The world's largest oil company slashed its share buyback program amid shrinking cash flow and less cash on hand. Fred Katayama reports.
Lower oil prices and higher costs for maintenance slammed ExxonMobil's earnings. Profit fell 21 percent in the latest quarter. The expiration of a production agreement in Abu Dhabi cut down oil production sharply at the world's largest oil company. Earnings from oil-related products fell because of thinner margins in the U.S. and higher expenses. It wasn't all bad. Profit rose sharply at its chemical business due to lower costs, but that makes up less than a fifth of the company's earnings. With less cash on hand and shrinking cash flow, ExxonMobil is cutting its share buyback program again, this time, to $1 billion in the current quarter. That's $2 billion less than before. Exxon Mobil profit handily beat forecasts but revenues missed. The company's shares, which have outperformed its peers over the last 12 months, rose in early trading. With oil prices down 60 percent since June, expect other energy companies to report sharply lower earnings. Fort Washington Investment Advisors chief economist Nick Sargen said, "In the past, we would have nervousness followed by a sigh of relief. This quarter, I'm less sure we'll get that sigh."