Exxon Mobil Corporation (XOM) on Q1 2021 Results - Earnings Call Transcript

Operator: Good day, everyone, and welcome to this Exxon Mobil Corporation First Quarter 2021 Earnings Call. Today’s call is being recorded. And at this time, I’d like to turn the call over to the Vice President of Investor Relations and Secretary, Mr. Stephen Littleton. Please go ahead, sir. Stephen Littleton: Thank you, and good morning, everyone. Welcome to our first quarter earnings call. We appreciate your participation and continued interest in Exxon Mobil. I am Stephen Littleton, Vice President of Investor Relations. I’m pleased to welcome Darren Woods, Chairman of the Board and Chief Executive Officer of Exxon Mobil, who will be joining me for the call today. After I cover the quarterly financial and operational results, Darren will provide his perspective on the quarterly results and how we are positioned for 2021. Following those remarks, Darren and I’ll be happy to address any questions. Darren Woods: Thank you, Stephen, and good morning, everyone. It’s good to be back with you. This time last year, I joined the call to discuss the challenges of COVID-19 and how we plan to respond. At that time, we were early in the pandemic, but the call to action was clear. We made some tough decisions and committed to bold actions. In our fourth quarter call, I reviewed our results, the success we had in meeting, and in some cases, beating those bold commitments. We made a lot of progress over the course of a challenging year. The positive results we announced today reflect not only last year’s work, the work we started years ago, work that has positioned us to take advantage of market improvements. Today, I joined the call to put that work in context. I’ll discuss the foundation for success that we’ve laid and how it will manifest in growing shareholder value, value that will further materialize as markets continue to recover and as the world transitions to a lower carbon future. Our successful response to the unprecedented challenges of 2020 has its roots in two critical initiatives started years earlier. The first was our focus on developing an industry-leading portfolio of advantaged investments to recapitalize our businesses and increase capacity to generate earnings and cash. Prioritized investments in these opportunities last year are paying dividends this year and will continue to well into the future. The second initiative, which began in 2017 and was completed in 2019, was a significant restructuring of our businesses, reducing functional silos, organizing along value chains and consolidating competencies. This greatly reduced organizational complexity, interfaces and overhead. We provided a clearer line of sight to the market, increased ownership for earnings at all levels and improved the speed and quality of decision-making across the corporation. Importantly, it helped our people better relate their work to our bottom line results. Stephen Littleton: Thank you for your comments, Darren. We’ll now be more than happy to take any questions you might have. Operator, please open up the lines for questions. Operator: Thank you, Mr. Woods and Mr. Littleton. We’ll take our first question from the line of Devin McDermott with Morgan Stanley. Devin McDermott: Good morning. Thanks for taking my question. Congrats on the strong results. Good to see some of the cost reductions and growth investments really paying dividends here in 2021. My first question is actually building on some of the last points you were making, Darren, on carbon reduction efforts in the Houston hub specifically. I think it’s a very interesting concept, has a lot of potential. I was wondering if you could elaborate from a policy standpoint, what types of things are needed or policies need to be put in place in order to bring these types of projects to fruition. And then, are there other parts within your portfolio globally where there are already policies in place to make these types of investments viable today? Darren Woods: Sure. Thanks, Devin. So, as I mentioned in my prepared remarks, what we’re looking at doing in this space and reducing CO2 across economies is really establishing a new business, one that today doesn’t have clear market drivers. And the governments have demonstrated, in other industries when they’re looking to reduce CO2, they provide stimulus to catalyze advancements of new technology. I think the big difference with what we’re talking about here versus some of the other initiatives that the government has supported is there’s not an existing business or market that provides some level of financial incentives. And so, I think the work that has to be done with the government is aligning on the incentives to drive investments across industries to drop and lower the CO2 price. And we think we can do that and do it at a very attractive rate of return at much lower prices than what the government is currently spending to reduce CO2. If you recall from our Investor Day, we had a chart that showed the costs associated with reducing CO2 through carbon capture and compare that to the cost of CO2 removal through other mechanisms. And we have the opportunity to reduce significant levels of CO2 at a much lower cost than current policy. So, that will be an important part, policy to drive incentives. You’ll need policies and frameworks to support the legal regime for storing CO2. We’ll need permitting to put the facilities in place and run the pipelines. You’ll need some frameworks to support the storage and access to the storage offshore. So, there’s a number of areas that will need to be addressed. And then, obviously, we’ll have to work with the industries involved here and work with them collaboratively to bring the CO2 in, and then also, of course, the communities that we’ll be operating in. We’ll have to work with them. And we think that’s all possible. If you think about the work we do around the world in establishing new ventures, bringing new ventures to market, this is very consistent with our experience base. And I’ll just point to Guyana, where essentially where we have started from grassroots, a brand-new oil and gas industry, working very closely with the government and community there in Guyana. So we’ve got experience in this space. We’ve got experience working in collaboration with other industry partners and experience working with governments to bring these complicated things together at scale and make a significant contribution. Devin McDermott: Great. That makes a lot of sense. And my second question is just on the cost reductions. So, you realized $3 billion last year. And if you look at the slide deck in the first quarter ray, you’re down about $1 billion in the first quarter of ‘21 versus the first quarter of last year. So, annualized, a $4 billion reduction so far. And you mentioned in your prepared remarks that you expect the reductions to increase and move through this year, and I know you have a longer term target of $3 billion of incremental cost reduction. My question specifically though is, how should we think about the cadence of these cost reductions flowing through for the balance of this year and over the next few years. And as you’ve embarked on these restructuring initiatives, have you found opportunities that might allow you to exceed this target over time, the $6 billion total target? Darren Woods: Yes, sure. I guess, let me just maybe start with where you ended and with respect to the $6 billion. And I just want to make the point, it’s not a target. It’s not something that we’ve laid out and asked the organization to figure out how to achieve it. It’s actually part of the plans that we’ve built. And so, the organization has a clear line of sight to the reductions, and there’s -- they’ve built that into their plans. We’re stewarding the businesses every month versus those plans. And so, we feel very good about what we’ve identified and the work that we have going on. And the first quarter demonstrates that we are continuing to achieve the reductions. I would not take the first quarter results and try to multiply those and move them out. I think you’re going to see things move with activities as you go through the year. But, my expectation is, the theme that you’re seeing with these reductions will continue, and we will -- we’re on track to deliver the $6 billion by the end of 2023. I guess, the final point I would make here, Devin, is my expectation, as we’ve been working our way through this and translating those plans into action is we’ll find more opportunities. I would expect it will beat the target of the plans that we put out there. We’ve got work going on now that kind of goes across the corporation. I mentioned the fact that we have structurally change the way we run our businesses. That change has now aligned each of the sectors in terms of how we’re organized and a lot of the processes that were used to execute the business. That gives us an opportunity to take advantage of this consistency and processes and execution and find additional efficiencies and synergies, and that work’s underway, which we’ll continue to develop as we move through this year, and I suspect we’ll have more to talk about it as we finalize our plans for the year at the back end and into the next year’s Investor Day. So, I’m real optimistic that the groundwork that we’ve laid since 2017 and looking at the businesses and how we reorganize are paying dividends today and are going to continue to pay dividends, well into the future. Stephen Littleton: I guess, Darren, if I can add, the other piece that we’re seeing, Devin, is as we’ve invested in technology, that’s starting to see its benefits in terms of reducing our overall cost structure with the technology and IT investments. Operator: Next question will be from Roger Read with Wells Fargo. Roger Read: I hope you can hear me okay, because I think the storms here in Houston are affecting my connection a little bit. So, apologies… Darren Woods: You’re loud and clear, Roger. Roger Read: Great. Darren, great performance this quarter from the Chemicals business. I know a lot of issues with storms, everything like that, some crazy moves in the pricing. I was just curious, do you think the Chemicals business is, in a sense, hit a reset here and this -- I don’t want to say Q1 performance continues, but a much better than, let’s say, the last six to eight quarters in this business. And as you think about that, is it mostly demand? Is it a pricing performance? We hear a lot of talk about inflation across the industry -- across industries, I should say. So, I’m just curious what all we should think about with Chemicals. Darren Woods: Sure. And thanks for the question, Roger. I would say, the first quarter performance in Chemicals, first and foremost, reflects that organization’s focus on running their operations reliably and safely, a lot of hard work to make sure that the integrity of the operations and the reliability of those operations are maintained. And we did a lot of work over last year. And I think moving into the first quarter. That focus has really helped our manufacturing facilities deal with the freeze and recover very rapidly from that. So, real proud of that effort. It wasn’t easy, but that organization really delivered. I think the other thing it demonstrates is the focus that they’ve had for several years on growing their high-performance products. And we knew that the demand for chemicals has been consistently strong and has been growing in excess of GDP growth around the world. And that fundamental, we think, will continue for some time since chemical plays such an important role in people’s modern life and the convenience of the modern life and actually the critical importance of some of the products that chemicals make. Of course, the -- so the big challenge there though is as supply comes on in fairly large chunks, with different plants, that tends to result in supply and demand imbalances and lower margins. And of course, we saw that last year. And frankly, going into this year, we kind of anticipated a lot of capacity coming on, which would squeeze the margins and make for a challenging year. I think what we’ve seen is with the impact of last year and the pullback in spending that was required due to the pandemic and then probably exacerbated by the Texas storm here with all the capacity in the Gulf Coast area, the supply has gotten pretty tight as demand has continued to move. And then, with the economic recovery and the rebound that we’re seeing, that’s put some more demand into the system. So, it’s -- I think the first quarter reflects good operations, good performance, good focus on growing our high-performance products and some really helpful market conditions from a supply and demand standpoint. My expectation as you move forward is we’ll see some of that supply come back on, a recovery from the ice storms and some of this new capacity that was deferred will start to make its way back into the market, and that will help probably ease some of the tightness. But, our expectation is, we’ll continue to see a pretty good market here this year for the Chemical business. Roger Read: And then, my other question, balance sheet. Obviously, you made the debt repayments this quarter commentary about excess cash will go towards debt repayments. Don’t expect you to fix the balance sheet in one year, but kind of reaffirm for us where you’d like to take the balance sheet over time, above and beyond just understanding you want to sustain the dividend, but like what’s the right way to think about whether it’s debt-to-EBITDA or debt-to-cap number, something along those lines? Darren Woods: Yes. Well, as we’ve said, with our capital allocation priorities, there is three legs to the stool, so to speak. And, obviously, really important for the foundation of success for the future is investing in the right projects, particularly in the Upstream with the depletion nature of that business. We’ve got to find industry advantaged investment opportunities. In the Chemical business, making sure that we’re investing in the high-performance products that meet the demand, the growing demand that we’re seeing around the world. And in the Downstream, investing in strategic sites to high-grade their production and make sure that the production is in line with the demand in the marketplace. And so, that’s critical element, and that’s something that we stay focused on as we went through 2020, making sure that we didn’t compromise the value of that particular capital allocation priority. The dividend obviously a critical part of that, and sustaining that dividend was a commitment that we’ve had for a long, long time, and we stay committed to that. So that’s obviously going to be an important factor going forward. And then, the balance sheet is making sure that we maintain the capacity to ride through the commodity cycles and not compromise those first two priorities that I talked to you about. And that’s what we did in 2020. Obviously, the pandemic was a very unusual year, much deeper than any typical commodity cycle. So, we had to lean harder on that than we normally would. We’re very committed now to making sure that we rebuild that in anticipation of future commodity cycles. I think what we said during the Investor Day was we’re going to shoot for something between 20% and 25% debt to capital. And that still feels like a reasonable place to be, and we’ll work our way towards that as we go through this year and probably into next, obviously, depending upon the price and margin environment that we find ourselves in. Operator: And next, we’ll go to Jeanine Wai with Barclays. Jeanine Wai: The first question that we have is on the balance sheet, and we’re just maybe looking for a little update here. Based on what you’re seeing so far on the macro and with your own operations, is there any update to the $45 to $50 breakeven for 2021 to cover CapEx to maintain the dividend? I know Chem’s margins, they’ve dramatically improved; Downstream margins, they’re still kind of below the 10-year band. Darren Woods: Yes. And so, if you remember how we did that breakeven as we made some assumptions about kind of low end of Chemical and Downstream margins and then average Chemical margin and Downstream margins going forward. And recognizing that that wasn’t necessarily forecast, it was just one way to characterize it. And the important point we were trying to make, and I think we’ve made historically, is as you look at our breakeven, you can’t just focus on the crude price that we’ve got significant businesses in both the Downstream and Chemicals that obviously impact that. I would say, we haven’t tried to update that number. I think what we tried to do with the Investor Day is just give you and others the confidence that with our portfolio and the plans that we had, we were robust to a very wide range of prices. The fact that the Chemical margins are as good as they are today says that that breakeven has come down. But frankly, we’re not really sharpening our pencils anymore on that because we’ve got a plan, and the foundations of that plant haven’t changed. I just think we feel better about the position that we’re in today, given where the market is at. We’ll take advantage of it while it’s here. But, I would tell you that our plans aren’t based on those sustaining themselves. And as I said, we will pay down the debt and deleverage faster, given the help that we’re getting from the market right now. That’s just put us in a stronger position for the future. Jeanine Wai: Okay. I figured I’d give it a shot. My second question is on CapEx. So, for the ‘21 budget, Q1 was in line with your plan. You reiterated the $16 billion to $19 billion for the year. I’m not sure if I missed it somewhere, but are you still targeting the lower half of the range, given what you’re seeing on the macro performance? For example, in the Permian, you slightly raised your production guidance only slightly. But, is that based on the same level of activity that you originally forecasted? Are you going faster than expected? We saw in the slide, you cited the performance improvement. But, some of those performance improvements would indicate that you are going faster, so you could be doing more activity. So, just wanted an update on if you’re still thinking about the lower half for the year. Darren Woods: Yes. So, I think the guidance that we gave was $16 billion to $19 billion. And as I said in my prepared remarks, that has not changed. And what I said during the Investor Day is that I expect to be on the lower end of that range, and that expectation remains today. They’re not necessarily targets. We have a plan that the business is executing, and that plan includes a spend level. That spend level has not changed. What we’re seeing in the Permian and the point that I tried to make in the slide in the prepared remarks is what’s changed really is the progress that the improvements that that business is making. And what the chart shows you, I think, is really, really impressive performance stuff that we had talked about. And I believe in reorganizing and better leveraging our technology, better leveraging the competencies of the entire organization in this very important resource that we would see significant improvements with time. I think, I’ve been talking about that now for several years. And what that organization is demonstrating is, indeed, they are making improvements and making them at a faster rate than we had planned. And so, that update with the production is a function of that performance improvement. We have not increased the capital allocation to that business. They’re basically running at their planned spend. And obviously, that is -- that plan is across the full year, and that number will change over the year, based on their plan. Operator: Next, we’ll go to Phil Gresh with JP Morgan. Phil Gresh: My first question is a bit of a follow-up on the capital spending. Obviously, the run rate in the first quarter is very low, and you’re expecting the full year to be towards the lower end of the range, so call it, $16 billion to $17 billion. You have the $20 billion to $25 billion target out there for the long term, which would obviously be still a pretty big step up from, say, $16 billion to $17 billion. So, just more intermediate term, as we think out to, say, 2022, should we think of the spending being more gradual in terms of the ramp back up, in terms of getting to the 20, 25 long term? Just any color there would be helpful. Thank you. Darren Woods: Sure. No, I think what’s important -- so we’ve put the plan out, our plan. We’ve got plans through 2025 with specific numbers. We’re not managing the business to ranges. We have plans. And those ranges frankly reflect the recognition that -- this is -- we got a big business, a lot of variables impacting our projects, things are going to move, and we can’t precisely call exactly when things will occur. But, we’ve got a pretty good basis for that, and that’s the plan. And that range that we’re showing reflects what I would say is how all these pieces tend to kind of come together and manifest themselves in any one quarter or a year. And so, that range gives us, I think, right kind of flexibility to make sure that what we’re talking to you about, some of that inherent variability in the plant. So, we’re not kind of wondering which end of that range we’ll be at. We’ve got plans within that range and what I said continues to be the case that we’re focused on delivering on those plans. I think, the way to think about the spending is, recognize we put these plans together and reviewed them initially with the Board in October and finalized them in November and then very quickly came out with the release that talked about that. If you think about the October time frame and where prices were at, reflect on the chart that I showed you, there was uncertainty as to exactly how the future would manifest itself. We knew that recovery would come just based on some of those underlying fundamentals, but really difficult to call. So, our plans basically were more back-end loaded. And so, what you’re seeing in the first quarter is a reflection of the recognition that while things will recover that we may still have some very challenging times here in the first quarter and into the second quarter, so making sure that we were building plans that comprehended that and anticipated that and would be robust to that. And so, that’s kind of how we built and why the numbers that you see in the first quarter are lower than maybe what would be a ratable run rate is because we had anticipated a probably more challenging environment than certainly that we’re seeing today. So, that will ramp up. I think, the other point I’d make, Phil, is just the point I made about our pace projects and the good work that our project organization did and thinking through, given a portfolio of very attractive, high-return projects. And as I said, we tested all those informed by what we are seeing with the pandemic, tested whether or not they were going to generate the returns and bring the value that we had expected, and all of them continue to look attractive. And so, we wanted to make sure that in the short term, we can serve spend to respond to the challenges of the pandemic, but make sure that we didn’t compromise that longer term value. And that was the real challenge of last year and the plans that we laid out reflect that. And so, as you move forward, in the back half of this year and into next year, what you’re seeing is some of those projects resuming activities on those products -- projects and seeing that spend go up. And so, that’s, I think, how I would suggest you think about that is feathering in those projects in a very managed way that our project organization is working very closely with our partners and contractors to make sure that we bring those things back online and get that work going in a very efficient and effective manner. Phil Gresh: Okay. Got it. Thank you. My second question would just be coming back to the Gulf Coast carbon capture opportunity. I’m frequently getting asked for ExxonMobil whether this would be more of just an opportunity to reduce your own GHG commissions, or is it something where it can be a third-party business that’s actually a long-term earnings driver for the Company. So, I’m curious how you would answer that. Darren Woods: I’d say yes. I think that project has opportunities to do both. If you -- and again, what we’ve been talking about for some time, and I think if I go back a year ago, the litmus test with respect to whether or not the Company was focused on managing the risk of climate change and position for an energy transition was whether or not you’re investing in solar and wind. Frankly, I’ve been very encouraged at how quickly that conversation has evolved and the recognition that there remains a significant challenge above and beyond the rule that wind and solar and electric vehicles, which they will play an important role. But above and beyond that, how do you decarbonize some of these very difficult-to-decarbonize sectors and do it in a way that is efficient and the lowest cost to society. And so that’s the work that certainly we’ve been talking about for some time and the work that we’ve been investing in with respect to technologies to bring down the cost of the technologies that we believe will be required to achieve that. That’s the venture that we launched in 2018, our carbon capture venture to start looking at how we could commercialize some of that technology and start looking for opportunities around the world. So, all that was happening with this view of what I would say is a business opportunity to meet an evolving demand of society, which is a reduction in CO2. And the way we’re thinking about that, that’s a new business. That’s a new demand for that society, I think, is a strong desire for. And so, we’re at the early stages of a new business. And what we’ve put out there is the opportunity to leverage the skills that we have, the competencies that we’ve developed over decades the experience that we have in bringing new ventures to market, working with governments and leveraging our own capabilities. And this Houston Ship Channel represents exactly that. And we’d be working with a number of companies and industries there, so collaborating with others, working with the government. And our own facilities would be involved in that. So, I think it’s kind of a mix of all those things that you brought up, Phil. It’s an opportunity to reduce our own emissions, an opportunity for others to contribute at scale and a cost-effective way to reduce their emissions. And then, again, potentially, there is a emerging market for CO2 reduction credits, maybe a way to meet that market demand as well. And so, I think it’s early to take a real sharp pencil and lay all that out, but we think the fundamentals are there. And it just becomes -- comes down to then working with the relevant parties to shape the policies and the frameworks and the constructs of that project to take advantage of that -- of those emerging fundamentals. Stephen Littleton: And Phil, I guess, I’d add. What we’re also seeing is policies being established in other parts of the world where we look at Europe over in Asia Pacific region that are interested in doing similar type of efforts to decarbonize in these hard-to-decarbonize sectors of the industry. Operator: And next, we’ll go to Doug Leggate with Bank of America. Doug Leggate: I also have two questions, if that’s okay. Darren Woods: Sure. Doug Leggate: Darren, when you laid out the Analyst Day, I think you talked about -- or Neil had talked about something around 250,000 barrels of oil equivalent of disposal impacts in your five-year plan. I realize you’ve gotten UK away now, but can you just bring us up to date that in this, I guess, stronger oil price environment, whether the pace is picking up and how you see that playing out? Darren Woods: Sure, Doug. Thanks for the question. What I’d say is, we laid that plan out quite some time ago. Neil talked about the work we had been doing in assessing the portfolio and upgrading that portfolio. And obviously, two -- a couple of levers to that. One, one lever is clearly the additional investments in bringing in more profitable lower cost production opportunities and then working on some of the tail items of our portfolio to see if others put a higher value on them, particularly given how rich the new opportunities were for us. And so, that portfolio of opportunities remains. We’ve been out actively marketing a number of those. And as you can imagine, last year really slowed that pace down just because of the number of buyers, and I’d say the range of uncertainty with where the future was going. The way I’d characterize it today is we’re continuing that activity on those assets. And I’d say, the work that we did in 2020 puts us in a really good position this year. We did not compromise the value that we expected to achieve, and that slowed things down. But I think as we go into this year, there’s different view that’s being taken on the future and the horizon and the price environment, which is generating more interest. And so, the way I’d characterize it right now, same set of assets, a lot more interest and discussions happening. And we’ll see if we can find the right buyer and settle on a value that’s kind of a win-win proposition, and that work goes on. And I’m optimistic that we’ll see that accelerate a bit. But, it will be accelerated based on a lot of work that’s already happened and will continue to happen. Doug Leggate: Great. I appreciate that. My follow-up is really more of a kind of philosophical question, Darren. I guess, a year ago, your yield was getting up there. So, very -- you could see uncompetitive level in terms of if you ever wanted to do anything in your equity. It’s obviously a consolidation question. You’ve got a fantastic organic portfolio, and some of your peers are now kind of starting with an investment case, you could argue, meaning growth is off the table for investors for the -- at least on EVs. So, when you rack all that together, I’m just wondering how does Exxon think about participating or not in consolidation, whether it be Permian or whether it be international. Darren Woods: Well, I would say, you point out that we have a very strong organic portfolio. And so, I think that gives us a lot of flexibility where we don’t -- we aren’t in a position where we have to go out and transact and look at acquisitions or mergers. But, I would also tell you that at the end of the day, we’re very focused on maximizing our growth in shareholder value, and so, keeping a kind of a firm eye on the opportunity set. And if things develop, if market conditions drive an opportunity that would be accretive and consistent with the existing portfolio and the capital allocation priorities that we’ve talked about, then that would certainly be an opportunity that we’d look at. I don’t think we take anything off the table when it comes to thinking about the future and how we might leverage our capacities. And then, if we find somebody where we can find some synergies with their capabilities and ours and to take advantage of that and together grow value at a rate faster than we can organically. But, I’ll come back to and finish on the point that I started with is we -- the portfolio we’ve got is pretty attractive. It’s going to -- whatever we do is going to have to compete with that attractive portfolio. We feel real good about that. We’ll keep an eye open, but it’s nice not to be in a position where we have to do something. Operator: We’ll take our last question then from Neil Mehta with Goldman Sachs. Neil Mehta: Good morning, guys. And Darren, thanks for coming on these calls. I know investors value the transparency. And hopefully, you can keep this up regularly, not just once a year. I guess, my first question is just on the Board changes. Exxon has announced some changes to Board representation. You’re obviously in the middle of a proxy contest going into the shareholder meeting. Can you just talk about, from your perspective, Darren, why you think that the current set of Boards -- the current Board best represents the interest of shareholders and some of the changes that you made and what these changes are able to deliver for the shareholder? Darren Woods: Yes. Well, good morning, Neil. And I’d just start by pointing out, this is the second time this year I’ve been on the call. So, I’ve doubled from your once a year. With respect I think to the Board and how we think about that, the first comment I would make is, since I’ve been in this job, been engaging with shareholders pretty consistently and listening to their perspectives and taking their feedback on. And I think as a result of that, you’ve seen quite a bit of change in terms of how we interface with the shareholders and in fact, with you and your community. So, I think we are responding to the feedback that we get. I would tell you that every decision that the Board has made with new directors, and we’ve brought on six since I came into the chair in 2017, have all been in response to and related to the feedback that we’ve been getting to our shareholders. In terms of the types of competencies and skill sets that they think would benefit our Company and managing for the future. And frankly, that continues to be an ongoing dialogue, and we continue to look for what are the capabilities and skills required to successfully manage a business like ours. If you look at the Board we have today, and how we -- the Board Affairs Committee goes through the processes, I think, first, you got to recognize this is a big business that spans the globe and also spans a number of different industrial sectors, consumer product sectors, very complicated, a lot of challenges across the different countries and across the different businesses. And so, really look to make sure that the folks that we bring into the Board have the perspective and the experience of managing global businesses, complex businesses, ones that span the globe and ones that have the kind of challenges that we see. Obviously, if you look at the industry and our Company over time, technology and the evolution of technology and how that applies to our business has been a really important part of the value creation that we’ve driven over the years and a really important part in terms of the future and how that evolves. And so, technology and understanding of the technology, engineering science is an important part of things that we look for in terms of the skills and capabilities of the investors of our Board members. If you think about the capital intensity of the business and how we are so intimately tied into economic growth in economies around the world and people standards of living, directors have had that experience in managing, I think, is important. And you can see that in some of our directors that have that experience in capital-intensive link closely to economic activity. So, that’s important. And then, I think the third point I would make is understanding of and experience in transitioning businesses. And from our perspective, it’s not necessarily transitioning an energy company. It’s transitioning business with fundamental drivers, how you think about the changes in those fundamental drivers and how you effectively respond to those changes while creating shareholder value. If you look at the folks that we have on the Board, a number of our individuals have really pertinent and relevant experience to managing large corporations successfully through transitions, albeit potentially in different industries. We also look to bring on industry experience that I would tell you has been a capability and competencies that we’ve been working to fill for quite some time. It’s challenging to find someone who has the relevant experience and can relate to all the businesses that we’re in, the scale that we’re in and the global coverage. And I think we were very lucky last year to engage with Wan Zul after he retired in the middle of 2020, and very pleased that he came on the Board and brings some of the experience from Asia, which is obviously a really important region for our Company and the fact that that’s where a lot of the growth is happening. So, that was a big advantage. And then, the final point I’ll make with respect to some of the new directors that we brought on is thinking about a transition with all the uncertainties associated with it and the challenge is how to best allocate your capital in that space and make sure that, one, that you’re moving the business in the direction consistent with some of those broader trends, but doing it in a way that protects shareholder value and generates returns. And so, I think some of the new directors have got some really good -- a really good track record in thinking through and doing that and has been bringing some of that additional perspective to many of our existing directors who also have that capital allocation experience. And so, I think we’ve got a really experienced Board with a lot of complementary skills. And the final point I would make, which is really, really important is the chemistry of the Board, the culture that we have, the willingness for those directors to work collectively, collaboratively to engage, discuss, debate, I think, is absolutely critical. And what we find today is our Board meetings, a lot of discussion, a lot of exploring, debating and all done in a very constructive way, all done focused on driving -- ultimately driving value. And so, it’s, I think, a very healthy Board that respects one another, but is very focused at the same time in driving value. And they’ve been a big part in helping reshape the Company and setting us on the path that we’re on now. Neil Mehta: Thanks so much, Darren. The follow-up question is just on slide 16. As you think about your growth projects, you talked a little bit about Guyana. Can you just flush out more just how big do you see this asset becoming over time? And what are the next big milestones we should be looking out for? And you didn’t mention greenfield LNG projects. As you think about those in the Q, where do those stand in terms of the projects that you’d look to move forward over the next five years? Darren Woods: Sure. I would think with Guyana, with respect to the potential of that resource base, it is -- we’ve talked about 9 billion oil equivalent barrels. I would tell you that is the current estimate and that I would expect it to grow. The recent announcement we made with Uaru-2 confirmed a deeper play. And so, I think additional opportunity or suggestive of an additional opportunity and resources that we haven’t fully quantified yet. So, I think it’s a very rich set of opportunities that we’re going to continue to progress. And I wouldn’t look for a big bang per se. I would look for a continued and steady progression of bringing those opportunities to market. I think, we’ve laid out a plan that’s pretty consistent with that, working very closely with the government and the people of Guyana to continue to progress that resource, and really bring a lot of economic opportunity to the country and the people of Guyana. And I think we’re beginning to see the benefits of that manifest themselves, and will continue to contribute on a ratable basis there. So, I would just say a good, steady drumbeat of improvement as we move through those development and those projects. I think today, we’re talking a potential for 7 to 10 FPSOs, 6 projects online by 2027. So, yes, we feel really good about what we’re finding in Guyana and a very constructive engagement with the government in terms of those developments. With respect to LNG, obviously, gas is going to continue to play a really important role. As economies around the world develop, populations grow, people standards of living grow is all going to require power generation, and gas is going to continue to play an important role, in part because it’s a really good substitute for coal and the fact that it’s got much lower emissions, obviously and lower particulate. It also has the potential with time to basically be used in making hydrogen, and that could play a role going forward as well. So, I think gas is going to continue to be a really important part as societies and economies grow and as we move into lower carbon future. And so, in that context, the LNG opportunities remain an important part of the portfolio. And we continue to work very closely with the governments around progressing discussions on how we continue to build on the portfolio that we have and expand those opportunities, and do it in a way that both benefits the countries and the communities in those countries but at the same time are attractive to us and compete within our portfolio. And so, that work goes on. We’re continuing to have very constructive conversations. And I would expect to see those advance at a pace that’s consistent with those conversations landing at the right frameworks for progressing those projects. Neil Mehta: Thanks, Darren. Congrats on a good quarter. Darren Woods: Thanks, Neil. Stephen Littleton: Okay. Thank you, Darren, for participating. I want to thank the audience for your time and thoughtful questions this morning. We appreciate your interest and the opportunity to highlight our first quarter results. I hope you enjoy the rest of your day. Thank you. And please be safe. Operator: That does conclude today’s conference. We thank everyone again for their participation.
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Exxon Mobil Corporation (NYSE:XOM) Earnings Report Analysis

  • Earnings Per Share (EPS) of $1.72 missed the estimated $1.77, indicating a shortfall in expected performance.
  • Revenue of approximately $84.34 billion fell short of the anticipated $86.33 billion, reflecting challenges in meeting revenue targets.
  • Despite revenue and EPS misses, record production levels in Guyana and the Permian Basin drove a positive earnings surprise, with a net income of $7.61 billion.

Exxon Mobil Corporation (NYSE:XOM) is a leading player in the energy sector, involved in the exploration and production of crude oil and natural gas, as well as the transportation and marketing of petroleum products. On January 31, 2025, Exxon reported an earnings per share (EPS) of $1.72, which was below the estimated $1.77. The company also generated revenue of approximately $84.34 billion, falling short of the anticipated $86.33 billion.

Despite the revenue miss, ExxonMobil's fourth-quarter 2024 performance showed resilience. The company achieved an EPS of $1.72, surpassing the Zacks Consensus Estimate of $1.55, as highlighted by Zacks. This positive earnings surprise was driven by record production levels from operations in Guyana and the Permian Basin, as well as high-value product sales. However, these gains were partially offset by reduced base volumes due to divestments, scheduled maintenance, and weaker commodity price realizations.

ExxonMobil's production reached 4.33 million oil equivalent barrels per day in 2024, marking its highest level in over a decade. This strong production contributed to the company's ability to maintain a net income of $7.61 billion, or $1.72 per share, which exceeded analyst estimates. However, the company's total quarterly revenues of $83.4 billion fell short of the expected $87.1 billion and decreased from the prior year's $84.3 billion.

The company's operational efficiencies resulted in a free cash flow of $8 billion, significantly surpassing analyst estimates of $6.6 billion, although this was a decrease of nearly 30% compared to the previous year. ExxonMobil's financial metrics, such as a price-to-earnings (P/E) ratio of approximately 13.71 and a debt-to-equity ratio of 0.25, indicate a conservative use of debt and a solid market valuation of its earnings. Despite the mixed results, ExxonMobil remains a major player in the energy sector.

Exxon Mobil Corporation (NYSE:XOM) Quarterly Earnings Preview and Financial Analysis

  • Analysts predict an EPS of $1.77 and revenue of $87.2 billion for the upcoming quarterly earnings.
  • Goldman Sachs analyst Neil Mehta adjusts price forecast for XOM to $123 but maintains a Neutral rating.
  • Exxon Mobil's financial metrics reveal a P/E ratio of 14.39 and a debt-to-equity ratio of 0.16, indicating a strong liquidity position and efficient operations.

Exxon Mobil Corporation, listed on the NYSE:XOM, is a leading player in the oil and gas industry. The company is involved in the exploration, production, and distribution of oil and natural gas. It also has a significant presence in the chemical manufacturing sector. Exxon Mobil competes with other major energy companies like Chevron and BP.

As Exxon Mobil prepares to release its quarterly earnings on January 31, 2025, analysts predict an EPS of $1.77 and revenue of $87.2 billion. Despite recent downgrades in EPS and revenue revisions, some believe the company might still achieve an earnings beat. In Q3 2024, Exxon Mobil reported stable revenue and strong performance across its segments, achieving significant cost savings and maintaining solid margins.

Goldman Sachs analyst Neil Mehta has adjusted his price forecast for XOM from $125 to $123, citing the company's relative valuation. Despite Exxon Mobil's strong execution and premium Upstream assets in regions like the Permian and Guyana, Mehta maintains a Neutral rating. The company's strong shareholder returns, including a 4% year-over-year increase in dividends, continue to attract investors.

Exxon Mobil anticipates fluctuations in oil prices to impact its Q4 upstream earnings by $500 million to $900 million. Changes in industry margins are expected to affect energy products earnings by $300 million to $700 million, specialty products earnings by a range of a $100 million decrease to a $100 million increase, and chemical products earnings by $300 million to $500 million. These factors suggest an approximate $1.50 EPS midpoint for the quarter.

The company's financial metrics, such as a P/E ratio of 14.39 and a price-to-sales ratio of 1.39, reflect its market valuation. With an enterprise value to sales ratio of 1.44 and an enterprise value to operating cash flow ratio of 8.73, Exxon Mobil demonstrates efficient operations. Its low debt-to-equity ratio of 0.16 and a current ratio of 1.35 indicate a conservative capital structure and strong liquidity position.

ExxonMobil (NYSE:XOM) Surpasses Earnings Expectations but Misses on Revenue

  • ExxonMobil reported an EPS of $1.92, beating the estimated $1.88.
  • The company's revenue of $90.02 billion fell short of the expected $93.98 billion.
  • Announced a 4% increase in its quarterly dividend, boosting investor confidence.

ExxonMobil (NYSE:XOM) is a leading oil and gas corporation known for its extensive global operations in the energy sector. The company explores, produces, and sells crude oil, natural gas, and petroleum products. It competes with other major players like Chevron and BP. On November 1, 2024, ExxonMobil reported earnings per share (EPS) of $1.92, surpassing the estimated $1.88.

Despite the earnings beat, ExxonMobil's revenue of $90.02 billion fell short of the expected $93.98 billion. CEO Darren Woods emphasized the company's highest liquids production level in over 40 years, highlighting the tangible results of their transformation efforts. This production milestone is a significant achievement for the company, reflecting its operational efficiency and strategic focus.

ExxonMobil's stock rose by 1.8% early on Friday, driven by the positive earnings surprise. The company also announced a 4% increase in its quarterly dividend, which further boosted investor confidence. This move indicates ExxonMobil's commitment to returning value to shareholders, even amid revenue shortfalls, as highlighted by Market Watch.

The company's financial metrics provide additional insights into its performance. ExxonMobil has a price-to-earnings (P/E) ratio of 14.83 and a price-to-sales ratio of 1.52, indicating how the market values its earnings and revenue. The enterprise value to sales ratio is 1.57, and the enterprise value to operating cash flow ratio is 9.81, reflecting the company's valuation and cash-generating ability.

ExxonMobil maintains a conservative capital structure with a debt-to-equity ratio of 0.16, suggesting limited reliance on debt. The current ratio of 1.36 indicates a strong ability to cover short-term liabilities with short-term assets. These financial metrics, combined with an earnings yield of 6.74%, provide a comprehensive view of ExxonMobil's financial health and investment potential.

ExxonMobil Exceeds Q2 Expectations

ExxonMobil (NYSE:XOM) reported impressive second-quarter earnings and revenue today, surpassing analyst expectations.

The oil and gas giant recorded adjusted earnings of $2.14 per share, beating the Street estimate of $2.03. Revenue for the quarter was $93.06 billion, exceeding the consensus forecast of $90.46 billion.

ExxonMobil's second-quarter earnings of $9.2 billion marked its second-highest Q2 earnings in the last decade. This strong performance was attributed to record production levels from its Permian Basin and Guyana assets, along with contributions from its recent merger with Pioneer Natural Resources.

Chairman and CEO Darren Woods highlighted the company's improved earnings power, noting the achievement of the second-highest Q2 earnings in a decade.

The company's Upstream total net production increased by 15%, or 574,000 oil-equivalent barrels per day, from the first quarter. The Pioneer merger, completed five months ahead of similar transactions, added $0.5 billion to earnings within the first two months post-closing.

For the first half of 2024, ExxonMobil generated $25.2 billion in cash flow from operations and $15.0 billion in free cash flow. The company plans to repurchase over $19 billion worth of shares in 2024, demonstrating its ongoing commitment to shareholder returns.

Neal Dingmann's New Price Target for Exxon Mobil Corporation 

Neal Dingmann of Truist Financial recently set a new price target for Exxon Mobil Corporation (NYSE:XOM), a leading player in the global energy sector. With a rich history in oil and gas exploration and production, Exxon Mobil has been a significant figure in the energy industry, facing both market highs and lows alongside its competitors. Dingmann's price target of $124 suggests an optimistic outlook on the company's stock, despite a recent downgrade from Buy to Hold. This adjustment reflects a nuanced view of Exxon Mobil's current position and future prospects in the market.

At the time of Dingmann's announcement, Exxon Mobil's shares were trading at $113.97. This price point indicates an 8.8% upside potential to reach the newly set target. Such a forecast underscores a belief in Exxon Mobil's ability to grow or maintain its value in the near future. However, the downgrade to Hold signals a cautious stance, suggesting that while growth is anticipated, significant uncertainties or limitations may temper the company's stock performance.

In the backdrop of this financial analysis, Exxon Mobil's operational and strategic decisions continue to draw attention from investors and stakeholders alike. Vanguard, a major investment firm, recently expressed its support for Exxon Mobil's director nominees at the company's annual meeting. This endorsement from Vanguard, despite raising concerns about Exxon's legal actions against climate activists, highlights the complex interplay between corporate governance, environmental responsibility, and shareholder rights. Such dynamics are increasingly relevant in evaluating Exxon Mobil's position within the energy sector, especially as environmental scrutiny intensifies.

The company's stock performance, with a recent increase to close at $113.97, reflects ongoing investor interest and market movements. Over the past year, Exxon Mobil's shares have seen highs and lows, reaching up to $123.75 and dipping to $95.77, showcasing the volatility and risks inherent in the energy market. With a market capitalization of approximately $511.26 billion and a trading volume around 13.1 million shares, Exxon Mobil remains a heavyweight in the industry, navigating through market fluctuations and strategic challenges.

This financial and operational context sets the stage for understanding the implications of Dingmann's price target and the downgrade of Exxon Mobil's stock. As the company continues to address environmental concerns, shareholder rights, and market expectations, its stock performance will be a key indicator of its ability to adapt and thrive in the evolving energy landscape.

Chevron, Exxon Mobil, and Phillips 66 Face Early Year Financial Challenges

Chevron Corporation, Exxon Mobil Corp (XOM), and Phillips 66: Navigating Early Year Challenges

Chevron Corporation, Exxon Mobil Corp (XOM), and Phillips 66, three giants in the oil industry, faced a challenging start to the year, as evidenced by their reported lower profits for the first quarter. This downturn in profitability led to a noticeable decline in their stock prices during early trading on Friday. The primary culprit behind this financial setback is the lower refining margins, a critical component of their revenue stream. Refining margins represent the difference between the cost of crude oil and the price of the petroleum products extracted from it. This margin has been on a downward trajectory, especially after reaching a peak following the geopolitical tensions caused by Russia's invasion of Ukraine in 2022. Such events often lead to volatility in the oil market, impacting companies' profitability.

Additionally, a significant drop in natural gas prices contributed to the financial woes of these oil majors. Natural gas, a vital energy source, has its pricing influenced by various factors including supply and demand dynamics, weather conditions, and geopolitical events. A decrease in its price can substantially affect the revenue of companies like Exxon Mobil Corp, which have considerable natural gas operations. Despite these challenges, the companies reported that the negative impact was partially offset by higher volumes. This indicates that while the prices and margins were not in their favor, the companies were able to produce and sell more, which helped cushion the blow to some extent.

The situation highlights the volatile nature of the oil and gas industry, where companies must navigate fluctuating prices and margins while trying to maintain profitability. For Exxon Mobil Corp, this means balancing the scales between the lower refining margins and natural gas prices with their production volumes. The ability to adjust to these market dynamics is crucial for sustaining operations and ensuring financial stability in the long run.

Investors and market watchers closely monitor these developments, as they can have significant implications for stock performance. The early trading dip on Friday reflects the immediate reaction of the market to the reported lower profits. However, the long-term impact on Chevron Corporation, Exxon Mobil Corp, and Phillips 66 will depend on how these companies adapt to the changing market conditions and their strategies for managing costs and optimizing production.

ExxonMobil Downgraded at Erste Group

Erste Group analysts changed their rating for ExxonMobil (NYSE:XOM) from Buy to Hold. The analysis highlighted several concerns affecting Exxon Mobil's performance. They noted that the company's profitability falls short of the sector average. This situation is exacerbated by a global surplus of crude oil, which has prompted a decline in oil prices. They do not foresee a swift recovery in the oil market.

Furthermore, the analysts pointed out a worsening outlook for Exxon Mobil's sales and earnings. They anticipate only a modest growth in turnover for the year 2024. Additionally, the expected earnings growth for Exxon Mobil is projected to be lower than the average growth across the global stock market. These factors have influenced the downgrade in the company's rating.