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Exxon Production Drops

It is no surprise that the world’s largest oil company would report record secondquarter earnings of $11.68 billion, or $2.22 per share, but what is surprising is that production dropped 8% from the year-ago period, the largest decrease in at least a decade.

Even excluding the effects of Venezuelan expropriation, the Nigeria labour strike and lower entitlement, volumes would’ve resulted in a production drop of 3%.

This is a re-occurring theme among companies and countries that is under-reported by the media and is a major reason why we remain long-term bulls on oil prices.

“They are not growing,” said one analyst. “Production is becoming more and more of a concern. For these guys, access to reserves is a very big issue.” Exxon’s capital expenditures rose 38% while margins in its refining and chemical units fell. Analysts expected EPS of $2.46.

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