*

Oil and gas output hits record of nearly 4.6 million boepd

Expects full year production of 4.3 million boepd

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Record Permian output, but below analyst estimates

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Shareholder returns reach 20% with expanded dividend

(Adds executive comments from conference call, analyst

comments, share price in paragraphs 6-12)

By Shariq Khan and Gary McWilliams

HOUSTON, Nov. 1 (Reuters) - Exxon Mobil ( XOM ) on

Friday edged past Wall Street's third quarter profit estimate,

boosted by strong oil output in its first full quarter that

includes volumes from U.S. shale producer Pioneer Natural

Resources.

Oil industry earnings have been squeezed this year by

slowing demand and weak margins on gasoline and diesel. But

Exxon's year-over-year profit fell 5%, a much smaller drop than

at rivals BP and TotalEnergies, which posted

sharply lower quarterly results.

The top U.S. oil producer reported income of $8.61 billion,

down from $9.07 billion a year ago. Its $1.92 per share profit

topped Wall Street's outlook of $1.88 per share, on higher oil

and gas production and spending constraints.

"We had a number of production records" in the quarter, said

finance chief Kathryn Mikells, citing an increase of about 25%

year-on-year in oil and gas output to 4.6 million barrels of oil

equivalent per day (boepd).

Exxon earlier this month flagged operating profit had likely

decreased, leading Wall Street analysts to shave their

quarterly per share earnings forecast by nearly a dime.

RECORD PRODUCTION

Exxon's results reflected the first full quarter of

production following its acquisition in May of Pioneer Natural

Resources. The acquisition has already boosted the company's

cash flow, Mikells told analysts on a post-earnings call.

The $60 billion deal drove production in Permian basin, the

top U.S. shale field, to nearly 1.4 million boepd, helping

overcome a 17% decline in average oil prices in the quarter

ended Sept. 30.

Volume growth from the Pioneer acquisition and its

lucrative

Guyana consortium

added almost $3 billion to earnings in the first nine

months of this year, Mikells said on a post-earnings conference

call. Compared with the second-quarter, Pioneer output averaged

slightly lower, she noted.

Despite the record, output from the Permian was still

below Barclays' estimate of 1.5 million boepd, and Exxon's

earnings from U.S. oil and gas production were also softer than

forecast, the bank's analyst Betty Jiang said.

No. 2 U.S. oil producer Chevron ( CVX ), whose plans to

acquire Hess Corp ( HES ) have locked the two rivals in a bitter

arbitration battle over Guyana, beat Wall Street estimates by a

nine-cent margin compared with Exxon's four-cent beat.

That helped Chevron ( CVX ) shares gain more than 3% on Friday,

while Exxon gave up more than 2% of premarket gains to trade

about flat by noon ET (1600 GMT).

Exxon expects full year output to average about 4.3

million boepd, including eight months of Pioneer's

contributions.

The company plans to issue a revised production forecast

next month. It noted that scheduled well maintenance will lower

output by about 30,000 boepd in the fourth quarter.

The market is worried about oil supply outrunning demand

next year, with exporter group OPEC reviewing plans to add

180,000 barrels per day (bpd) of additional oil supply from

December. Oil prices slumped over the summer and remain about

12% below June's average.

REFINING SLUMPS, CHEMICALS GROW

Exxon disclosed it raised its quarterly dividend by 4% after

generating free cash flow of $11.3 billion, well above analysts'

estimates. Rivals Saudi Aramco and Chevron ( CVX ) have had to

borrow this year to cover shareholder returns after boosting

dividends and buybacks to attract investors.

Exxon's earnings from producing gasoline and diesel in the

quarter were $1.31 billion, down from $2.44 billion year-on-year

as weak margins and a nearly month-long outage at its

251,800-bpd Illinois refinery hit segment results.

Lower planned maintenance at other plants, along with gains

on derivatives, helped offset weak industry-wide refining

margins and the impact of the Illinois outage, Exxon said.

"Refining margins definitely came down in the quarter. If

you look at overall results for the refining business, we feel

pretty good," said CFO Mikells. Per unit refining margins since

2019 have about doubled on a constant margin basis, she said.

Profits from Exxon's chemical business, which has been

pressured by industry overcapacity for two years, rose in the

quarter to $893 million, compared with $249 million a year ago,

on a slight increase in margins.