Exxon, the world’s largest publicly traded oil company, reported net income of $9.5 billion, a $50 million increase from the first quarter in 2012, which analysts attributed to a gradual shift from drilling for natural gas to drilling for more profitable oil. Overall gas and oil production volumes fell 3.5 percent, although that trend is expected to reverse by the end of the year because of the imminent start-up of the Kearl oil sands project in western Canada.

The company’s total production has barely budged since 2002, despite some major acquisitions, as a result of declines in older fields and the difficulty of exploring for new fields in a world where most oil is now controlled by national oil companies. Exxon Mobil has tried to pivot from oil to natural gas in recent years, but a supply glut and lower prices in the United States has cut into profits.

Exxon Mobil has been struggling to keep its dominant position by investing heavily in large oil sands and liquefied natural gas projects, which are expensive but not prone to the declining production of more traditional oil fields. Large oil and gas projects are scheduled to come on line over the next five years in Kazakhstan, Angola and Nigeria.

With an eye to the future, the company put a positive light on the earnings. “Exxon Mobil achieved strong results while investing significantly to develop new energy supplies,” Rex W. Tillerson, the chairman and chief executive, said in a statement.

Most analysts drew a more nuanced picture. They pointed to continued strong performance by the company’s United States refineries, which benefit from booming domestic oil production and inexpensive natural gas, while noting declines in production of high-priced natural gas in Asia. The company’s United States chemical business also benefited from low-priced natural gas, an important feedstock.

The company reported chemical earnings of $1.14 billion, $436 million higher than for the same quarter in 2012. It said higher margins were responsible for most of the increase in its global specialty chemicals business, which includes the production of synthetic rubber and lubricants, as well as other products.

Allen Good, a Morningstar oil company analyst, characterized the results as “rather uneventful.” Mr. Good said that inadequate cash flow was forcing the company to borrow to maintain shareholder returns. “As a result,” he added, “it is reducing share repurchases to $4 billion per quarter from $5 billion and could reduce further in coming quarters” while its dividend yield lags competitors such as Chevron.

Exxon’s revenue dropped by 12 percent as earnings from exploration and production fell by nearly 10 percent and earnings from refining and marketing fell by 2.6 percent.

ConocoPhillips, the No. 3 American oil company, also reported mixed results with slightly lower oil and natural gas production. The company reported a first-quarter profit of $2.1 billion, down from $2.9 billion from the same quarter in 2012.

United States oil companies expect improved earnings in the second quarter because of higher oil and natural gas prices, though both have been easing in recent weeks. Domestic natural gas prices, in a long slump from the boom in production, were helped by the cold winter but they will need a hot summer to remain over $4 per thousand cubic feet, energy analysts say. Benchmark oil prices have been bouncing in a range of $90 to $105 a barrel in recent months, but slowing economic growth in China and the slumping economy in Europe are preventing price spikes.

Last year, Exxon Mobil tried to increase its reserves and production by purchasing 196,000 acres in North Dakota and Montana from Denbury Resources for $1.6 billion to add to the Bakken shale oil field. “You’re starting to see the dividends,” said David Lawrence, vice president for investor relations, while noting that operations in the Bakken field are beginning to ramp up.

Exxon Mobile shares were down just over 1 percent in midday trading to $88.48.

Article source: http://www.nytimes.com/2013/04/26/business/energy-environment/exxon-profit-is-flat-conocophillips-earnings-fall.html?partner=rss&emc=rss