Profits Fall Short at Exxon Mobil

Updated from 9:31 a.m. EDT

Exxon Mobil's XOM second-quarter profits declined slightly year over year but still remained well above the $10 billion mark.

However, on a per-share basis, Exxon Mobil missed analysts' estimates. For the quarter, the world's biggest oil company had net income of $10.26 billion, or $1.83 a share, 13 cents short of the consensus forecast carried by Thomson Financial.

A year earlier, it earned $10.36 billion, or $1.72 a share. Per-share earnings rose because the company had fewer shares outstanding in the latest period following a significant stock buyback.

"Lower natural gas realizations were mostly offset by higher refining, marketing and chemical margins," Chairman Rex Tillerson said in a press release. "Exxon Mobil continued to actively invest in the second quarter, spending $5.0 billion on capital and exploration projects. For the first half of 2007, spending on capital and exploration projects was $9.3 billion."

Revenue slipped to $98.35 billion from $99.03 billion in the year-ago quarter.

Total upstream income was $5.95 billion last quarter, down from $7.13 billion in the same quarter of 2006. The decline was mostly caused by lower natural gas realizations. Slimmer gains from asset sales and higher costs were also factors, said Henry Hubble, vice president of investor relations, during a conference call.

Natural gas production was 8.71 billion cubic feet per day in the second quarter, down from 8.75 billion cubic feet during the same time last year. Lower demand for natural gas in Europe contributed to the drop, Hubble said.