Exxon Mobil (XOM), the world’s largest publicly traded oil producer, reported a higher-than-expected first-quarter profit on Friday as it slashed costs to offset plunging crude prices and weak refining margins.
The results reflect the new reality for an oil industry hammered by a more than 60% drop in crude prices since 2014 that has forced radical reductions in spending and personnel.
Exxon’s capital budget during the first quarter dropped 33% from a year earlier, reflecting a drive to survive a price downturn that has already cost the company a perfect credit rating.
Exxon reported net income of $1.81 billion, or 43 cents per share, down from $4.94 billion, or $1.17 per share, a year earlier.
Analysts on average expected earnings of 31 cents per share, according to Thomson Reuters I/B/E/S.
Exxon CEO Officer Rex Tillerson cited the company’s large size and cash flow for helping it weather the low prices.
“The organization continues to respond effectively to challenging industry conditions,” Tillerson said in a news release.
Production rose 2% to 4.3 million barrels of oil equivalent per day.
Exxon’s oil and gas production arm lost money in the United States during the quarter. The company operates in North Dakota, Texas and other parts of the country.
Internationally, profit at the oil and gas production arm fell 74%.
The company’s refining unit’s profit fell 45% due to weak margins, unusual as these operations tend to perform better during periods of low oil and gas prices.
Exxon earlier this week had raised its dividend by 3%, one of the smallest increases in years. Historically, increases have ranged from 5% to 10% or more.
During the first quarter, Exxon spent more on its dividend than it earned.
The dividend increase came the day after Standard and Poor’s slashed the company’s sterling credit rating by one notch to “AA+,” citing concern about Exxon’s quarterly payout to shareholders.