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Exxon spends lavishly, but earnings decline

Earnings for $3.9 billion for the U.S. supermajor came in 15 percent below first quarter 2017.

By Daniel J. Graeber
Exxon spends lavishly, but earnings decline
Exxon shows a trend of spending heavily over the past six months, though its second quarter performance was lackluster. File Photo by Calin Tatu/Shutterstock

July 27 (UPI) -- Spending heavily over the past year, U.S. supermajor Exxon Mobil reported Friday that second quarter earnings were down 15 percent sequentially.

"Second quarter results were primarily impacted by significant scheduled maintenance undertaken to support operational integrity," Chairman and CEO Darren Woods said in a statement.

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The company reported second quarter earnings at $3.9 billion, down 15 percent from the first quarter. Spending of $6.6 billion, meanwhile, represented a 36 percent increase from first quarter 2017. Spending over the first six months of the year was 42 percent higher than the same period last year.

Exxon, along with Hess Corp., have been focused on development of oil reservoirs off the coast of Guyana. Reserve estimates there were increased by 25 percent to 4 billion barrels of oil equivalent. By 2023, production using floating infrastructure could reach 550,000 barrels per day.

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Total oil-equivalent production for Exxon averaged 3.6 million barrels per day, down 7 percent from the same period last year. Production from its assets in the Permian and Bakken shale basins in the United States increased 30 percent from last year, though outages from the loss of power at the Syncrude oil sands facility in Canada and earthquake damage to its natural gas assets in Papua New Guinea offset those gains.

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Exxon Mobil was forced to shutter LNG operations in Papua New Guinea after the February quake. The company said some of its infrastructure was damaged and it took about two months for operations there to return to normal.

Among the highlights, Exxon pushed into offshore Brazil with an acquisition from Norwegian energy major Equinor. Production there, one of the emerging hot spots, could begin as early as 2023.

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In terms of growth prospects, the company said it shook hands with Plains All American to build a pipeline from the Permian shale basin in Texas to the Gulf Coast with a carrying capacity of 1 million barrels per day.

There's not enough infrastructure to keep pace with accelerating U.S. oil production. Trade policies enacted by U.S. President Donald Trump could make some of that infrastructure more expensive and industry groups have warned production may suffer a consequence.

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