NEW YORK -- Exxon Mobil Corp. net income rose 28 percent in the second quarter on a sale of Asian assets and higher oil prices, but oil and gas production slipped 6 percent, disappointing analysts.
On Thursday, Exxon reported net income of $8.78 billion in the second quarter on revenue of $111.65 billion. Last year during the same period, the company earned $6.86 billion on sales of $106.67 billion.
On a per-share basis, Exxon earned $2.05, up from $1.55 last year. The average estimate of analysts surveyed by Zacks Investment Research was for profit of $1.91 per share, but that estimate does not include the benefit from the Asian asset sale.
Exxon, based in Irving, Texas, does not adjust results based on one-time events such as asset sales, as most analysts and companies do. Exxon's sale of power and utility assets in Hong Kong helped increase earnings by $1.2 billion and masked weak production results.
Oil and gas production fell to 3.84 million barrels of oil and gas per day from 4.15 million barrels last year. The decline was driven by the expiration of rights to a field in Abu Dhabi and natural field declines.
Exxon's production has been steadily declining, and is a concern for investors. "Production volumes were weaker than anticipated," said Brian Youngberg, an analyst at Edward Jones. "Declining production continues to be a problem for the company."
Exxon shares fell $4.31, or 4.2 percent, to close Thursday at $98.94.
Exxon benefited from higher oil prices in the quarter, both in the U.S. and abroad. In the U.S., Exxon sold oil for an average of $98.55 per barrel, up from $93.18 per barrel in last year's second quarter. Outside of the U.S., oil sold for $103.72, up from $101.54 last year.
Sanctions against Russia have spurred questions about the Exxon's ability to pursue its largest international oil prize.
The world's largest energy company is joining with Rosneft to go after crude in Russia's Arctic regions to extract some of the largest crude reserves and reverse a trend of declining production for the company. Sanctions threaten to halt that progress after the U.S. and European Union said Tuesday that they would restrict the export of technologies for energy production to Russia.
"Because these new oil technology sanctions imposed by Europe and the U.S. governments do impose some restrictions on Arctic drilling tech, it may have an effect on these Arctic drilling plans," Pavel Molchanov, a Houston-based analyst for Raymond James & Associates Inc., said before the results were released.
The sanctions come on top of other restrictions levied against a group of Russian individuals and corporations -- including Rosneft Chief Executive Officer Igor Sechin -- in retaliation for Russia's activities in Ukraine. The moves have so far not stopped plans by Exxon or other foreign energy producers to invest in Russia's oil sector.
Information for this article was contributed by Jonathan Fahey of The Associated Press and by Zain Shauk and Joe Carroll of Bloomberg News.
Business on 08/01/2014