Exxon Mobil Corp, the world's largest publicly traded oil company, reported a quarterly profit on Thursday that topped expectations, as higher margins from its refining arm countered a 7.5 decline in oil and gas output.
Exxon and other global oil producers are buying oil and gas assets in North America as they struggle to raise production in a sector where vast energy resources are tightly controlled by countries like Brazil.
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Earlier this month, Exxon agreed to buy Celtic Exploration Ltd for $2.64 billion. That deal will give Exxon access to some of the most promising shale oil and gas region in Western Canada.
And in September, Exxon said it planned to buy 196,000 acres in the Bakken shales in North Dakota and Montana in a $1.6 billion deal.
"The (earnings) beat definitely came from the refining side of the business," said Brian Youngberg, energy company analyst at Edward Jones in Saint Louis. "The production decline was more than expected. It has been a recurring challenge for Exxon."
Refining margins have improved as companies benefit from processing cheaper grades of crude oil from Canada as well as shale basins like the Eagle Ford in south Texas.
Earnings from Exxon's global refining business more than doubled to $3.2 billion. The company's exploration and production business had a profit of $5.97 billion, down 29 percent.
Natural gas prices in the United States fell about 30 percent from a year-ago in the quarter as huge supplies weighed. Brent crude prices in the quarter were also declined, pinched by worry about global demand.
Those lower prices cut into Exxon's profitability.
The Irving, Texas company said its third-quarter earnings had fallen to $9.57 billion, or $2.09 per share, from $10.33 billion, or $2.13 per share, a year earlier.
Analysts on average had expected a profit of $1.95 per share, according to Thomson Reuters I/B/E/S.
Exxon's revenue fell 8 percent to $115.7 billion.
Oil and gas output declined 7.5 percent to 3.96 million barrels oil equivalent per day, Exxon said.
Analysts at Houston-based energy investment bank Simmons & Co had expected Exxon to report a production decline of 5 percent.
The company said it had bought back 58 million shares of its own stock for $5.1 billion in the third quarter.
Shares of Exxon were up 10 cents at $91.27 in mid-morning trade on the New York Stock Exchange trading.
(Additional reporting Ernest Scheyder in New York; Editing by Lisa Von Ahn, Gerald E. McCormick and Leslie Gevirtz)