STREAMING NOW: Watch Now

Will Exxon's oil production keep shrinking?

The United States is pumping more oil than any other country in the world. And yet ExxonMobil's oil producti...

Posted: Nov 7, 2018 7:35 PM
Updated: Nov 7, 2018 7:35 PM

The United States is pumping more oil than any other country in the world. And yet ExxonMobil's oil production keeps shrinking.

Exxon's output has declined in eight of the past nine quarters. America's largest oil company is expected to disclose another dip on Friday when it reports third-quarter results.

Banking, finance and investments

Business and industry sectors

Business, economy and trade

Commodity markets

Companies

Energy and utilities

Energy commodities

Exxon Mobil Corp

Financial markets and investing

Natural gas

Oil and gas industry

Oil prices

Shale development

The trend is surprising given the shale oil boom that has turned the United States into an energy powerhouse. US oil output topped 11 million barrels a day in August for the first time ever, according to new government statistics. That's more than either Russia or Saudi Arabia.

But Exxon (XOM) was late to the shale revolution. Instead of drilling in North Dakota and Texas, Exxon plowed resources into expensive projects overseas, including ones in Russia that didn't pan out.

"They missed the boat on the shale boom. They're playing catch-up," said Brian Youngberg, senior energy analyst at Edward Jones.

Exxon spent $5.6 billion in early 2017 to buy assets in the shale oil hotbed of the Permian Basin, which stretches from Texas to New Mexico. The deal was announced two weeks after former Exxon CEO Rex Tillerson stepped down to focus on his nomination as President Donald Trump's secretary of state.

That deal, along with other US shale investments, are starting to pay off. Exxon's production in the Permian Basin and Bakken of North Dakota soared 30% in the second quarter. And Exxon signaled plans to pump more out of the Permian, which has turned into one of the largest oilfields in the world.

Investors are hoping Exxon was able to ramp up production to capitalize on higher oil prices. Even though crude has pulled back in recent weeks, prices last quarter were significantly higher than a year ago.

Higher oil prices allowed Royal Dutch Shell (RDSA) to log a 50% jump in profit on Thursday. BP's (BP) profit more than doubled. Analysts are expecting Exxon's per-share profits rose by just 21%.

Exxon disappointed investors in the second quarter by reporting a worse-than-expected 7% drop in oil and gas production. Analysts are calling for another drop in the third quarter.

"They need to show improvement. The company needs to get back going to increase confidence from investors," said Youngberg.

Others don't think Exxon's recent production declines are a big deal in the long run.

"People in the oil industry know Exxon is the best in the business," said Jerry Bailey, a former Exxon executive who is currently president of oil producer Petroteq Energy.

"They're run by a bunch of guys in the business, not guys in pinstripes on Wall Street," said Bailey, who owns Exxon shares.

Exxon was held back in the second quarter by technical issues, including unscheduled maintenance that sidelined operations. The hiccups were a surprise because Exxon has a history of being a top-notch operator.

In the long run, Exxon has several overseas projects that look poised to eventually grow the company's bottom line. Exxon is most excited by its development in Guyana, which the company estimates contains 4 billion barrels of recoverable oil.

But turning Guyana into a moneymaker will take considerable time and resources -- something investors may not have patience for.

"They're taking the long-term approach," said Youngberg. "I think it will pay dividends, but we won't be seeing it for another three years."

Mississippi Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 16041

Reported Deaths: 767
CountyConfirmedDeaths
Hinds103526
Lauderdale74568
Madison74525
Neshoba70742
Jones66331
Scott66112
Forrest59439
DeSoto5538
Leake44712
Rankin4468
Holmes43928
Copiah3154
Jackson30813
Attala30318
Yazoo2864
Newton2824
Leflore27334
Lincoln27029
Monroe26525
Harrison2637
Oktibbeha25314
Lamar2485
Lowndes2309
Wayne2242
Pearl River21131
Pike20411
Adams20015
Noxubee1916
Washington1917
Warren18110
Covington1732
Jasper1654
Lee1657
Bolivar16511
Clarke15419
Smith15311
Kemper14711
Lafayette1414
Chickasaw13714
Coahoma1274
Winston1211
Marion1179
Carroll11711
Clay1154
Claiborne1122
Lawrence1061
Simpson1020
Grenada993
Yalobusha966
Tate951
Hancock9112
Itawamba897
Wilkinson859
Union857
Sunflower853
Montgomery851
Panola843
Marshall813
Jefferson Davis803
Tippah7611
Webster683
Calhoun674
Amite641
Walthall610
Humphreys597
Tunica563
Prentiss563
Perry513
Choctaw482
Pontotoc433
Jefferson431
Tishomingo340
Quitman340
Stone310
Franklin292
Tallahatchie291
George261
Greene221
Alcorn181
Benton140
Sharkey70
Unassigned00

Alabama Coronavirus Cases

Confirmed Cases: 18474

Reported Deaths: 651
CountyConfirmedDeaths
Mobile2283118
Jefferson1882103
Montgomery180243
Tuscaloosa81616
Marshall7059
Franklin5768
Lee55234
Shelby52220
Tallapoosa43166
Butler41618
Walker3782
Elmore3739
Chambers35826
Madison3444
Morgan2971
Baldwin2929
Unassigned2922
Dallas2823
Etowah26112
DeKalb2563
Lowndes25512
Autauga2395
Coffee2381
Sumter2267
Houston2235
Bullock2136
Pike2080
Colbert1872
Hale1789
Russell1770
Barbour1751
Marengo1746
Lauderdale1672
Calhoun1653
Choctaw15310
Wilcox1527
Cullman1501
Clarke1482
St. Clair1311
Randolph1287
Marion12411
Dale1230
Pickens1215
Talladega1175
Limestone1080
Chilton1041
Greene954
Winston910
Macon864
Jackson833
Henry812
Covington811
Crenshaw783
Bibb761
Escambia743
Washington726
Blount631
Lawrence510
Monroe442
Geneva430
Perry420
Conecuh411
Coosa401
Cherokee383
Clay282
Lamar260
Fayette160
Cleburne151
Tupelo
Clear
73° wxIcon
Hi: 87° Lo: 70°
Feels Like: 73°
Columbus
Broken Clouds
74° wxIcon
Hi: 87° Lo: 70°
Feels Like: 74°
Oxford
Clear
68° wxIcon
Hi: 88° Lo: 67°
Feels Like: 68°
Starkville
Clear
70° wxIcon
Hi: 86° Lo: 66°
Feels Like: 70°
WTVA Radar
WTVA Temperatures
WTVA Severe Weather