Exxon Mobil Corp. missed Wall Street predictions and joined competitors in suffering from a severe decline in energy prices and reduced fuel margins by reporting a 56% decline in second-quarter profit on Friday.

Oil companies’ second-quarter earnings have decreased from enormous profits posted a year ago after Russia’s invasion of Ukraine drove up oil and gas prices.

Profit declines of 48%, 56%, and 49%, respectively, were announced by Chevron Corp., Shell, and TotalEnergies.

In the absence of encouraging news, shares of Exxon and Chevron fell by less than 1% in pre-market trade.

“Results came in slightly weaker than expected across earnings and cash flow,” RBC analyst Biraj Borkhataria wrote in a note. “We would expect Exxon to underperform the peer group today”.

The full results from Chevron, which had released its primary data on Sunday, were neutral, according to Borkhataria.

Compared to a record $17.85 billion in net income the previous year, net income was $7.88 billion, or 1.94 cents per share. Refinitiv Eikon data showed that $2.01 per share was what Wall Street had anticipated.

Exxon still reported its best quarterly performance in more than a decade for the months of April through June, discounting last year’s record second quarter, thanks to cost reductions and the disposal of underperforming assets.

“That is quite a good quarter for us,” Chief Financial Officer Kathryn Mikells told Reuters. Last year aside, she noted: “You would have to go back to the second quarter of 2011 to find the last time we produced this level of earnings in the second quarter.”

Benchmark Average prices for Brent crude fell to $80 from $110 a year earlier. Liquefied natural gas (LNG) costs decreased from about $33 to $11.75 per million British thermal units (mmBtu).

“Lower natural gas realizations and industry refining margins adversely impacted earnings,” Exxon said in its earnings statement.

“Industry margins declined sequentially from a strong first quarter on weaker diesel margins as Russian supply concerns eased,” the company said, pointing to earnings in Energy Products of $2.3 billion, down $1.9 billion from the first quarter.

A rise in Chemical Products’ earnings to $828 million from $371 million in the first quarter, supported by decreased feed costs, it said, partly offset that.

According to Mikells, Exxon has produced 3.7 million barrels of oil equivalent per day (boed) so far this year, meeting the company’s yearly goal.

The U.S. Permian area, which produced 622,000 boed in the quarter, and Guyana, where Exxon intends to raise production by 5% to 400,000 boed by the end of the year, both contributed to higher results.

In keeping with the company’s full-year projection of $23 billion to $25 billion, capital and exploration investment was $6.2 billion in the second quarter and $12.5 billion in the first half of 2023, according to the company.

The corporation has cut structural costs by a total of $8.3 billion from 2019 levels, which is very close to its $9 billion goal.

Exxon announced earlier this month that it would pay $4.9 billion to acquire gas pipeline provider Denbury Inc in order to expand its carbon capture and storage (CCS) business and advance the energy transition.

In the second quarter, the oil giant paid out roughly $8 billion in cash to stockholders, including about $3.7 billion in dividends.

“We are very comfortable overall with our capital allocation approach,” Mikells said. “So we’re committed to continuing that balanced approach.”

(Adapted from EconomicTimes.com)