HOUSTON: Exxon Mobil Corp and Chevron Corp posted rare quarterly earnings misses as cost cuts and rising oil prices failed to offset weakness in international refining operations, sending shares of both companies plunging.

The results surprised Wall Street, where analysts had been steadily raising expectations due to stronger crude prices and a rebounding global economy, according to Thomson Reuters data.

But excluding US tax benefits, results at both companies fell short of expectations, casting a cloud over the US oil industry just days after the nation’s output surpassed a milestone 10 million barrels per day. “We got carried away with our expectations, and by we, I mean Wall Street as a whole,” said Oliver Pursche of wealth manager Bruderman Brothers, which holds Exxon shares.

Exxon, Chevron and rival Royal Dutch Shell all reported lower cash flow from operations in the fourth quarter despite higher oil and gas prices. Reasons varied, but included weaker refining profits and spending on capital expenses.

Shell, the world’s second-largest publicly traded oil company after Exxon, managed to overtake its bigger rival for the first time in a key area, producing about 6 per cent more cash last year than Exxon’s $33.2 billion.

“What struck us the most was the decline in cash flow from operations at Exxon,” Pursche said.

Exxon’s stock dropped 6 per cent in Friday afternoon trading, the biggest one-day drop since August 2011. The stock had been making gains after hitting a low last summer, closing Thursday at a 52-week high. But Exxon shares are flat over the past year despite a 22 per cent rise in the S&P 500.

Analysts needled Exxon’s director of investor relations, Jeff Woodbury, with unusually pointed questions about the cash flow drop on a Friday earnings conference call. Exxon Chief Executive Darren Woods did not participate in the call.

The frustration boiled over into the Chevron call, which followed Exxon’s. Mike Wirth, in his second day as Chevron’s CEO, described the refining weakness a one-time issue rather than a systemic problem.

While Wirth’s answers did not seem to mollify all analysts, several thanked him for talking. “I really appreciate you coming on the call from time to time,” Barclays Capital analyst Paul Cheng said to Wirth. “I hope that at least one of your other major competitors will do the same.”

Reuters