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By Ernest Scheyder and Anna Driver
July 31 (Reuters) - Weak oil prices shriveledquarterly profit at Exxon Mobil Corp and Chevron Corp on Friday, compelling both companies to rethinkoperations and plan for what many expect to be a sustainedperiod of cheap crude.
Earnings at U.S. oil majors Exxon, which were the worst in adecade, and Chevron missed analysts' expectations, adding toconcerns that perhaps executives had not acted quickly enough tomitigate the impact of an over-50-percent drop in oil pricessince last summer.
The results highlight how smaller and more nimble U.S. shaleoil companies have slashed costs faster and more aggressivelythan global majors. Some shale producers have cut back drillingby 60 percent or more.
Evan Calio, an analyst with Morgan Stanley, said onExxon's earnings conference call that the oil giant appeared tobe less vocal than its peers about cutting costs.
Jeff Woodbury, Exxon's head of investor relations, respondedthat the company was constantly focused on capital efficiencyand cost management.
Still, Exxon is sticking for now with its plans to spend $34billion this year, although that figure has a downward biasbecause of cost savings and efficiencies, Woodbury said.
Chevron also still plans to spend $35 billion this year, butsaid it would spend less in 2016 and 2017 as several megaprojects come online.
CUTS AT EUROPEAN RIVALS
Exxon and Chevron's European peers such as Royal Dutch ShellPlc have taken more aggressive action. BP Plc cut its budget for the second time this year, while Shell saidit would lay off 6,500 workers.
Exxon's profit fell by more than half, with the biggest dropin its exploration and production business, where earningsslumped by nearly $6 billion
Chevron's profit plunged 90 percent, a starker drop and oneexacerbated by a $2.22 billion loss in its exploration andproduction division.
Pat Yarrington, Chevron's chief financial officer, seekingto head off complaints about cost management, said the companyhad slashed about $3 billion in spending so far this year, andwasn't done. Still, analysts peppered her throughout theearnings call for details.
Though production grew at both companies, they missed theestimates of many analysts who had expected the energy giants topump more.
Shares of both slumped more than 3 percent in afternoontrading.
BRIGHT SPOT
To be sure, the two companies benefited from their refiningdivisions, which make gasoline and other fuels.
Refining units tend to be far more profitable when oilprices are low, providing Chevron and other integrated energycompanies with an internal hedge during times when coreoperations, such as oil production, are weighed down by weakprices.
Both companies stressed their ability to weather the pricedoldrums and emerge stronger.
Chevron's Chief Executive John Watson, for instance, bluntlydescribed the results as "weak." He laid off 2 percent of itsstaff earlier this week.
"I think in general the industry is putting a sharper pencilto cost cutting," said Brian Youngberg, senior oil companyanalyst at Edward Jones in St Louis. "I think they are realizingthe days of $100 a barrel (oil) are over."
Exxon also said Friday it would slow its share repurchaseprogram. The company purchased $1 billion of its own stock inthe second quarter, but expects to spend roughly half of that onrepurchases in the third quarter.
Chevron earlier this year scrapped its entire repurchaseprogram.
(Reporting by Ernest Scheyder in Williston, N.D., and AnnaDriver in Houston; Editing by Terry Wade and Bernadette Baum)
