HOUSTON (AP) – Don’t let Exxon Mobil Corp.’s 1 percent drop in second-quarter profit fool you. It was still the fourth-best quarterly result for an American company – ever. And analysts say the company’s massive global footprint points to more big quarters.

The world’s largest publicly traded oil company said Thursday lower natural gas prices and a drop in production hurt results for the April-June period, contributing to a rare miss of Wall Street expectations.

But Exxon Mobil’s net income of $10.26 billion was still eyepopping and off only slightly from the $10.36 billion it earned in the second quarter of 2006 – the third-best U.S. quarterly result. It already holds the record for the No. 1 quarterly and annual profits.

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 fell short of the forecast of $1.96 a share by analysts polled by Thomson Financial, but revenue topped the prediction of $97.6 billion.

Its shares followed the broader market downward and fell $4.56, or 4.9 percent, to $88.23 on Thursday. The 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.

“The fundamentals of our business are strong, and we saw continued good operational performance in the quarter,” Henry Hubble, the company’s vice president for investor relations, said in a conference call with analysts.

Brian Youngberg, an energy analyst at Edward Jones in St. Louis, called Exxon Mobil’s results disappointing and noted its share price continues to benefit from an aggressive buyback strategy. Exxon Mobil’s quarterly decline came on the same day European competitor Royal Dutch Shell PLC said its net profit rose 18 percent in the second quarter to $8.67 billion.

But Youngberg cautioned against reading too much into Exxon Mobil’s outcome.

“I think for now they’re still the 800-pound gorilla,” he said. “They have the strongest balance sheet. They have the most cash on hand. They’re the big dog, and I think that will continue for the foreseeable future.”

Rex Tillerson, the company’s chairman and CEO, has said Exxon Mobil is spending the bulk of its record profits on finding and producing new supplies of crude oil and natural gas, rather than alternatives, to meet the rising global demand for energy. The company has said it will invest in more than 20 new global projects in the next three years; its capital spending is forecast to be about $20 billion a year through the end of the decade.

“Looking ahead, new projects remain on track while share buybacks continue at a swift pace,” Citigroup analyst Doug Leggate said in a note Thursday.

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.

Like U.S. rival ConocoPhillips, Exxon Mobil last month walked away from a heavy oil project in Venezuela after it was unable to agree on terms for a “mixed enterprise” venture. Hubble said the company’s net investment is those assets is about $750 million, and it continues to negotiate with Venezuelan authorities over compensation.

“At this time, the net impact of this matter on the corporation’s consolidated financial results cannot be reasonably estimated,” he said, noting he doesn’t expect the resolution to have a “material effect” on Exxon Mobil’s operations or financial condition.

ConocoPhillips, the third-largest U.S. oil company, had bigger holdings in Venezuela. On Wednesday, it said a $4.5 billion charge in the second quarter to write off the South American assets sliced net income by 94 percent. Without that charge, higher oil prices and refining margins helped its operating earnings top Wall Street expectations. The April-June results amounted to net income of $301 million.

On Tuesday, London-based BP PLC reported a 1.5 percent increase in second-quarter profit. But BP said production declines and refinery outages hurt results, which amounted to a profit of $7.38 billion.

Chevron Corp., the No. 2 U.S. oil company, is scheduled to report results Friday.

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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