John At The Center

Exxon’s earnings fell 66 percent from a year earlier, while revenue slid 46 percent. The problem, however, is that the company — so revered in the industry for tight cost control — failed to produce a corresponding reduction in the expense line, which fell just 42 percent.

This is partly explained by Exxon’s capital spending. While down 6 percent in the quarter from a year earlier, so far this year the company has spent about as much as it did in the first half of last year to discover new hydrocarbon sources. That gets to the heart of Exxon’s long-term strategic challenge.

via Breakingviews.com – Price Drop Reveals Big Oil’s Problem – NYTimes.com.