New York CNN Business  — 

ExxonMobil is finally cashing in on America’s shale oil boom. But soft crude prices are dinging the oil giant’s bottom line.

Exxon (XOM) said Friday its third-quarter profit tumbled 49% to $3.2 billion as stronger production was overwhelmed by lower prices. Wall Street was bracing for an even steeper decline.

Like other oil titans, Exxon was slow to take advantage of the oil boom happening in its backyard. But Exxon has since ramped up spending, especially in the West Texas shale hotbed of the Permian Basin.

The company reported a 70% spike in Permian shale output, which represents staggering growth for an oil producer the size of Exxon.

Those investments helped boost Exxon’s once-stagnant production. The company’s total oil production rose 4%, excluding asset sales and other items.

“We are making excellent progress on our long-term growth strategy,” Exxon CEO Darren Woods said in a statement that highlighted the Permian strength.

However, that progress came at a cost. Exxon’s capital spending jumped 17%, a contrast from the relative restraint some of its peers are showing.

And the oil market hasn’t cooperated. Slow economic growth, trade tensions and excess supply have kept a lid on prices. US oil prices ended the third quarter at around $50 a barrel, compared with nearly $70 a year earlier.

Exxon said weak prices slashed its drilling profit by $1.5 billion during the third quarter. The segment’s US division suffered a 94% plunge in earnings to just $37 million. Exxon explained that production growth was “more than offset by lower prices and higher growth-related expenses.”

The results still managed to exceed Wall Street’s expectations. Exxon’s share price ticked 1% higher on Friday.

Exxon’s profit drop comes as the company is mired in a high-stakes legal battle in New York. The oil giant has denied accusations of duping investors about the cost of climate change regulations.

Meanwhile, rival Chevron (CVX) posted results on Friday that were worse than investors anticipated. Chevron (CVX)’s profit dropped 36% and its revenue retreated because of lower prices.

Like Exxon, Chevron continues to rapidly build up its shale operations. The company’s Permian Basin oil production totaled 455,000 barrels per day, up 35% from a year ago.