The integrated oil giant earned $9.41 billion in the third quarter, or $1.70 a share, down from last year's $10.49 billion and $1.77 a share. Analysts surveyed by Thomson Financial were looking for $1.75 in the latest quarter.

Shares of Exxon were losing 2.8% to $89.42 in afternoon trading Thursday.

The decrease in profits, Exxon said, "reflected lower downstream and chemical margins partly offset by higher crude oil realizations."

Earnings from upstream operations were $6.30 billion, down $194 million from the third quarter of 2006. Lower natural gas realizations and higher operating expenses were to blame for the downturn, Exxon stated in a press statement.

During the quarter, Exxon earned a realized price per barrel of $71.46, up $6.42 from the same period last year, according to Henry Hubble, vice president of investor relations, who spoke on a conference call.

The company's production of liquids lagged during the quarter, falling by 110,000 barrels a day from last year. Venezuela's expropriation of Exxon's drilling installations last spring was responsible for the fall, Hubble said.

In September, Exxon filed a request with the International Center for Settlement of Investment Disputes seeking arbitration for its losses in Venezuela. The issue has not yet been resolved.