Exxon Mobil logo and stock graph are seen through a magnifier displayed in this illustration taken September 4, 2022. REUTERS/Dado Ruvic/Illustration

By Sheila Dang

HOUSTON (Reuters) -Exxon Mobil beat Wall Street estimates for third-quarter earnings on Friday, underpinned by higher oil and gas production in Guyana and the Permian Basin, which offset lower oil prices.

Adjusted earnings during the July-to-September quarter were $8.1 billion, or $1.88 per share, beating analysts' consensus estimate of $1.82 per share, according to data compiled by LSEG.

Free cash flow, however, declined to $6.3 billion from $11.3 billion in the same quarter last year as the top U.S. oil producer spent more to acquire additional acreage in the Permian Basin. The company's shares declined 1.5% in morning trading before paring some of the losses.

Global oil producers have experienced a rocky year as OPEC+ has increased its oil output while a U.S.-led tariff war has clouded the outlook for global growth and oil demand, driving oil prices down in the third quarter from a year earlier. Brent crude prices averaged $68.17 in the third quarter, down about 13% from the same period last year.

PRODUCTION GROWS IN KEY AREAS

Oil and gas production totaled 4.8 million barrels of oil equivalent per day, which included record output in Guyana and the Permian Basin. The figure was up from 4.6 million boepd in the second quarter.

During a conference call with analysts, Exxon CEO Darren Woods said the company is continuing to invest in developing technology to increase the amount of oil it can pull out of the ground, as well as evaluating acquisition opportunities because it sees strong energy demand growth in the future.

"The industry has to bring on more barrels just to stand still," Woods said. "That goes into our thinking in terms of what's needed from an investment standpoint, and really keeps us focused on the medium- to long-term rather than the very short-term."

Woods also said Exxon was looking to lift force majeure on its $30 billion liquefied natural gas project in Mozambique as security risks in the country are abating.

Exxon paid $4.2 billion in dividends and repurchased $5.1 billion worth of shares during the quarter. It is on track to meet its annual share buyback target of $20 billion.

The company raised its fourth-quarter dividend by 4% to $1.03 per share.

The results were mixed, with higher expenditures offsetting the positive news of the dividend increase and earnings beat, wrote Jeoffrey Lambujon, an analyst with TPH & Co, in a research note.

Earnings from upstream totaled $5.7 billion, while refining profits were $1.8 billion.

Excluding acquisitions, Exxon said it expects its capital expenditure this year to be slightly below the low end of its $27 billion to $29 billion guidance range.

The company recorded $510 million in restructuring costs during the quarter.

While crude prices have been down, average U.S. natural gas prices over the quarter rose about 38% from last year.

(Reporting by Sheila Dang in HoustonEditing by Sonali Paul, Mark Potter and Nick Zieminski)