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Exxon Mobil: Production Down, Shares Up

The Exchange

Exxon Mobil (XOM) had revenue $115.7 billion for the third quarter, and while that's an extraordinary number, it actually broke a string of five consecutive quarters with a top line above $120 billion -- revenue for the Irving, Texas, oil giant was last lower in the first quarter of 2011.

However, the figure that was getting the most attention probably was production, which declined 7.5% from the same quarter in 2011 to 3.96 million barrels a day and fell short of the FactSet consensus estimate of just under 4.15 million. Excluding the effect of OPEC quotas, divestitures and other impacts, production would have fallen 2.9%.

Here's the trend over the past three years. The latest drop is the second-steepest slide in the graph. (Production also was slightly lower at Royal Dutch Shell (RDS-A), which, along with Exxon, issued its quarterly numbers Thursday.)

Exxon Production

What happened here? As explained in The Wall Street Journal, the most recent decline was partly a result of Exxon's decision to move drilling equipment to areas with greater concentrations of oil and away from regions with more natural gas, which are less profitable. Now that the company is closer to development in those oil fields, production should start to increase, the report said, citing Exxon's VP of investor relations.

At the same time, revenue fell from $125.3 billion in the same quarter a year earlier, but still topped estimates by $3.3 billion. Overall earnings, upstream profits and chemical earnings also were lower. The downstream segment had higher earnings.

The chart below shows revenue for the last 12 quarters for one of the world's biggest corporations of any type, and the largest U.S. oil company.

Exxon Revenue

Earnings follow a similar path, and the next chart breaks down Exxon's primary money-making divisions. Upstream, that is, oil and gas exploration and production, accounts for the bulk of the earnings. In recent quarters, downstream (refining) has been the second-biggest contributor, but in many past periods Exxon's chemical division has been just as key, if not more so.

Exxon Earnings Chart

At any rate, what wasn't falling was the stock, which was in fact up 39 cents to $91.56. Not a large gain, but it does keep Exxon's shares within striking distance of their all-time closing high of $92.13, reached on Oct. 12.

Meanwhile, beyond Wall Street, Exxon was for many people a secondary energy story of the day. The report comes as long gas-station lines are continuing to build in the Northeast, and reports of fuel shortages are spreading. Flooding and power outages in states such as New York and New Jersey as a result of Hurricane Sandy have made fuel deliveries difficult or impossible in some cases. Millions of people also remain without electricity in the region that was hit the worst by the storm that came ashore earlier this week.