Exxon plans to keep jobs, investments although third-quarter profit plummeted

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Weak consumer demand for fuel sliced third-quarter profit for Exxon Mobil Corp. and other major oil companies.

While Exxon, with its deep pockets, plans to continue its multibillion-dollar investment projects without layoffs, other oil companies are shrinking in response to the weak market for oil, natural gas and fuels.

On Thursday, Exxon announced that third-quarter net profit dropped to $4.7 billion, or 98 cents a share, from $14.8 billion, or $2.85 a share, a year ago.

Revenue dropped 40 percent to $82.3 billion because of lower oil and natural gas prices and weak demand for fuel.

"These earnings reflect a very challenging operating business environment due to weak demand and lower business margins," said Ken Cohen, Exxon's vice president of public affairs.

For the Irving oil giant, the weakest spot was U.S. refining operations, which lost $203 million in the quarter, or $2.2 million a day.

Americans used less gasoline and diesel during the quarter because of the weak economy.

When people lose their jobs, they don't drive to work. And when people have less money, they don't buy as many goods, and stores don't need as many diesel-driven shipments.

Demand for gasoline and diesel was lower during the third quarter than last year. According to the American Petroleum Institute, gasoline demand recovered in September, up 6.6 percent from a year ago, but demand for diesel and other distillate fuel was down 1.5 percent.

Oil and natural gas prices also were lower than last year. Oil was above $100 a barrel during the third quarter of last year. On Thursday, oil prices closed at $79.87, up 3 percent from the day before.

So, even though Exxon produced 3 percent more of the commodities in the third quarter, the company made less money off that production. Profit from oil and gas production dropped 57 percent to $4 billion.

Other oil companies also are suffering. Royal Dutch Shell said Thursday that third-quarter earnings dropped 72 percent to $3 billion. The company is cutting costs and laying off 5,000 employees.

Exxon officials say they are not cutting jobs or investment. The company's investment strategy is to spend steadily during good times and bad.

"Despite the ups and downs of the business cycle, we continue to adhere to our disciplined long-term strategy," Cohen said.

Exxon officials said they will probably spend about $26 billion this year on capital expenditures, close to last year's investment but below their original estimate of $29 billion.

Cohen said the spending cut has nothing to do with the recession or lower profit, rather it's because some projects will come online later than anticipated. Also, Exxon benefited from some cost savings in those projects.

The company is building terminals to liquefy natural gas, ship it globally, and then regasify it for pipelines.

Exxon is drilling new oil and natural gas wells around the world, and it is acquiring acreage to drill for natural gas in shale fields in Europe, similar to the Barnett Shale in North Texas.

Exxon shares closed Thursday at $73.96, up 0.2 percent.