Exxon Mobil on April 26 missed analysts' estimates with a 28% year-on-year drop in first-quarter profits as weaker refining margins and lower natural gas prices offset volume gains.

Exxon Mobil and rival Chevron are feeling the pinch of weak energy prices and fuels margins that have cooled in the last year. A glut of natural gas and a warmer-than-expected winter slashed natural gas prices, eating into earnings.

Exxon, which is in the process of closing a $60 billion deal for top shale oil producer Pioneer Natural Resources, posted lower first-quarter earnings of $8.22 billion, down from an $11.43 billion net profit a year ago.

Earnings from oil and gas production fell 14% on lower natural gas prices and refining tumbled 67% on weaker fuel margins, mark-to-market derivatives and higher maintenance costs. Its chemicals business, however, was a standout, with earnings more than doubling on lower input costs and higher margins, the company said.

Earnings of $8.22 billion for the first quarter ended March 31 were off 29% compared to adjusted profit of $11.62 billion a year earlier.

But the results were the second highest for a first quarter in the past decade, behind the year-ago period, said CFO Kathryn Mikells. The miss was due in part to tax and inventory balance sheet adjustments, she said.

"Every quarter, we have some pluses and minuses associated with these one-off items", she said. "Sometimes they are favorable, this time they were unfavorable."

Global oil prices were largely flat against a year ago while the company received a price for its natural gas that was 32% less than a year ago, the company said.

Oil and gas results were boosted by lower costs and higher volumes from Exxon's Guyana operations, where the latest production vessel hit full production earlier than expected. Hess, one of Exxon's partners in the South American country, earlier flagged the increase with a 70% year-over-year output gain.

Related: Exxon’s Guyana Gas Project a “Win-Win,” Set for Hook-up by Year-end ‘24

"Oil volumes outpaced the street, driven by surging production in Guyana, where gross production reached a record 600,000 barrels per day," said Peter McNalley, an analyst at Third Bridge.

Exxon's capital spending last quarter was the lowest in seven quarters and its streamlining of operations expanded what it calls structural cost savings by $400 million.

It added $1.7 billion in cash last quarter to end the period with $33.3 billion.

Chevron profits down

Chevron beat estimates for first-quarter profit on April 26 as higher production volumes in the U.S. helped to offset a hit from weak natural gas prices and fuel margins. But the supermajor's margins were still down.

The second largest U.S. oil producer posted a profit of $5.5 billion in the quarter ended on March 31, down from $6.57 billion, or $3.46 per share from a year ago. Results beat consensus by 2% as recent acquisitions bolstered oil and gas volumes.

"U.S. production was up 35% from a year ago, and we continued to meet major project milestones," CEO Mike Wirth said in a statement.

Chevron said results were sustained by higher production brought by the acquisition of PDC Energy, Inc and sustained strong execution in the Permian and Denver-Julesburg (DJ) basins.

Chevron said first-quarter oil and gas production jumped 12%, to 3.34 MMboe/d.

Earnings from pumping oil and gas were $5.24 billion, up from $5.16 billion in the same period a year ago. But profits from producing gasoline and chemicals fell sharply, to $783 million from $1.8 billion a year ago. Refining suffered from weaker margins and higher operating expenses, the company said.

Chevron reported adjusted per-share profit of $2.93 for the first quarter, beating analysts' consensus estimate of $2.87.

Hess Arbitration 

Exxon is in a dispute with Chevron and Hess over assets in Guyana, home to the biggest oil finds in the past two decades. In face of Chevron's $53 billion offer for Hess, Exxon has claimed preemption rights over Hess' Guyana assets. That claim is being considered by an international arbitration panel.

Hess' 30% stake in the Guyana joint venture is the prize in Chevron's proposed takeover.

Mikells said Exxon and partner CNOOC Ltd will "evaluate our options" if the arbitration panel agrees that they have the first of first refusal to a sale.

"It is all about clarifying our contractual rights, period," she said.