Exxon Mobil profit slides as oil-market slump threatens reserves

IRVING, Texas (Bloomberg) -- Exxon Mobil profit sank as the world’s largest publicly traded oil company posted its lowest production in seven years and warned the prolonged slump in energy markets may force a write off of 19% of its reserves.

The Irving, Texas-based driller extended its longest streak of profit declines in almost three decades. Third-quarter net income was $2.65 billion, or 63 cents a share, compared with $4.24 billion, or $1.01, a year earlier, Exxon said in a statement on Friday. The per-share results exceeded the 59-cent average of 20 estimates in a Bloomberg survey, though the company pumped less crude and natural gas than analysts expected.

The year-on-year decline in quarterly profit was the eighth in a row, a pattern of dwindling returns Exxon hasn’t posted since at least 1988. About 3.6 Bbbl of reserves in the Canadian oil sands and the equivalent of another 1 Bboe in other North American fields may be written down if the average energy prices seen during the first nine months of 2016 persist, Exxon said in the statement.

Brent crude, the international benchmark, averaged $46.99/bbl during the July-to-September period, down 8.4% from a year earlier amid a worldwide supply glut. Refining margins in the U.S. averaged less than $14/bbl during the quarter, 35% lower than the year-earlier figure.

Exxon pumped the equivalent of 3.81 MMbpd during the quarter, below the 3.99 MMbpd average of five estimates from analysts in a Bloomberg survey. It’s the lowest production level since 2009.

Spending Cuts

Exxon has been curbing outlays for drilling and new oil and gas installations to conserve cash for dividend payments that consumed $9.2 billion during the first nine months of this year. Aside from cratering energy prices, the company has been parrying climate-science investigations in the U.S. and was hit earlier this month with a $74-billion fine in Chad for what the central African nation’s high court said were underpaid royalties.

Exxon announced a billion-barrel discovery off the coast of Nigeria on Thursday, the company’s second major offshore find in as many years. In May 2015, the explorer disclosed what it called a “world-class discovery” in Guyanese waters that Exxon later estimated may yield as much as 1.4 Bbbl.