Weak Gas Prices Hurt ExxonMobil's Upstream Earnings

ExxonMobil saw its upstream earnings for the second quarter of 2012 hit by lower U.S. natural gas and liquids prices, the company reported Thursday.

The company reported upstream earnings of $8.3 billion, down $183 million from the second quarter of 2011. Lower gas and liquids prices decreased earnings by $870 million, while lower sales volumes reduced earnings by $330 million.

ExxonMobil Chief Executive Rex Tillerson said in June that the company was losing its shirts on low natural gas prices, Dow Jones reported.

The company's liquids and gas production were also down for the second quarter of this year compared with second quarter 2011. On an oil-equivalent basis, production decreased 5.6 percent from the same period a year ago. Excluding the impacts of entitlement volumes, OPEC quota effects and divestments, production was essentially flat.

ExxonMobil reported earnings for its entire operations of $15.9 billion, up $5.2 billion or 49 percent from the second quarter of 2011. Earnings included a net gain of $7.5 billion associated with divestments and tax-related items. Excluding these items, second quarter earnings were $8.4 billion.

The company reported capital and exploration expenditures of $9.3 billion in the second quarter and a record $18.2 billion for the first six months of 2012 as it progresses its plans to invest about $37 billion per year over the next five years to help meet the global demand for energy.

"Despite global economic uncertainty, we continue to invest throughout the business cycle, taking a long-term view of resource development," said ExxonMobil Chairman Rex W. Tillerson in a statement Thursday.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

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