IRVING (AP) – Exxon Mobil’s fourth-quarter profit dropped 40 percent and the company wrote down the value of some natural gas sites in the United States as oversupply continues to plague the industry and drive down energy prices.
New CEO, Darren Woods, said the write-down mostly covered undeveloped natural gas acreage in the Rocky Mountains.
Exxon acquired most of that land when, under then-CEO Rex Tillerson, it paid $31 billion for XTO Energy, a deal that made Exxon the largest natural gas producer in the U.S. The acquisition has not paid off as expected, however, because Exxon made its move not long after prices peaked as new drilling techniques freed up billions of cubic feet of natural gas.
However, Exxon had been slower than other oil companies in writing down the value of oil and gas reserves. Securities regulators have been investigating Exxon’s write-down practices, according to The Wall Street Journal.
Fourth-quarter net income was $1.68 billion, or 41 cents per share. That included a $2 billion impairment charge.
Analysts expected 72 cents per share, according to a survey by Zacks Investment Research, but they lacked all the information they needed to make accurate forecasts.
Analysts usually exclude one-time events such as asset sales or write-downs from their forecasts. Exxon had signaled in October that it was reviewing the value of its assets because of lower prices but never told analysts how big the write-down would be until Tuesday, an Exxon spokesman said.
Without the fourth-quarter impairment charge, Exxon would have earned 89 cents per share, the spokesman said.
Exxon reported revenue of $61.02 billion, below the $63.57 billion forecast in the Zacks survey.
Production of oil and gas dropped 3 percent from a year ago.
Like other big oil companies, Exxon has responded to the slump in crude prices that began in 2014 by slashing capital and exploration spending. Exxon’s spending dropped 35 percent in the fourth quarter compared with a year earlier.
Shares of Exxon Mobil Corp., based in Irving, Texas, rose 24 cents to $85.10 in trading before Tuesday’s opening bell. Through Monday, they had dropped 6 percent so far in 2017 while the Standard & Poor’s 500 index climbed about 2 percent. Exxon stock has gained 10 percent in the last 12 months.
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