Jul. 31--Royal Dutch Shell and Exxon Mobil turned a tough earnings season downright ugly on Thursday with reports of steep profit drops, but the two companies reacted to their news in different fashion.

Shell said it would slash spending by 10 percent in the next year after reporting a 67 percent drop in profits, to $3.8 billion, and a poor outlook for economic recovery.

Exxon Mobil officials emphasized that ongoing investments in some 120 new projects will help it weather the down cycle, with no major job cuts planned, as it reported a 66 percent fall in profits to $3.9 billion including one-time items.

"We take a very long-term view to this business and we are very careful in our assessments," said spokesman Ken Cohen in a call with reporters.

Houston-based producers Apache Corp. and Noble Energy also reported earnings on Thursday, and both beat analysts' expectations.

Apache's net income dropped 68 percent to $443 million, $1.31 a share. Noble reported a smaller net loss from last year of $57 million, 33 cents per share, including bad bets on fuel prices and other one-time items.

Earlier this week, ConocoPhillips said its second-quarter profit tumbled 76 percent, while BP net income fell 53 percent. Chevron, the No. 2 U.S. oil company behind Exxon Mobil, is set to report earnings today.

Steep drops from the same quarter last year aren't a surprise: Oil prices topped $100 per barrel for all of the second quarter of 2008 and averaged just under $60 for the second quarter 2009. The U.S. Energy Information Administration reported Thursday that oil demand for May was down 7.9 percent year-over-year.

But income for Irving-based Exxon Mobil was well below Wall Street's expectations, with analysts polled by Thomson Reuters expecting earnings of $1.02 per share instead of the 81 cents Exxon Mobil reported.

"This is an unusually bad miss," Credit Suisse analysts said in a report to investors, particularly given the drop in the key international exploration business, where profits fell by $4.98 billion to $3 billion. U.S. exploration and production earnings were down $1.2 billion to $813 million.

Exxon Mobil's U.S. downstream business, which includes refining, saw a loss of $15 million while worldwide downstream earnings were down $1.04 billion to $512 million as narrowing refinery margins offset better marketing margins.

The results "will raise red flags over (Exxon Mobil's) safe haven status in a weak energy" sector the Credit Suisse report concluded.