Profit Margins Squeeze Shell and Exxon Mobil LONDON - Royal Dutch Shell, Europe's largest company by market capitalization, reported sharply lower earnings for its third quarter as weak profit margins in refining, and disruption in Nigeria, one of Shell's leading production areas, hurt results. Shell, based in the Netherlands, said earnings excluding extraordinary items were $4.5 billion, a drop of 32 percent from the quarter a year earlier. Net income of $4.7 billion was down 35 percent. Like other oil majors, Shell is struggling just to maintain production, let alone increase it, despite heavy capital expenditure as the tenure of Chief Executive Peter Voser draws to a close. Shell shares were down 4.4 percent in afternoon trading in London to 2,088 pence per share. Exxon Mobil, for instance, on Thursday said its profit was down 18 percent from last year. Production was slightly higher, but profit margins are thinner. Exxon Mobil's third-quarter net income was $7.87 billion, or $1.79 per share, slightly better than analyst expectations. That compares with $9.57 billion, or $2.09 per share, a year earlier. Revenue was down 2 percent to $112.37 billion. At Shell, Mr. Voser said in a statement, "We are facing headwinds from weak industry refining margins and the security situation in Nigeria, which continue to erode the near-term outlook." Analysts at Liberum Capital in London called the results "disappointing" and said that Shell may need to trim its high capital investment. Mr. Voser announced earlier that he would be leaving at the end of the year. He is to be replaced by Ben van Beurden, the current head of Shell's refining business. That unit reported that its earnings fell 43 percent to $900 million in the third quarter. Shell pointed to "global overcapacity and weak demand" as the main culprits. Analysts say that Europe is particularly challenging for refining these days, with razor-thin profit per barrel, because there is too much capacity for existing demand. Shell's oil and natural gas production for the quarter was down by about 50,000 barrels a day to about 2.9 million barrels a day, a 2 percent decrease compared to a year earlier. Shell's oil output declined by 2 percent, while natural gas, which is less valuable than oil these days, increased by 5 percent. Shell also continued to encounter problems in the Americas, losing $347 million on its exploration and production business there. Sarah Bradley a Shell spokeswoman, said the company reviews the value of its portfolio each year in the third quarter and took a series of relatively small write-offs, mostly in the Gulf of Mexico, adding up to about $200 million this year. Shell also said it was gearing up for a new foray into the waters off Alaska, where it has spent more than $4 billion on leases but was forced to call a halt to exploration activities earlier this year after accidents involving its drilling vessels and other problems last fall and winter. The chief financial officer, Simon Henry, said on Thursday that Shell was likely to file a new exploration plan "in a couple of weeks" and had contracted a new drill ship called the Polar Pioneer. Despite the setbacks in Alaska, Mr. Henry said it was "the most attractive single opportunity for the future" in its portfolio. He said that Shell would focus on the Chukchi Sea, which he said was easy to access and was the main potential prize with possibly billions of barrels. He said the company would likely steer clear for now of the Beaufort Sea, which he said was more difficult because the water was too shallow for most drill ships. The company said that outages in Nigeria trimmed production by 65,000 barrels per day and cost about $300 million. Other companies including Eni of Italy have been hurt by problems in Nigeria that included deteriorating security and an extraordinary blockade of a liquefied natural gas facility by the Nigerian Maritime Administration over a payment dispute, Shell said. The company is beginning to put some Nigeria properties with as much as 100,000 barrels a day of production up for sale. Trying to build for the future, Shell spent a hefty $9.7 billion in the quarter on capital investment, part of an estimated $45 billion for the year. Some of the spending is beginning to pay off. Production from Shell's Pearl facility in Qatar that converts natural gas to liquids helped offset the natural declines that occur in Shell's oil and gas fields, the company said. But high costs are squeezing Shell's returns. The company said that its return on average capital employed, a much-watched oil industry metric, was 10.4 percent at the end of the quarter compared to 13.5 percent a year earlier.