Going into this earnings season, there was a lot of buzz around energy, and with good reason. The U.S. benchmark oil price, WTI, started Q1 2018 by breaking through the $60 mark and continued to climb for most of the quarter, dipping back below that level only once, and even then, it was for only four days.

The most remarkable thing about that was that it came even as there was ample evidence that U.S. production was increasing rapidly. Oil companies were producing more oil and selling it for more, so the numbers had to be good. Still, some energy companies missed earnings expectations.

The most notable miss was by ExxonMobil (XOM), whose stock was just beginning to show signs of recovery after last quarter’s disastrous earnings. It was then hit again after reporting EPS of $1.09, short of the Zacks Consensus Estimate of $1.14. Given the great conditions that prevailed in the first three months of this year, that was obviously disappointing.

Traders were of the mind that, to misquote Oscar Wilde, one earnings miss was unfortunate, but two in a row looks careless, and they reacted accordingly. Ever since former CEO Rex Tillerson left to become Secretary of State, the once-dominant Exxon has lapsed into a series of disappointments, so the question for the company and its investors is clear, is there life after Rex?

As is often the case with earnings related stock moves, the possible longer-term impact on XOM can only be assessed when you look a little deeper into the numbers. In this case there are things beyond the obvious that indicate caution is advised.

On the surface, Exxon’s earnings miss was mainly attributable to weaker than expected results in downstream operation, their refining and chemicals businesses. Higher prices hurt refining operations, as they increase input costs and squeeze margins, so a drop there was at least partly factored into estimates and applied to all integrated oil companies. On a comparative basis, downstream results were still disappointing even in that context, but the real red flag in this report comes from upstream operations.

“Upstream,” in oil terms, refers to the drilling for and extraction of oil and gas, and results there were good for Exxon compared to the same quarter last year. Revenue and EPS both increased significantly year on year, but an analysis of the results would bear a resemblance to my high school report card, which featured the words: “Could do better.”

The problem here is that all of their competitors are expanding production to take advantage of higher oil prices, while Exxon’s production actually decreased 6% compared to last year. Now if that means that they have enormous pent up potential, and if oil continues to rise, then I suppose that will look smart in a few months, but it doesn’t look like a considered strategy.

They have already increased the number of rigs they operate in the Permian Basin and are indicating an 18% increase in shale output this year, both of which suggest that they are trying to produce more from productive areas, yet still falling short overall.

At the same time as trying to expand in some places, though, Exxon is continuing the post-Tillerson policy of selling off some assets and it is telling that the earnings release was very quiet about project start-ups. As their competitors are growing, Exxon seems to have made a conscious decision to shrink. That is often not a bad thing for a big, sprawling, multinational oil company, but holding off when your product is realizing the highest price for years may not be that smart.

The volatility of oil and the unpredictability of geopolitical events may make that look prescient at some point, but for now it looks like a big mistake to traders. Nobody is suggesting that Exxon is in trouble in any way, but that is not the point. Management once again asked for patience from investors, but traders and investors have plenty of choices if they wish to ride the seemingly contradictory wave of oil prices and production rising at the same time.

Based on two consecutive earnings misses and shrinking production in the midst of a boom, however, Exxon stock is not one that many will choose. That means XOM can be expected to underperform again in the coming months and should be avoided.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.