Exxon Mobil Corporation (XOM), Royal Dutch Shell plc (ADR) (RDS.B): Should Poor Earnings From Big Oil Make Investors Panic?

Oil prices are rising, and the global economy continues to recover from the worst financial crisis in decades. With those twin tailwinds, you’d think Big Oil stocks would be a no-brainer investment. Unfortunately, a pair of very disappointing earnings results from energy giants Exxon Mobil Corporation (NYSE:XOM) and Royal Dutch Shell plc (ADR) (NYSE:RDS.B) sent each stock significantly lower on a day in which the markets rallied more than 1% to set new all-time highs.

In the wake of disappointing results, should investors view the quarterly reports as one-offs for each company? Or, is this a harbinger of things to come for Big Oil?

Storm clouds as dark as crude oil

Exxon Mobil Corporation (NYSE:XOM) whiffed badly on earnings, representing the company’s biggest miss since 1999. There’s no sugarcoating the results, and investors are likely scratching their heads as to how such a powerful company could come up so woefully short.

All told, second-quarter net income fell a whopping 57% from the prior-year period, due to weaker refining results and lower production. Revenue fell 16% year over year, and the company’s $1.55 in per-share profits was the lowest EPS total since September 2010.

Meanwhile, Royal Dutch Shell plc (ADR) (NYSE:RDS.B) reported a 57% drop in its own quarterly net income. Shell’s problems were distinctly different from Exxon Mobil Corporation (NYSE:XOM)’s. Royal Dutch Shell plc (ADR) (NYSE:RDS.B) attributed its poor quarter to attacks on its operations in Nigeria, in addition to a significant write-down of its North American shale oil fields. Furthermore, production of oil and gas equivalents declined 1.3% from a year ago.

On a positive note, it should be mentioned that despite their big misses, Exxon Mobil Corporation (NYSE:XOM) and Royal Dutch Shell plc (ADR) (NYSE:RDS.B) are two very shareholder-friendly companies.

ExxonMobil increased its dividend by 21% in 2012 and then again by 11% early this year.

This year’s dividend bump represented the 31^st consecutive annual dividend increase from Exxon Mobil Corporation (NYSE:XOM). According to the company, its dividend has grown by 6% compounded annually over the past 30 years.

Royal Dutch Shell plc (ADR) (NYSE:RDS.B)’s dividend yield is much higher, at nearly 5.5% annualized. And, it’s not as if the company’s payout is standing still. The stock recently increased its dividend by nearly 5%.

For investors who’d prefer to stick with an oil company firing on all cylinders, ConocoPhillips (NYSE:COP) handed in a quarterly report that clearly pleased the market more than its two rivals did.

ConocoPhillips (NYSE:COP)’s second-quarter earnings declined, but the results were higher than analyst estimates, and the company raised its production guidance for the year.

And, if you exclude special items, ConocoPhillips (NYSE:COP)’s adjusted earnings per share actually increased, to $1.41 per share from $1.19 per share year over year.