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Exxon Record Earnings Ring Hollow

Posts by Ian Wyatt

Falling oil prices dampened earnings expectations at Exxon (NYSE: XOM). But the world’s largest oil firm came through with a record-setting quarter thanks to some clever restructuring.

Exxon reported second-quarter earnings of $3.41 per share, nearly double the $1.95 a share analysts were expecting. Revenue of $127.36 billion also beat estimates of $115 billion.

Exxon’s profits of $15.9 billion are a new quarterly record for any company ever. But it comes with a major caveat.

Nearly half of those profits — $7.5 billion worth – stemmed from what the company is calling “divestments and tax-related items.” A sale of refining and chemical operations in Japan was partly responsible.

Aside from that special one-time credit, the company’s earnings drop to $8.4 billion – a 21% decline from the $10.7 billion it made in the same quarter a year ago.

That’s why investors haven’t exactly been pouring into the stock this morning. Exxon shares have climbed just 0.6% in early trading – not much of a bump considering the record earnings.

But when you consider that the company’s exploration and production earnings were down 2.4%, Exxon officials will probably take the slight bump the stock is getting today.   

ConocoPhillips (NYSE: COP) has seen its stock slide 1.6% since reporting a 33% drop in its second-quarter earnings yesterday.

Crude oil prices dropped 19% in the second quarter, weighing heavily on oil companies’ margins.

Even mighty Exxon felt the brunt of lower prices. XOM shares declined 1.65 from April through June.