $3.19
billion mainly on stronger refining margins.
ConocoPhillips (COP) last week reported third-quarter results in
which lower oil and gas prices took a toll, though production
results in unconventional U.S. oil formations helped the company
top analysts' expectations. Chevron Corp. (CVX) and Hess Corp.
(HES) are set to report third-quarter financial results Friday.
Exxon shares were down 0.69% at $90.54.
-Tess Stynes contributed to this article
Write to Angel Gonzalez at angel.gonzalez@dowjones.com and Tom
Fowler at Tom.Fowler@wsj.com