By Sheila Dang
HOUSTON, July 31 (Reuters) - ExxonMobil missed Wall Street estimates for second-quarter profit on Friday, sending its shares down about 2% in premarket trading, even as high oil prices and refining margins due to the Iran war led to its biggest quarterly profit in four years.
Adjusted earnings for the largest U.S. oil major by market capitalisation rose 67% from the first quarter to $14.7 billion, or $3.52 per share, and below the consensus analyst estimates compiled by LSEG of $3.60
per share.
Still, the quarterly profit was more than double the amount in the same period last year and could draw a further backlash from U.S. President Donald Trump. Last month he called for an investigation into oil companies he accused of price gouging.
Exxon Chief Financial Officer Neil Hansen said the company's underlying results were strong and attributed the miss to "extreme swings" in commodity prices and margins that were difficult to model.
Fellow U.S. oil major Chevron beat analyst estimates for the second quarter, as did its European counterpart Shell. Results from Paris-based TotalEnergies for the three months ending in June were in line with expectations.
"The second quarter was shaped by disruption, but defined by execution,” Exxon CEO Darren Woods said in a statement. "As conditions changed, we moved products where they were needed."
While the U.S. and Iran agreed to a ceasefire in April, the two sides have remained at odds over terms for a peace deal including details about how to resume shipping traffic through the Strait of Hormuz, the waterway through which one-fifth of global energy supplies normally transit.
Uncertainty over the tenuous ceasefire pushed up the price of benchmark Brent crude to an average closing price of $96.68 per barrel during the second quarter, up 23% from the first three months of the year.
Exxon's stock is up 28% year-to-date, just under the S&P 500 energy index, which is up 29%.
SOME MIDDLE EAST OUTPUT REMAINS OFFLINE
Exxon's total production was 4.5 million barrels of oil equivalent per day in the second quarter, down from 4.6 million boepd in the first three months of the year.
About 450,000 barrels per day of lost output is related to liquefied natural gas production from Qatar, which suffered Iranian attacks on energy facilities this year.
"That remains substantially shut-in. There's not much production coming out from LNG," Hansen said, adding that about 150,000 boepd of domestic gas production in Qatar continued to flow.
Meanwhile, about 150,000 bpd is offline from an oilfield in the United Arab Emirates, while 250,000 bpd was produced. But Exxon will not be able to book the revenue from the output until shipping routes open and the company is able to sell the barrels, Hansen said.
If the Strait of Hormuz is closed for the entire third quarter, production from the Middle East would be reduced by about 750,000 boepd compared with last year, the company said.
Those losses were offset by rising production from the Permian Basin in the U.S. during the second quarter that reached a record of more than 1.8 million bpd. In Guyana, a fifth floating production platform is set to begin operations in the fourth quarter and will increase production capacity by 250,000 bpd.
Despite the miss, the results are a turnaround from the first quarter, when Exxon booked a large multibillion-dollar paper loss from financial hedging related to the delivery of some cargoes.
Exxon paid $4.3 billion in dividends and repurchased $5.1 billion worth of shares during the quarter. The share repurchase figure keeps Exxon on track for its target to buy back $20 billion worth of shares this year.
Hansen said the company was focused on further improving its balance sheet before increasing dividends and buybacks. He added that Exxon reduced net debt in the second quarter by $7 billion.
(Reporting by Sheila Dang in Houston; Editing by Nathan Crooks, Jamie Freed and Barbara Lewis)
