BIG FIRMS BEHIND AS OIL PRICES UP

Oil prices are surging worldwide, but the country's biggest oil companies have yet to catch the wave, investing conservatively in new production and ultimately disappointing investors.

Exxon Mobil and Chevron reported strong profits for the fourth quarter, but most of them came from one-time benefits related to the recently-enacted U.S. tax law. Investors were generally underwhelmed by Exxon and Chevron's performance in the fourth quarter, which lagged competitors such as the Anglo-Dutch oil major Royal Dutch Shell and the larger Houston independent ConocoPhillips.

Exxon, headquartered in Irving, even reported that its oil and gas production volumes fell 3 percent in the fourth quarter, compared to the same period in a year ago, despite oil prices ending 2017 about 12 percent higher than at the end of 2016.

"It was a disappointing quarter for both companies," said Brian Youngberg, an energy analyst for Edward Jones, a financial services company in St. Louis. "We'll see if they can reboot in 2018."

Exxon's stock dove 5 percent and Chevron's nearly 6 percent, contributing to Friday's rout on Wall Street. Exxon and Chevron are among the 30 companies in the Dow Jones industrial average, which plunged 666 points.

Exxon, the nation's largest energy company, posted an $8.4 billion profit from the last three months of 2017, up from $1.7 billion during the same period in 2016. But that profit included nearly $6 billion in one-time benefits from the new tax law, largely through higher valuations of U.S. assets because they'll be taxed less.

Subtracting tax benefits and other one-time charges, Exxon Mobil actually earned less operationally than it did at the end of 2016.

"In the case of Exxon, this is just a train wreck," said Pavel Molchanov, an energy analyst with Raymond James, citing a continued pattern of oil and gas production declines from Exxon Mobil for much of the last two years.

Chevron's $3.1 billion quarterly profit in the fourth quarter was buoyed mostly by $2 billion in benefits from the new U.S. tax law changes. That compares to a $415 million profit during the final quarter of 2016.

During the oil bust, Exxon Mobil and Chevron were kept afloat by stronger refining and petrochemical profits. Now, their refining profits are falling and their oil and gas exploration and production earnings are falling short of expectations, analysts said.

Overall capital spending of Exxon and Chevron is relatively flat - Exxon is increasing a bit and Chevron is still cutting - but they're both moving money from international operations and investing more in U.S. shale oil and gas, especially in West Texas' booming Permian Basin.

"The focus now is shifting back to the U.S. and shale," Youngberg said.

Chevron plans to reduce its capital spending in 2018 to $18.3 billion from $18.8 billion last year. But about $8 billion of planned spending is allotted to the United States, with a big focus on acquiring more land and ramping up production in the Permian growth, said new Chevron Chairman and CEO Mike Wirth.

Chevron earlier had a "Let's go slow to really understand what we've got" approach to the Permian shale, Wirth said. "Now we are in a position we feel like we really understand what we want, and where we want to go."

Exxon Mobil plans to increase its capital spending from $23 billion to $24 billion, with most of the extra money dedicated to U.S. shale. Last year, Exxon spent more than $6 billion to beef up its Permian holdings.

Earlier this week, Exxon said it would spend $2 billion in terminal and pipeline upgrades in the Permian as part of $50 billion the company said it plans to spend in the United States during the next five years.

Exxon's stock closed at $84.53 a share, down $4.54. Chevron's stock fell $6.99 a share to $118.58.