Exxon Mobil Corp said on Monday its quarterly profit fell 21 percent as weak oil prices took a toll, but results topped Wall Street expectations due to tax benefits and a favorable arbitration ruling.
Global oil markets are oversupplied at a time when demand is waning, a situation that has caused crude prices to tumble by more than half since June. During the quarter, the average price for benchmark Brent fell 30 percent from a year earlier.
Exxon also said it will reduce its share buyback program in the first quarter by more than half to $1 billion. In the fourth quarter, Exxon spent $3 billion on share repurchases.
Profit in the fourth quarter fell to $6.57 billion, or $1.56 per share, from $8.35 billion, or $1.91 per share in the same quarter a year earlier.
Analysts, on average, expected a profit of $1.34 per share, according to Thomson Reuters I/B/E/S.
Earnings were helped by about $1 billion in items that included deferrals on income tax and a favorable arbitration ruling for expropriated assets in Venezuela, Exxon said.
“I think the quality of the earnings beat is questionable,” said Brian Youngberg, an oil analyst at Edward Jones in St. Louis. “Some net-tax effects and Venezuela really drove the beat. They remain growth challenged.”
Oil and natural gas production fell 3.8 percent, according to Irving, Texas-based Exxon.
Shares initially rallied as much as 3 percent in premarket trading, then edged slightly lower to be nearly unchanged from Friday’s New York Stock Exchange close of $87.42.