The declines were the third straight for both companies, and ExxonMobil's per-share profit excluding one-time costs fell 15 [image-nocss] cents short of the average of analyst estimates compiled by Bloomberg. New York oil futures fell by more than half to an average of less than $60 a barrel, the biggest second-quarter drop since the contracts began trading in 1983, as the global recession eroded demand for diesel, natural gas and other fuels.
"Prices are down big time, and that pulled down results across the board," William Andrews of C.S. McKee & Co., Pittsburgh, told the news agency. "You're comparing against a quarter when prices were over the moon, so everybody looks bad."
Shell said it plans to cut capital spending by about 10% and to make additional job cuts. The company said it is not ruling out freezing its dividend at the current level. ExxonMobil said it will cut stock buybacks to $4 billion in the current quarter from $5 billion in the second quarter.
London-based BP Plc, Europe's second-biggest oil company, said July 28 that its net income dropped 53% to $4.39 billion. Houston-based ConocoPhillips, the third-largest U.S. oil company, yesterday said that its profit declined 76% to $1.3 billion.
The No. 2 U.S. oil producer, Chevron Corp., San Ramon, Calif., is scheduled to report its results for the quarter today.
ExxonMobil's profit was its lowest for any quarter in more than five years. Revenue slid 46% to $74.5 billion. The company's revenue for the first six months of this year was just 0.3% higher than its total in 2008's second quarter.
ExxonMobil's oil and gas output fell 3.3% to the equivalent of 3.68 million barrels a day, the lowest second-quarter production since Exxon Corp.'s 1999 acquisition of Mobil Corp. The drop in output, coupled with lower commodity prices, slashed earnings from oil and gas wells by 62% to $3.8 billion. ExxonMobil's U.S. downstream recorded a loss of $15 million, down $308 million from the second quarter of 2008.
ExxonMobil and Shell produce one in each seven gallons of refined fuels in the world. Shell's output fell 5.3% to the equivalent of 2.96 million barrels of oil a day, partly on production disruptions in Nigeria. The company previously said output may fall in 2009 for the seventh consecutive year.
"I think it's generally going to be difficult for the Big Oils to move the needle," Doug Leggate, an analyst at Howard Weil, Houston, told Bloomberg. "Those companies that can move the needle in terms of adding value through exploration or other methods of improving their portfolios, they're the ones who are going to win out."
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