Exxon Mobil Corp said on Thursday its 2012 oil and natural gas output would drop 3 percent from last year even as it increases spending to bring several large new projects on line, pushing its shares lower.

Despite the expected drop in 2012, production should grow by an average of 1 to 2 percent annually through 2016, the company told analysts in New York.

Oil companies like Exxon, Royal Dutch Shell Plc and BP Plc have struggled to increase their oil and gas output in recent years, forcing them to hike their spending to record levels to tap in to difficult-to-reach fields.

The company, the world's largest nongovernment-controlled producer of oil and gas, saw production rise last year by 1 percent to 4.5 million barrels of oil equivalent (BOE) per day.

That modest growth came as the company spent a total of $36.8 billion, slightly less than the $37 billion per year it expects to spend annually for the next five years, or a total of $185 billion.

That spending will go toward nine major project startups this year and in 2013, the company said, followed by 12 projects in 2014, which will help it bring on new production of more than 1 million BOE per day over five years.

The industry is in a period of high capital investment, Chief Executive Rex Tillerson told the meeting.

That spending to bring on new projects is likely to push the company's return on capital employed (ROCE) this year below the 24 percent it earned in 2011, Tillerson said.

Exxon said its production of liquids would grow by 2 to 3 percent on average through 2016, while its gas output would rise by 0.5 to 1.0 percent.

Among the new projects coming on line is the Kearl Oil Sands development in Canada which is expected to begin operations late this year with an initial production target of 110,000 barrels per day.

Other projects due to start up include four in West Africa, as well as the first phase of the Kashagan project in the Caspian Sea off the Kazakhstan coast. Exxon owns a 16.8 percent stake in that project, which is likely to see output of around 400,000 bpd when it comes on line.

Shares of Exxon were down 1.3 percent at $84.70 on Thursday morning on the New York Stock Exchange, lagging the 0.7 percent rise in the CBOE oil companies index <.OIX>.

(Reporting By Matt Daily; Editing by Gerald E. McCormick, Dave Zimmerman and Matthew Lewis)

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