Exxon Mobil Corp on Tuesday reported its smallest quarterly profit in more than a decade and said it will cut 2016 spending by one-quarter and suspend share repurchases as it copes with a prolonged downturn in crude prices. Shares of Exxon, the world’s largest publicly traded oil company, fell 2.2 percent in premarket trading to $74.59, hit by a more than 4 percent slide in the price of crude oil. Crude oil prices have dropped about 70 percent from the 2014 high over $100 barrel.
Current prices at around $30 barrel have triggered a wave of spending cuts as oil companies slash investment in new wells and projects to conserve cash. Exxon sees capital spending at around $23.2 billion this year, a 25 percent drop from 2015. “While our financial results reflect the challenging environment, we remain focused on the business fundamentals, including project execution and effective cost management,” Rex Tillerson, the chairman and chief executive officer, said in a statement.
In another move to conserve cash, Exxon suspended its share buyback plan in the first quarter. In the fourth quarter, Exxon purchased 9.4 million shares for $754 million. Oil analyst Brian Youngberg at Edward Jones in St. Louis characterized Exxon’s report as “relatively good, especially when compared with BP’s terrible results.” He noted that Exxon’s oil and gas output was better than expected and that the company had improved its operations this year.
Earlier Tuesday, BP Plc reported an annual loss of $6.5 billion, its largest ever. Smaller U.S. rival Chevron Corp last Friday also reported a net loss. Irving, Texas-based Exxon reported that fourth-quarter profit tumbled to $2.78 billion, or 67 cents per share, from $6.57 billion, or $1.56 per share, in the same period a year earlier.
The 2015 fourth-quarter profit was the smallest since September 2002. Analysts, on average, expected Exxon to earn 63 cents per share, according to Thomson Reuters I/B/E/S. Exxon said its oil and gas output rose 4.8 percent in the fourth quarter as it pumped more crude oil.