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Exxon Mobil Corporation (XOM) Stock Slides on Cratering Revenue, Earnings

Shares of Exxon Mobil Corporation (ticker: XOM) fell on Friday after a disappointing third-quarter earnings report that saw revenue fall 13 percent and profits slide by almost 40 percent. XOM stock, which had gained 4.4 percent in the last month, was down 1.6 percent in early morning trading.

Exxon managed to earn $2.65 billion in the quarter, down 38 percent from the $4.24 billion it made a year ago. On an earnings-per-share basis that came out to 63 cents versus $1.01 a year ago. Analysts were expecting EPS of 58 cents, so profitability was modestly better than feared. Still, it was the eighth consecutive quarter of year-over-year profit declines, the worst streak for Exxon since 1988.

[See: 5 ETFs to Invest in Exxon Mobil Corporation.]

Weaker refining margins were mostly to blame for the earnings decline, the company said.

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Revenue, however, was not only down but came in below analyst estimates. The Irving, Texas-based integrated oil and gas company posted third-quarter revenue of $58.7 billion, down about $8.7 billion from the $67.3 billion it took in a year ago and substantially beneath the $61.34 billion Wall Street expected. This was the ninth straight quarter of year-over-year revenue declines.

On the profitability side, one way XOM was able to beat on earnings was by dramatically slashing capital and exploration expenditures, which it cut by 45 percent. Capex came in at $4.19 billion last quarter, down from the $7.67 billion it spent in that area a year ago.

[See: 7 Notable Quotes From Warren Buffett.]

With oil prices stubbornly refusing to materially advance for any long period of time, the energy sector has been forced to trim costs and operate on leaner budgets than in years past. Even the world's biggest oil and gas companies like XOM and Chevron Corp. ( CVX) are feeling the pain. Although Exxon was profitable last quarter, it paid out more dividends than it made in earnings. Exxon paid $3.1 billion in dividends on $2.7 billion in profit in the third quarter.

XOM stock pays a quarterly dividend of 75 cents per share, or $3 annually. That works out to a dividend yield of 3.5 percent, well above the yield on the Standard & Poor's 500 index, which sits at 2.2 percent. Meanwhile, the 10-year Treasury yield pays out just 1.85 percent.

Brent crude prices fell 8.4 percent to $46.99 a barrel last quarter, and XOM pumped the equivalent of just 3.81 million barrels a day, missing the 3.99 million-barrel estimate.

"While the operating environment remains challenging, the company continues to focus on capturing efficiencies, advancing strategic investments, and creating long-term shareholder value," said Rex Tillerson, Exxon's chairman and CEO.

On the brighter side of things, Exxon announced a discovery of between 500 million and 1 billion barrels of oil on Thursday on the Onwowo field offshore Nigeria, so that will increase its reserves going forward.

Consensus estimates for the fourth quarter call for earnings per share of 71 cents and revenue of $67.5 billion, though those figures might see revisions in the coming days on the heels of the XOM earnings announcement. Regardless, investors can expect full-year 2016 revenue to come in at least 10 percent lower than they were in 2015; the current consensus calls for an 11.5 percent decrease to $237.9 billion.

[See: The 7 Smartest Acquisitions of All Time.]

If energy prices remain subdued well into 2017, however, that number will have to come down significantly -- and Exxon's ugly streak of revenue and profit declines may continue indefinitely.

John Divine is a staff writer for U.S. News & World Report. He is also a longtime investor, and has previously written about investing and the markets for InvestorPlace and The Motley Fool. You can follow him on Twitter @divinebizkid or give him the Tip of the Century at jdivine@usnews.com.