While consumers across the country are enjoying lower prices at the gas pump, the joy of seeing the drop in crude - not so much for the largest and richest oil company in the USA.
Exxon Mobil Corporation (XOM - NYSE) reported a 52% drop in profit for Q2, as higher profit from its refining and chemical operations couldn't offset plunging earnings in its exploration and production business amid lower crude prices.
For Q2, revenue for the oil giant fell 33% to $74.11 billion, profit came in at $4.19 billion or $1 a share, down from $8.78 billion or $2.05 a share compared to same period of 2014. Capital spending fell to $8.26 billion from $9.8 billion during same period of 2014. Production improved 3.6% to 4 million barrels per day.
Profits for Exxon's U.S. upstream segment for exploration and production plummeted 74% to $2.03 billion.
As lower feedstock costs boosted margins, chemical segment earnings for Exxon improved 48% to million to $1.25 billion.
Citing stronger margins, earnings for Exxon's U.S. downstream - refining and marketing - more than doubled to $1.51 billion from $711 million during same period of 2014.
Downstream and chemicals divisions profits, boosted by low prices for oil and gas, gave a helping hand to profits for Exxon. In Q1, the divisions reaped nearly as much profit as Exxon made from pumping oil and gas, which traditionally generates the most profit.
In a sign that shows the oil company does not expect a quick rebound in crude prices, they moved to conserve cash by slashing capital spending and reducing stock buybacks in the near term.
During the current quarter, Exxon said it will scale back its share buybacks to a level of $500 million. For Q2 Exxon, bought back $1 billion in share, down from previous level of nearly $3 billion in buybacks a quarter.
Over the past year, shares of Exxon are down 16% and as of mid-afternoon trading Friday, shares were lower by 5%.
Contributed by Millennium Traders
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