The biggest of the big publicly traded oil majors, ExxonMobil Corp., failed to impress investors with its first quarter performance, with production falling below 4 million boe/d for the first time in nearly 20 years.

First quarter profits of $4.7 billion ($1.09/share) rose from year-ago profits of $4 billion, but they failed to hit Wall Street consensus of $1.12/share. In 1Q2014 profits reached $9.1 billion on the back of soaring oil prices, and in the first three months of 2015, as the oil slump was beginning, profits still reached $4.9 billion.

CEO Darren W. Woods, in prepared comments, said increased commodity prices, combined with “a focus on operating efficiently and strengthening our portfolio, resulted in higher earnings and the highest quarterly cash flow from operations and asset sales since 2014.

“Through new discoveries and acquired acreage, we’ve positioned our upstream portfolio well for future growth. We also made good progress on our plans to improve the production mix and grow premium product sales in the downstream and chemical businesses.”

Questions surround the global output, however. Worldwide, upstream production was down 6% year/year at 3.89 million boe/d from 4.15 million boe/d, blamed on declines, entitlements and divestments that were offset by North American growth. Excluding one-time items, production fell 3% year/year.

In the United States, oil, gas and liquids volumes increased to 523,000 b/d from 513,000 b/d, while Canadian/Other Americas volumes rose to 427,000 b/d from 421,000 b/d.

However, U.S. gas volumes declined year/year to 2.576 Bcf/d from 3.011 Bcf/d, while Canada/Other Americas volumes were down at 211 Mcf/d from 218 Mcf/d.

Investor relations chief Jeff Woodbury helmed the conference call early Friday, stressing that future growth is in the pipe, fueled by North American upstream, chemical and refinery investments.

To be sure, U.S. upstream performance recovered from year-ago losses, soaring 447% year/year to $428 million from a loss of $18 million as crude oil and natural gas prices strengthened.

However, North American crude realizations were impacted by an increased discount in Western Canada, notably for heavy oil, as supply exceeded pipeline and rail capacity, Woodbury noted.

“Takeaway capacity in Western Canada is not going to be resolved anytime soon,” he said. ExxonMobil, he noted, has been developing oilsands for nearly 30 years, but any “new investments” are going to have to compete with other options across the portfolio to ensure the company can capture attractive returns.

“We continue to identify options in both in situ and mining operations” in Canada, but the oilsands have “fallen in rank…When the value proposition meets our objectives, we’ll move forward with it.”

Meanwhile, natural gas prices were supported by strong seasonal demand on winter weather across the United States and Europe, along with higher crude-linked liquefied natural gas (LNG) prices.

Worldwide, capital and exploration expenditures rose 17% from a year ago to $4.9 billion. U.S. upstream capital spending was up sharply at $1.25 billion from $704 million.

Operations-wise in the United States, ExxonMobil’s largest onshore operation, the Permian Basin, had 27 operated rigs running in the quarter, with another four working the Bakken Shale. Together, output from the two plays increased by 18% year/year.

“We have a number of 15,000-foot wells in Bakken that are still early and they are producing,” Woodbury said. “The results are meeting expectations…We also have drilled some longer laterals in the Permian that are not yet completed…

“At this stage, you have to remember that a lot of wells are drilled by pad to optimize and focus on capital efficiencies.” Production, he said, tends to “come in batches…We’re being careful,” but to be candid, he said, “we do think we have a competitor advantage here. I will tell you that we see value uplift” from the tight plays, as management laid out in the annual analyst meeting in March.

At the Hebron field in Canada, which started up last year, production ramped up to 14,000 boe/d in the first quarter with well performance exceeding expectations, Woodbury said.

And on the LNG front, a severe earthquake in Papua New Guinea (PNG) in February temporarily shut down operations at ExxonMobil’s PNG LNG project while the company responded with humanitarian relief and worked to fully restore operations. The project resumed LNG production ahead of schedule in mid-April. The impact of the earthquake reduced earnings by $80 million and production by 25,000 boe/d.

ExxonMobil has increased the estimated size of the natural gas resources in the P’nyang field in PNG to 4.36 Tcf, an 84% hike from an assessment completed in 2012.

“This increase, based on an independent recertification study, supports a potential three-train expansion concept of the PNG LNG plant,” Woodbury said.

The company also strengthened its worldwide portfolio, announcing, among other things, its seventh discovery offshore Guyana, and increased holdings in Brazil’s pre-salt basins, where it won eight additional exploration blocks. In addition, the company added more than 640,000 net acres to its existing deepwater portfolio offshore Brazil.

Also during the quarter ExxonMobil and Synthetic Genomics Inc. announced a new phase in their joint algae biofuel research program that could lead to the technical ability to produce 10,000 b/d of algae biofuel by 2025.

Cash flow from operations and asset sales in 1Q2018 was $10 billion, including proceeds associated with asset sales of $1.4 billion. The corporation also distributed $3.3 billion in dividends.