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Exxon posts smallest profit since 1999

Chicago - Exxon Mobil posted its weakest quarterly profit in more than a decade amid tumbling energy prices that have already cost the oil explorer its sterling credit rating.

First-quarter net income fell to $1.81bn from $4.94bn, a year earlier, Exxon said in a statement on Friday. The per-share result was 15 cents above the 28c average estimate of 19 analysts in a Bloomberg survey.

It was Exxon’s sixth straight drop in quarterly earnings, the longest losing streak since 2001-2002. Crashing crude and natural gas prices have compounded the fall-out from chairperson and CEO Rex Tillerson’s wrong-way bets on shale gas and the Russian Arctic.

Cash conservation measures including drastic cost cuts and halting share buybacks weren’t enough to prevent Standard & Poor’s from revoking Exxon’s AAA credit rating for the first since the Great Depression earlier this week.

While posting a loss in upstream, the company’s chemical business improved. Chemical earnings increased 38% to $1.4bn on stronger margins and higher sales volumes, capturing increased specialty and commodity product demand along with significant cost benefits from both gas and liquids cracking advantages at integrated sites, the company said in the statement.

The Downstream segment earned $906m as global gasoline demand remains relatively strong.

Exxon disclosed first-quarter results before the opening of US equity markets. The stock fell 0.5% to $88.03 on Thursday and has advanced 13% this year. Among analysts who follow the company, Exxon has eight buy rating, 13 holds and six sells.

Tillerson, an Exxon lifer who’s been CEO since January 2006, ceased share buybacks in February that were consuming $1 billion a quarter as recently as early 2015.

The 2016 capital budget has been cut by about 25% to $23.2bn and Tillerson said last month that it will continue to shrink through at least next year. Despite those measures, full-year profit is expected to dip below $10bn in 2016 for the first time since the company’s historic acquisition of Mobil in 1999.

Brent crude, the benchmark for international oil sales, fell 36% to an average of $35.21 a barrel during the quarter from a year earlier, according to data compiled by Bloomberg.

US gas averaged $1.982 per million British thermal units, down 29% from the first quarter of 2015.

Despite the rout in crude markets, Exxon earlier this week raised its quarterly payout to stockholders by almost 3% to 75c a share. The pledge will cost the company $3.1bn when the dividend is paid in June.

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