(Reuters) – Exxon Mobil Corp reported on Friday a 49 percent fall in first-quarter profit that missed forecasts due to lower oil and gas prices and weakness across its businesses that outweighed modest production gains.
The largest U.S. oil producer’s profits were down across its major operations, including chemicals and oil and gas production, and fell to a loss in its refining business due to higher maintenance costs and lower margins on sales.
First-quarter profit fell to $2.35 billion, or 55 cents a share, from $4.65 billion, or $1.09 a share, a year ago.
Cash flow from operations of $8.3 billion was offset by capital spending and dividend payments of $10.4 billion.
“They had a large $2 billion cash flow shortfall that I don’t think investors will be comfortable with,” said Jennifer Rowland, analyst with Edward Jones.
She added that the share repurchases carried out by other oil majors seemed unlikely for Exxon. She expects the company to invest heavily and outspend cash flow for the next few years.
Shares were down about 2.7 percent in premarket trading on Friday.
Irving, Texas-based Exxon also took a $115 million impairment charge in its U.S. oil and gas operations.
Analysts had expected Exxon to earn 70 cents per share, according to Refinitiv Eikon estimates.
Maintenance and production curtailments in its Canadian oil production, as well as weak oil and natural gas prices, pushed profits down in its oil and gas unit by 10.3 percent, the company said.
“Clearly this is a weak set of results,” RBC Capital Markets said in a client note, adding that given the company’s solid fourth-quarter performance it had seemed Exxon was turning a corner. “Clearly, the corner is further away than we expected and we expect this to lead to underperformance in the near term.”
Exxon’s oil and gas production rose 2 percent overall to 4 million barrels per day, up from 3.9 million bpd in the same period the year prior. The company said its still-growing output in the Permian Basin, the largest U.S. shale basin, rose 140 percent over a year ago.
The refining business lost $256 million in the first quarter, compared with a profit of $940 million in the same period last year.
Its chemicals business earned $518 million, down 53 percent from profits of $1.1 billion during the same period last year, while its upstream business, which pumps oil and gas, had a profit of $2.9 billion, down 18 percent.
(Reporting by Jennifer Hiller in Houston; Editing by Chizu Nomiyama and Susan Thomas)