(Adds details from conference call, details on results, updates stock price)
By Anna Driver
Feb 2 (Reuters) - Exxon Mobil Corp said on Monday its quarterly profit fell 21 percent as weak oil prices took a toll, but results topped Wall Street expectations due to a tax adjustment and higher earnings from its chemicals business.
Shares of Exxon rose 1.2 percent to $88.46 in mid-day New York Stock Exchange trading.
Global oil markets are oversupplied at a time when demand is waning, sending crude prices tumbling by more than half since June. Investors are closely watching oil companies' responses to the collapse, which has included job cuts and reduced capital expenditure budgets.
Mindful of lower oil prices, Exxon said it will slash its share buyback program in the first quarter by more than half to $1 billion. In the fourth quarter, Exxon spent $3 billion on share repurchases. Rival Chevron Corp said on Friday it suspended its share buyback program for the year.
Exxon, which plans to release its 2015 capital expenditure plan on March 4, spent $38.5 billion in 2014, down $4 billion from 2013. Spending for the oil major peaked at $42.5 billion in 2013, and the company has said it expects annual budgets below $37 billion over the next several years.
The company's investment plan will change, but not very much because Exxon bases its strategy on long-term planning, Jeff Woodbury, Exxon's vice president of investor relations, said on a conference call.
"We'll keep a close eye on our cash flow, maintain our investment discipline and of course our commitment to the growing dividend," said Woodbury. Last week, Exxon declared a quarterly dividend of 69 per share, up nearly 10 percent from the year-ago quarter. (BreakingViews-Shareholders give Exxon the benefit of the doubt, click )
In stark contrast to other companies drilling in North American shale deposits, Exxon said it increased the number of rigs drilling in its oil basins that includes the Bakken and Permian to 44 in the fourth quarter from 39 in the third period.
Profit in the fourth quarter fell to $6.57 billion, or $1.56 per share, from $8.35 billion, or $1.91 per share, in the same quarter a year earlier.
Analysts, on average, expected a profit of $1.34 per share, according to Thomson Reuters I/B/E/S.
Earnings were helped by about $1 billion in items that included deferrals on income tax and a favorable arbitration ruling for expropriated assets in Venezuela, Exxon said.
"I think the quality of the earnings beat is questionable," said Brian Youngberg, an oil analyst at Edward Jones in St. Louis. "Some net tax effects and Venezuela really drove the beat. They remain growth challenged."
Oil and natural gas production fell 3.8 percent, according to Irving, Texas-based Exxon.
Profit in the company's chemicals unit rose 74 percent to $1.23 billion, while profit in its exploration and production business fell by $1.3 billion to $5.5 billion. (Reporting by Anna Driver in Houston; Editing by Jeffrey Benkoe)