Exxon Mobil Relinquishes Biggest Company Crown to Apple

Shares of Exxon Mobil Corp. (XOM) are down nearly 2 percent in afternoon trading on Thursday, accelerating losses from the last six days after hitting an all-time high of $95.49 on July 23.  At $92, shares are off by 3.6 percent from those highs.  With the slide in Exxon value and recent appreciation in shares of Apple, Inc. (AAPL) , the gas and oil behemoth and tech giant have once again flip-flopped positions as the world’s most valuable company, with the iPhone maker re-assuming the position as king.

This morning, Exxon released its estimated results from the second quarter, showing its smallest quarterly profit in three years.  The company reported revenue of $106.47 billion, versus $127.36 billion in the same quarter last year.  Earnings for the quarter totaled $6.86 billion, or $1.55 per share, down 57 percent from $15.91 billion, or $3.41 per share, in the year prior quarter. 

Wall Street was expecting earnings of $1.90 per share on sales of $105.5 billion.

The year prior quarter benefited $7.5 billion from divestment of a Japanese lubricants division and tax-related gains.  Excluding those gains, the recent quarter’s profits were still 19 percent lower.  It was Exxon’s lowest quarterly profit since the first quarter of 2010 ($6.3 billion).  On a per share basis, it was the worst earnings since the third quarter of 2010 ($1.44 per share).

The company took hits across the board, struck by lower production, lower margins, reduced volumes at refineries and higher exploration costs.  Oil-equivalent production decreased 1.9 percent from the second quarter of 2012.  Production has now fallen year-over-year for nine straight quarters.

Weaker margins, mostly in Exxon’s refinery business, decreased earnings by $510 million.

Capital and exploration expenses rose 10 percent to $10.2 billion for the quarter.  At $597 million, corporate and financing costs were essentially flat compared to last year’s quarter.

Liquids productions fell slightly from 2,208,000 barrels per day to 2,182,000 barrels per day.

Natural gas production dropped 307 mcfd (million of cubic feet per day) to 11,354 mcfd.  The decrease was paced by lower production in the U.S. and Asia and counterbalanced by increased production in Europe.  Exxon became the largest natural gas producer in the United States when it spent $25 billion in 2010 to acquire XTO Energy.

Not discouraged, Exxon Mobil chairman Rex W. Tillerson commented in today’s statement, “ExxonMobil’s second quarter results reflect continued strong operational performance and investments to meet growing demand for oil, natural gas and chemical products in the years ahead.”

During the quarter, the company rebought 45 million shares for an aggregate cost of $4.0 million.  Dividends of 63 cents per share were up 11 percent from the second quarter last year.

The recent drop in XOM shares has shaved about $15 billion from Exxon’s market capitalization.  Meanwhile, Apple gained about 15 percent in July, packing about $53 billion on to its market cap.  Apple may have regained its crown, but the two companies are still very tight with only about $2 billion separating their valuations.  Any swings in share price in the opposite direction and Wall Street could see the roles quickly reversed…again.