Exxon Mobil was able to beat Wall Street expectations Tuesday as the oil giant’s revenue increased, though it took an impairment charge of $2 billion, mostly because of lowering values of some gas assets in the U.S.
Excluding one-off items, Exxon posted a profit for its fourth quarter of 90 cents per share, while expectations on Wall Street were for 70 cents per share.
Results from the oil giant, based in Irving, Texas were helped by cutting costs through last year. However, persistently low prices of oil and weak profit margins in the refining business at Exxon weighed on its earnings during the full year.
CEO and chairman Darren Woods said that the financial results in 2016 were impacted negatively by the long-term plunge in commodity prices as well as the impairment charge.
Exxon shares were down 1% in trading on Tuesday. One industry analyst said that many investors had been focused on the impairment charge. Including the impairment, Exxon would not have reached its forecasts for profit.
The market viewed the result in a negative way, said the analyst, due to Exxon missing the headline number however that is due to impairments for Exxon that are non-recurring.
Excluding the charge, Exxon posted earnings for the fourth quarter of $3.7 billion equal to 90 cents per share. For the same period one year ago, Exxon posted $2.8 billion in earnings equal to 67 cents per share.
Revenues for its most recent quarter reached $61 billion in comparison to expectations of more than $62.27 billion.
Exxon announced it is increasing its program of capital spending in 2017, which includes its explorations arm, to $22 billion. In 2016, its capital spending dropped 38% to over $19.3 billion.
Earnings for the fourth quarter fell compared to one year ago for all three of the major segments of the company exploration and production, chemical and refining.
The impairment charge of $2 billion resulted from the review by the company of its reserves. A determination was made by Exxon that some assets in the U.S. had future cash flows that no longer surpassed carrying value. They primarily were located in the Rocky Mountains.
Exxon released a warning last quarter that it would revise the quantity of unproduced resources it will hold if the price of oil remained low during all of 2017.