*

Shares rise in pre-market trading

*

Second-quarter oil and gas output at highest in more than

25

years

*

Low production costs cushion impact of price fall

By Sheila Dang

HOUSTON, Aug 1 (Reuters) - Exxon Mobil ( XOM ), the

United States' biggest oil producer, beat Wall Street estimates

for second-quarter profit on Friday as higher oil and gas output

and low production costs offset the impact of lower crude

prices.

Oil and gas production was the highest for any second

quarter since the merger of Exxon and Mobil formed the company

more than 25 years ago, Exxon Mobil ( XOM ) said.

Adjusted earnings during the second quarter were $7.1

billion, or $1.64 per share, surpassing consensus analyst

estimates of $1.56 per share, data compiled by LSEG showed.

The energy sector has struggled with price volatility as the

OPEC+ group increased its production, pushing global benchmark

Brent crude prices down 11% in the quarter.

Global tariffs levied by U.S. President Donald Trump added

to price weakness because they raised the prospect of a

weakening global economy with knock-on effects for oil demand.

"The second quarter, once again, proved the value of our

strategy and competitive advantages, which continue to deliver

for our shareholders no matter the market conditions or

geopolitical developments," Exxon CEO Darren Woods said in a

statement.

Shares of Exxon were slightly higher in pre-market trading.

Exxon paid $4.3 billion in dividends and repurchased $5

billion worth of shares during the quarter. The buyback figure

puts the company on track to meet its annual share repurchase

goal of $20 billion.

The company's main production areas include the Permian

basin, the largest U.S. oilfield, as well as the prolific

Stabroek Block off the coast of Guyana.

The low cost of production in those fields allows them to

stay profitable even during times of lower oil prices, Exxon has

said previously.

Global production totaled 4.6 million barrels of oil

equivalent per day during the quarter, up from 4.5 million boed

in the previous three months.

The start-up of Yellowtail, a fourth floating production,

storage and offloading facility in Guyana, is anticipated next

week, the company said.

In a press briefing, Woods said he would assess

opportunities for acquisitions, but with a high bar.

"We're not interested in buying volume," he said. "We're

very focused on creating value."

Last month, Exxon lost a legal challenge against Hess, one of

its partners in Guyana, which cleared the way for rival Chevron

to complete its acquisition of Hess.

Exxon argued it had a contractual pre-emptive right to

purchase Hess' 30% stake in the Stabroek Block.

Woods said Exxon sought out legal opinions from neutral,

third parties about the joint operating agreement that governed

the partnership between Exxon, Hess and China's CNOOC in Guyana.

"In every case, and I mean in literally every case, we were

told that our rights were clear," Woods said.

The arbitrators said that Exxon had a commercially

reasonable argument but that it relied on a narrow textual

interpretation, Woods said, adding that the company would take

steps to strengthen future contracts as needed.

Earnings from oil and gas production were $5.4 billion, down

from $6.7 billion in the first quarter.

Exxon said it expects lower scheduled maintenance in its

refining business during the third quarter.