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Exxon CEO combines exploration units to reverse output declines

FILE PHOTO - An Exxon sign is seen at a gas station in the Chicago suburb of Norridge, Illinois, U.S., October 27, 2016. REUTERS/Jim Young/File Photo

By John Benny and Jennifer Hiller

HOUSTON (Reuters) - Exxon Mobil Corp on Thursday outlined a major reorganization of its global exploration businesses aimed at reversing years of weak oil and gas output.

Chief Executive Darren Woods, who took over the helm two years ago, has spent billions to buy production, build new pipelines and expand refineries after a series of costly misfires on deals under predecessor Rex Tillerson.

Woods, who will address Wall Street analysts on an earnings call Friday for the first time as CEO, has been pleading with investors for patience as he restructures its sprawling businesses. The Exxon veteran replaced Tillerson, who became U.S. Secretary of State in February 2017, and reorganized Exxon's refining operations that year.

Exxon, which has spent heavily on U.S. shale and deep-water blocks in Brazil and Guyana, has posted lower output in nine of the last 10 quarters.

"I am skeptical that this decision will make any real difference in practical terms," said Pavel Molchanov, an analyst at Raymond James. He cited hurdles and a sharp drop in output in a gas field in the Netherlands that accounts for 2.5 percent of Exxon's total production.

The reorganization will fold seven companies into three as of April 1, merging units for production, exploration, development, gas and power marketing, and others.

The new companies - ExxonMobil Upstream Oil & Gas Co, ExxonMobil Upstream Business Development Co and ExxonMobil Upstream Integrated Solutions Co - are designed to help the company double profits by 2025 and better coordinate oil and gas production with logistics and refining operations.

"Our focus is on increasing overall value by strengthening our upstream business and further integrating it with the downstream and chemical segments," Senior Vice President Neil Chapman said in a statement.

Liam Mallon was named president of ExxonMobil Upstream Oil & Gas, Steve Greenlee president of ExxonMobil Upstream Business Development, and Linda DuCharme president of ExxonMobil Upstream Integrated Solutions.

XTO Energy, which Exxon acquired for $41 billion in 2009, will be part of Upstream Oil & Gas, a spokesman said.

One of the new business units will oversee its existing portfolio of exploration projects, and handle future acquisitions. Analysts have been pushing Exxon to sell some assets to improve returns.

Analysts expect Exxon to earn $1.08 per share for the fourth quarter, excluding one-time items, according to Refinitiv data.

Exxon shares rose 0.6 percent to $72.71 shortly before the close. They fell to $65.51 in December, a level last reached in October 2010.

(Reporting by John Benny and Debroop Roy in Bengaluru and Jennifer Hiller in Houston; Editing by James Emmanuel and Richard Chang)