updated 7/26/2007 11:38:08 AM ET 2007-07-26T15:38:08

Exxon Mobil Corp., the world’s largest publicly traded oil company, said Thursday its second-quarter profit fell 1 percent from a year ago as lower natural gas prices and production declines hurt results.

Still, the company’s net income of $10.26 billion was the fourth-largest quarterly profit ever recorded by a publicly traded U.S. company. The latest profit compared with earnings of $10.36 billion in the second quarter of 2006.

On a per-share basis, Irving, Texas-based Exxon Mobil reported earnings of $1.83 a share in the most-recent quarter, up from $1.72 from a year ago, reflecting about 7 percent fewer shares on the market from a year ago because of an ongoing stock buyback program.

Revenue dipped to $98.35 billion from $99.03 billion a year ago.

The earnings result fell short of the forecast of $1.96 a share by analysts polled by Thomson Financial, but the revenue figured topped the prediction of $97.6 billion. The earnings estimates typically exclude one-time items.

Its shares, which have risen about 20 percent since the first of the year, have traded in a 52-week range of $63.87 to $93.62.

Exxon Mobil, which produces 3 percent of the world’s oil, said earnings from its exploration and production arm fell 17 percent to $5.9 billion in the most-recent period, largely reflecting lower natural gas prices. Production on an oil-equivalent basis fell 1 percent from a year ago — a significant blow for a company that generates more than two-thirds of its earnings from oil and gas production.

Exxon Mobil said weak demand for natural gas in Europe continued to hamper results.

But like some of its competitors, Exxon Mobil said it got a big lift from higher global refining and marketing margins. Earnings from refining and marketing rose 37 percent in the quarter to $3.4 billion. That result also was aided by the sale of a German refinery, Exxon Mobil said.

Also Thursday, Royal Dutch Shell PLC, based in The Hague, Netherlands, said net profit rose 18 percent in the second quarter to $8.67 billion, which it also attributed to strong increases in margins at oil refineries.

Exxon Mobil said it bought 99 million shares of its common stock in the quarter at a cost of $8.1 billion. Roughly $7 billion of that amount was dedicated to reducing the number of shares outstanding; the balance was used to offset shares issued as part of the company’s benefit plans.

The company said shares outstanding fell to 5.5 billion at the end of the second quarter from 5.6 billion at the end of the first quarter.

For the first six months of 2007, Exxon Mobil posted record earnings of $19.5 billion, or $3.45 a share, up 4 percent from $18.76 billion, or $3.09 a share, a year ago. Sales fell to $185.6 billion from $188 billion a year earlier.

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