Exxon Mobil Corporation (XOM) on Q2 2021 Results - Earnings Call Transcript

Operator: Good day, everyone, and welcome to the Exxon Mobil Corporation Second 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 second quarter earnings call. We appreciate your participation and continued interest in ExxonMobil. I am Stephen Littleton, Vice President of Investor Relations. Joining me today are Darren Woods, Chairman and Chief Executive Officer; and Jack Williams, our Senior Vice President, overseeing Downstream and Chemical. In a moment, Darren, will make some introductory comments. I will then cover the quarterly financial and operating results, and then Jack and Darren will provide their perspectives on the business. Following those remarks, we will be happy to address any questions. Darren Woods: Thank you, Stephen, and good morning, everyone. Thanks for joining us today. Before Stephen takes us through the second quarter results, let me start by covering the significant developments in the quarter, starting with the extensive engagement that Board and I had with our shareholders in the months leading up to our Annual Meeting. We received some very explicit feedback that we found valuable, and are incorporating in our plans as we move the company forward. In future, the directors, the management committee, and I look forward to continuing the active shareholder engagement, and discussing the good work going on at the company and the progress we are making on all fronts. Since our Annual Meeting, we welcomed our new directors, Greg Goff, Kaisa Hietala, and Andy Karsner, with a number of discussions that included myself, our Lead Director Ken Frazier, other Board members, and senior managers of the company. In June, we began the new members' onboarding process within depth reviews of our businesses and key topics, such as our energy outlook and our approach to the energy transition. While the Board has met virtually on a couple of topics since the Annual Meeting, this week was the first in-person regular meeting of the Board. We had very substantive and productive discussions across both the committees and the full Board. They were informed by the extensive shareholder engagements over the past several months. I'm pleased to say, that without exception, our directors are focused on improving the performance of the company, addressing the challenges faced by our industry, and increasing long-term shareholder value. There is very good alignment on the importance of leveraging the diverse experience and skills of the Board, the important role ExxonMobil will have in the transition helping to lead to the development and deployment of critical technologies, advocating for necessary policy, and making strategically and financially accretive investments, the need to improve transparency and engagement with our shareholders, actively listening and more explicitly addressing concerns, and of course, driving total shareholder return in both the short and long run. While there is still much to do, I think we're working from a very strong foundation. Stephen Littleton: Thanks, Darren. I will now walk through developments since the first quarter. Across all three businesses, demand recovery has improved results. In the Upstream, liquids realizations improved significantly versus the first quarter. Production was lower due to seasonal gas demand in Europe and higher scheduled maintenance activity, notably in Canada. Jack Williams: Thank you, Stephen, and good morning. We're very pleased with the company's performance for the first six months of this year from a number of perspectives, including safety, reliability, earnings, cash flow, and debt reduction. We've also made progress in our efforts to reduce emissions, advance lower carbon solutions, and further advance the depth and quality of our portfolio. I'll spend a few minutes providing some highlights and perspectives on this progress, and let's start with a look at the business environment. Second quarter saw a rapidly recovering environment with significant improvement in all our product markets. Oil and gas prices increased materially since the fourth quarter of last year and we're back within the 10-year range, driven largely by economic recovery as the pandemic-related restrictions were relaxed. Downstream margins moved close to the low end of the 10-year band. They continue to be impacted by an unbalanced global refining system, resulting primarily from an oversupply of distillates from low international jet demand. Nonetheless, U.S. demand growth drove substantial improvements from the historic lows of the fourth quarter. Importantly, significant earnings potential remains as the Downstream continues to recover from the lingering effects of the pandemic. And to build on that point and demonstrate just how quickly things can change, Chemical prices and margins were far above the 10-year band and drove record earnings. Chemical's record results were driven by strong base reliability, robust demand, and tight supply for both polyethylene and polypropylene in the North American and European markets. Looking ahead, although we anticipate lengthening of supply and rising feed across the regions, our outlook is for Chemical margins to remain strong in the coming months. Given the dynamic market and record results, I'd like to spend a few minutes talking more deeply about the Chemical markets and our business. Starting with a closer look at the current market environment, the last 18 months have been a testament to the underlying resiliency in demand for chemical products, and that is especially true in a surging global economic recovery, as these products are widely needed for food packaging, hygiene, and the recovering automobile sector among others. This year, polyethylene and polypropylene margins across North America and Europe increased by more than 140% versus the fourth quarter of last year. The recovery in Asia has been more challenging due to pockets of COVID resurgence, higher supply, and increased crude and naphtha prices. The strong margins in the Atlantic Basin are the result of several factors, first, hurricane impacts in late 2020, followed by winter storm Uri earlier this year, which reduced inventory levels; second, unplanned industry shutdowns and turnarounds; third, global shipping constraints of finished products caused by port congestion, container availability, and increased shipping costs from Asia to the U.S.; and then finally, demand growth in the U.S. commensurate with growth in GDP. Our Chemical business has benefited from this tightness, with 70% of our polyethylene capacity located in these regions. A material portion of this is typically exported to Asia, but was redirected to Europe and North America, enabling us to capture more than our share of demand growth. The scale, global footprint, and multitude of product lines in our Chemical business provides competitive advantage and strong earnings potential, as amplified in tight markets like today, and is also durable when looking at longer time frames. ExxonMobil Chemical's earnings over the past decade were 80% higher than the industry average. In the first quarter, our earnings were double the industry average and our second quarter result is materially higher than the first. The core strategy of our Chemicals business is growing technology-driven, higher -value performance products. These have proven over the test of time to add significant value for our customers versus commodity chemical products. Our diverse product offerings and global reach are significant advantages. ExxonMobil Chemical is number one or number two in more than 80% of the markets where we compete. This provides resiliency across a wide range of market scenarios and upside in the market like today. In addition to the product diversity, I want to highlight the benefits we've seen this year from three important drivers. First, our ability to optimize feed and unit operations at our integrated facilities and leverage regional feedstock supply chains has generated about $1.4 billion of earnings for the first six months of this year. Second, as we discussed during Investor Day, we've sharpened our focus on making our Chemicals business a leader in cost efficiency. As a result, costs were down significantly in 2020 and even with the higher sales volumes this year, ongoing structural efficiencies, such as digital enhancements, manufacturing efficiencies, and previously announced staffing reductions are expected to support $1 billion in annual reductions versus 2019. And third, the recent advantaged project investments, including the world-scale U.S. Gulf Coast steam cracker and polyethylene reactors delivered $600 million in earnings in the first half of this year. And there are more advantaged projects in flight today that will grow our supply of performance products and have an even larger impact on earnings. These projects will grow our supply of performance products by 70% by 2027 and grow the earnings contribution by 100% due to the higher-value slate of new products. These products bring significant benefits to our customers. They support lower emissions, improve the performance of technologies that enable the energy transition, and improve efficiencies. And those advantages ultimately are reflected in higher margins. For example, polyethylene packaging has lower lifecycle emissions compared to alternatives. Performance polyethylene like our Exceed XP is stronger, enabling thinner films for the same applications. We're developing the capability to produce certified circular polymers from plastic waste using our proprietary advanced recycling technology and polypropylene used to reduce the way the vehicles improve fuel economy and battery life. The projects gain advantage not just from the higher margin products they produce, but also from advantaged feed, scale, proprietary catalyst technology, and the integration with our existing chemical and downstream facilities and logistics. Our focus going forward remains on advancing a number of major chemical and also downstream projects that will further strengthen our integrated manufacturing platforms and upgrade our product mix to meet a range of future demand scenarios. As you may recall, many of these projects were paced to preserve cash during the market downturn last year. Our Global Projects organization has done an excellent job managing this activity to preserve long-term value. This group of projects are expected to still be completed within the FID estimate. As an aside, this is the same organization that will be delivering future carbon capture projects, advancing through our Low Carbon Solutions business. This capability continues to be an enduring competitive advantage and will only increase in importance going forward. In the Chemical business, our large Corpus Christi chemical complex is ahead of schedule and under budget. We just announced a mechanical completion of the three derivative units, including a monoethylene glycol unit and two polyethylene reactors. Full site start-up is anticipated by year-end. Progress is ongoing at the polypropylene growth project in Baton Rouge, with start-up anticipated next year. Our Baytown chemical plant expansion will include a new Vistamaxx unit and a full range, linear alpha olefins unit. It's on track for a 2023 start-up. Our China1 venture captures the advantage of being located in the world's largest growth market. We signed several important agreements to advance the project, including a contract with Sinopec for basic engineering design, procurement, and construction. In the Downstream, we're moving crude to the Wink to Webster pipeline from the Permian Basin and are preparing to ship third party production in the fourth quarter of this year. At Beaumont, process unit modules are on-site and we're ramping up construction activity for start-up in 2023. And our Singapore and Fawley projects are also progressing. However, they are a bit further out in terms of full project restart. Even in the current challenging refining environment, these Downstream projects are still attractive and materially improve the competitiveness of our integrated sites. If these four projects were online at today's margins, they would be contributing more than $1 billion in annual earnings. For example, our Singapore resid project will produce 20,000 barrels a day of high quality lube basestocks that would have added to our strong lubricants result this quarter. Collectively, this world-class Chemical and Downstream project portfolio delivers 30% returns at 10-year average margins. That's more than $4 billion of annual earnings at 10-year average margins and $2 billion at 10-year low margins. We're also benefiting from ongoing attractive Upstream investments as well, especially in the Permian as development performance continues to improve, resulting in rapidly growing value. We produced 4,000 oil-equivalent barrels a day this quarter, which was up approximately 50,000 oil-equivalent barrels a day versus the second quarter of last year, excluding the impact of the economic curtailments. We expect to grow production a further 40,000 oil-equivalent barrels per day in the third quarter. And importantly, value is growing even faster as operating and development performance continues to improve at a rate exceeding our plans. Relative to 2019, we've more than double the lateral feet we're drilling per day and recently set an industry record by drilling the Delaware Basin 12,500 foot lateral in just 12 days. At the end of the second quarter, our drilling rates are approximately three times more efficient than in 2019. Another way to think about this is that the eight rigs we're running today are achieving the same lateral length as it took close to 25 rigs to drill just two years ago. Completions are improving too. Our frac rates are around 50% faster. This has resulted in a reduction in drilling and completion costs of more than 40%. And on top of that, we've also improved lease operating expense by about 35%. Our environmental performance also continues to improve. We achieved record-low flaring intensity levels during the quarter, which was top quartile in the industry. As we've discussed previously, the advantage short cycle development profile of the Permian gives us flexibility within the portfolio. The parameters setting our pace of development have not changed. First, delivering positive free cash flow across a broad range of price scenarios; second, demonstrating we are achieving industry leading capital efficiency; and third, ensuring double-digit returns at $35 a barrel or less. This low price resiliency also applies to our deepwater developments in Guyana and Brazil. In Guyana Stabroek block, we've added three new discoveries since the first quarter, including the Whiptail discovery announced this week. The Uaru-2 well encountered 220 feet of high quality oil bearing reservoirs. The Longtail-3 well encountered 230 feet of net pay, and both of these results included newly identified intervals below the zones originally discovered. Resource quantification is ongoing. The Whiptail-1 well encountered 246 feet of net pay and drilling is ongoing at the Whiptail-2 well, which has encountered 167 feet of net pay, both in high quality oil bearing sandstone reservoirs. This additional resource will add to the 9 billion oil-equivalent barrels we discussed at Investor Day, further increasing our confidence in the resource size and quality in the area east of Liza and supporting our view of an ultimate block-wide footprint of seven to 10 developments. The projects in progress remain on schedule, with the expected arrival of the Liza Phase 2 Unity FPSO in Guyanese waters early in the fourth quarter. Payara, the third major development on the block is on track for a 2024 start-up, with topsides construction ongoing. And pending government approval, we're targeting a final investment decision on Yellowtail, our fourth major development later this year, with start-up planned for 2025. Offshore Brazil, we confirmed the final investment decision on the Bacalhau development during the second quarter and expect this 220,000 barrel a day project to start up in 2024. It will deliver more than a 15% rate of return at $50 a barrel. I'll now turn the call back over to Darren to discuss our Low Carbon Solutions business and long-term plans. Darren Woods: Thanks, Jack. Let me shift focus now to the wide range of activities we are pursuing to ensure ExxonMobil plays a key role in the energy transition, while continuing to grow shareholder value. You will recall that earlier this year, we established our Low Carbon Solutions business to develop potential carbon capture and storage opportunities, using both established and emerging technologies and progress commercialization of other lower-emissions technologies. We believe that the depth and breadth of our operating experience, history of process innovation, project execution, subsurface expertise, and ability to scale technology gives us a competitive advantage in what is expected to be a fast-growing market for Low Carbon Solutions. We also believe that the time is right, given the developing market for emission reduction credits and growing recognition of the importance of carbon capture and storage, hydrogen and biofuels by both governments and investors, all critical for broad-scale commercialization. The new organization is making steady progress in developing a wide range of attractive opportunities weighted initially towards carbon capture and storage. We've provided a few examples here to give you a sense of the opportunities. Next year, we anticipate final investment decisions for a large CCS expansion at our LaBarge facility in Wyoming and a new carbon capture technology pilot associated with the Porthos project in Rotterdam. This quarter, we signed an MOU to explore the development of CO2 infrastructure to help decarbonize the industrial basin in the Normandy region of France, and an MOU to participate in the recently announced Acorn CCS project in Scotland. We are continuing to pursue several Gulf Coast opportunities, including our Houston hub concept, which are all gaining industry and third-party support. In addition to carbon capture and storage, we're advancing a number of options to produce low-emissions biofuels. These include new projects, repurposing existing refinery units, co-processing bio feeds and purchase agreements. These plans would enable the production of more than 40,000 barrels per day of low-emission fuels by 2025. We also recently completed a successful trial to co-process bio feed across our existing refining circuit. Co-processing bio feeds is a key technology that can be rapidly scaled to help society quickly lower emissions, provided the right policies are in place. In addition, during the quarter, we expanded a previous agreement with alternative fuels developer, Global Clean Energy, to annually purchase up to 5 million barrels of renewable diesel. This is basically a drop in lower carbon fuel that meets all finished product specs for today's engines. Commercial production is expected to begin next year. In markets where low carbon fuels policies incentivize the development of lower-emission fuels, like California and Canada, scale opportunities exist. We see the potential to leverage our existing facility footprint, proprietary catalyst technology, and decades of experience in processing challenging feed streams to develop attractive low-emission fuels projects with competitive returns. An effectively designed low carbon fuel standard in the U.S. could accelerate significant CO2 reductions in the hard-to-abate transportation segment at a cost much lower than some existing policy. While we advocate for new policies, such as a carbon tax or low carbon fuel standard and develop future projects, we continue to lead the industry in developing and deploying new technologies to address another important issue, reducing methane emissions. To that end, we have conducted more than 23,000 leak surveys on more than 5 million components at over 9,500 locations. We are eliminating high-bleed pneumatic devices across our U.S. unconventional production, and participating as a founding member in industry initiatives to improve detection and reduction of methane leaks. ExxonMobil is also the first company to file an application with the EPA to use airplanes equipped with methane detection technology to conduct large flyover inspections, and we're evaluating satellite technology in support of our 2025 reduction plans for both methane intensity and absolute methane emissions. These ongoing efforts to commercialize Low Carbon Solutions and reduce emissions are central to our long-term plan to grow shareholder value. As markets and policies continue to evolve, we will be there playing our part, contributing where we bring the most value. In the near term, as we begin the development of next year's plan, our organization is focused on continuing to deliver industry-leading operating performance, building on last year's record results in safety and reliability, and extending our trend of annual reductions in emissions intensity by accelerating the pace of reductions and establishing more aggressive objectives. This will enable us to reduce our own emissions at a pace faster than what the countries have committed to under the Paris Agreement. It will also help accelerate our objective of industry leadership in greenhouse gas performance by the end of the decade. Of course, we remain focused on sustained financial discipline. We are developing plans consistent with our existing commitments to deliver $6 billion of annual structural savings by the end of 2023, manage future capital investments, including new low carbon projects within previously announced CapEx ranges, and restoring the strength of our balance sheet, returning debt to levels consistent with a strong AA rating. As our results demonstrate, we've made good progress in improving our competitiveness, but we're not satisfied. Our plans will focus on driving a further step change. We see a significant opportunity to capture scale and integration benefits from our recent reorganizations, improving efficiency, effectiveness, and growing additional cash flow. To strengthen the earnings and cash flow potential of our assets, our plans will continue to advance high-return, advantaged projects and high-grade our existing assets through accretive divestments. Finally, as I have illustrated, we're stepping up and accelerating efforts to ensure the company plays a meaningful role in the energy transition. Our plans will reflect the continuing development and deployment of needed technologies, and where the appropriate incentives are in place, accretive investments. As we finalize our plans later this year, we'll provide additional updates with a more detailed review at our next Investor Day. Reflecting back on the past half year, we're pleased with the results the organization's hard work has delivered in a recovering market. We've made a lot of progress, as demonstrated by our year-to-date performance, and we're excited about the opportunities ahead. We appreciate your participation in today's call. I look forward to answering your questions. Stephen Littleton: Thank you, Darren. Operator, please open up the phone lines. Operator: Thank you, Mr. Woods, Mr. Williams, and Mr. Littleton. And we'll go first to Phil Gresh with JPMorgan. Phil Gresh: So just going back to your earlier remarks about all the discussions that you've had with the Board recently, I'm curious what you take away from that as to whether you have any new or incremental thoughts about the best way to drive increased value to shareholders from here. You kind of went through some items there at the very end, but on the margin, do you feel like you've learned anything different from these discussions? And if you could layer in some thoughts around CapEx and balance sheet in that, that'd be helpful. Thank you. Darren Woods: Sure. Yes, Thanks, Phil. Good to hear from you this morning. Yes, I think the one point I would make in terms of the context to the response is it's fairly early in the process, as I said in my opening comments. We've only had the one meeting with the Board, but I would tell you that meeting was very encouraging. The other point I would make is, actually, the new Board has formed at a very good time with respect to our typical cycle with to - and managing the business. We have just kicked off our corporate plan process that runs through the end of November, and so we, with the new Board, went through kind of the basis of the plan and the objectives that we are setting ourselves. We had an opportunity for a very rich conversation about that and what we need the organization to deliver this year and continuing this year and into next year and the years ahead. We also have a bi-annual strategy process that we have in place, which this year, we are doing in September and the new Board will basically have an opportunity to really dig into and go through the strategies that we've developed with all of our business, including our new business, Low Carbon Solutions, in the broader corporate profile. So I expect as we go through this year, to get a lot of good conversations about where the company is going, the opportunities that are ahead of us, and where we want to put our emphasis. I think I would say the fundamental approach that we have taken is very, I'd say, is a pretty good alignment amongst the Board. I think they all recognize that the opportunity for us to take a leadership role in this space and just leveraging the capabilities and advantages we currently have. And so, finding the opportunities that fit well with where we can add the most value is, I think, a very aligned objective amongst the Board, and of course you've heard me talk about that, I mentioned in my opening comments. The broader conversation network this society is now having, governments are now having around the solution sets needed to address the transition, I think, opens the door to a much richer conversation about where ExxonMobil can play and contribute carbon capture and storage, hydrogen, biofuels, other areas potentially where that leverage our strength. So I think we're - the things are lining up very well within the company, and then I would say more externally in the broader environment. With respect to CapEx in the balance sheet, as you mentioned, I think, again, good alignment around the importance of rebuilding the strength of the balance sheet. Everyone recognizes this is a commodity market with some significant cycles and volatility, and making sure that we've got a balance sheet that we can lean on as we move through that volatile environment and manage the downs, as well as the ups, is a really important foundational piece of our strategy, and I think very good alignment on that. And that was reaffirmed in the conversations we had this week with our finance committee and the broader Board. And I think too, given the improvements we've made around capital efficiencies, the work our Global Projects organization has done to really make sure that we can deliver these projects with - at a very advantaged cost, we're very confident that we can do the things that we want to do, add some additional activities in the Low Carbon Solutions, and do all of that within the range of CapEx that we've previously communicated. And I think, again, good alignment on that and we will confirm that as we move to plan cycle and have those reviews with the Board later this year. Phil Gresh: And as a follow-up, just on the spending side and with respect to your comments, it sounds like, if you were to stick with the $20 billion to $25 billion range, which would be up a decent amount from the low end of the $16 billion to $19 billion range this year. Should we be seeing more of an acceleration around energy transition spending kind of embedded in that? Is that how you envision things moving forward versus how you thought about in the past? Darren Woods: Yes, I would say that the energy transition spending will be embedded in the range that we've laid out. I think though, it's good to keep some perspective in this space. If you think about the comments around the broader opportunity set opening up and a broader recognition of the need for that opportunity sets, I'm referring to carbon capture, hydrogen, that's a very rapidly evolving space and so, while we've got a really, I think, good portfolio of opportunities, some of them very attractive that the time to transition from the planning and the development of those projects to steel in the ground is going to take some time, we'll be talking about that and the investments that we're planning going forward. And then of course, the steel in the ground will come with time across the horizon that we typically talk about. And all of that's expected to be within the 2025 range. Operator: We'll go next to Jon Rigby with UBS. Jon Rigby: Can I ask a question on the Downstream? I listened to what Jack said about the Chemicals and the huge competitive advantage Exxon continues to demonstrate in Chemical. If you could turnaround around that comment and sort of see it in reverse in the Downstream, where the series of loss-making quarters is pretty unusual and looks like underperformance versus your peers. Are there any takeaways from those quarters that you could share with us around sort of the structural makeup of that business, or are you just relying on the cycle for those earnings and cash flows to recover? Darren Woods: Yes. Thanks, Jon, and good morning. I'll - I'm going to hand it to Jack here to get maybe more specifics, maybe a couple of broader comments that you point, that it is unusual given the consecutive quarters of challenged results in the Downstream. But I would also say, going through the pandemic and losing over half of the jet demand, coming out of the refining circuit is very unusual as well. And I think a very discrete and unique event associated with the global pandemic. So I think that context is really important to keep in mind as you think about our Downstream business in the results. The other point that I would just make with respect to your comment or question is, I think, when you talk about the Downstream and compare across competitors, you've got to recognize the difference in the footprints and the investments in capital assets that we have. I would tell you, as you look across our competitive group, we are much more heavily weighted in refining than some of our competitors. And so obviously, in an environment where refining margins are structurally down, performance is going to look different. And I think it's really important and certainly to what we focus on is making sure we normalize and understand what aspects are driving the performance. And I would say, our capital structure, the investments that we've made over the years are a really important part of that. I'd also tell you that what I refer to as the physics of this business is, and you can't stay at these low levels and continue with the level of supply that has historically existed in the Downstream, and you see that today with the shutdowns that are incurring in the industry. And so, while that takes some time, this market will come back into balance and if it's anything like we've seen in the crude, when that economic recovery kicks in, we're going to see supply and demand tighten, I suspect, and I think we'll see a different level of performance with respect to the Downstream and with respect to our peers. But obviously, that will be a function of that balance and when that economic recovery comes back around again. And I'll just make one final point in terms of - we are not relying on just the cycle, we recognize the impact of the cycle, but I can assure you that that Downstream organization is very focused on ensuring that we're pulling as many of value levers as we can in the right way to build sustained and structural improvements that will benefit us obviously in this down cycle, but also in the up cycle. Well, with that, let me turn it over to Jack. I don't know if I left anything, Jack. Jack Williams: Well, I did want to pick up on the refining exposure versus some of the others. We do have a - as the largest refiner, I would say refiner, we do have quite a bit exposure to that market. And we talked about in the fourth quarter how historical low that was, and we are seeing some recovery. But due to the jet demand, that's going to take a little bit of time. I did mention in my prepared remarks that these new investments that we are making will help, and the recent ones we have made have helped. The Rotterdam investment has made a couple hundred million dollars this year, and that will continue to help. So we are investing to continue to grow advantage in our - in what is a, difficult right now, fuels value chain. But picking up on the Rotterdam comment, our lubricants business has done quite well over the past couple of years. As a matter of fact, having a record year last year and extremely strong results so far this year. So that is a kind of balance to the fuels, a tough refining fuels market. We - I mentioned the integration of our refining with our chemicals. 75% of our refineries are integrated with chemicals and others are in advantaged market. So we're making sure - we want to make sure that refineries we have going forward are advantaged, and that's what these investments are about, making sure the ones that we think are - have natural advantages, we build on those advantages. And then just in terms of Darren's comment about kind of the physics of refining, we see about almost 3 million barrels a day rationalization over the past year, 18 months. So it's definitely quite a bit above where it has been historically, and we'll just have to see how that plays out, but we are seeing a slow - slower than we hoped recovery refining environment. Jon Rigby: And just a follow-up. Darren, you mentioned at the start - you sort of referenced some of the responsibilities that Kathryn will be taking on when she takes on the role of the CFO, and I think you indicated IR responsibilities, strategic planning, et cetera. But it is unusual, very unusual to appoint somebody from outside of the organization at such a senior role and also somebody without oil and gas experience. So I just wondered whether you could just expand a little bit around the sort of qualities and experience that she brings that will add value, or will add to the process at the high level of Exxon. Darren Woods: Sure. And then maybe, just as, I think, very important context to understand what's enabled that change or evolution. And I've talked before, I think, with all of you about the reorganizations and the consolidations and the changes that we've been making in how we run the business. If you look at the senior, the corporate officers in the organization, we've reduced that group by almost 40% over the years in terms of - as we simplify the business, line up the value chains, reduce the overhead, and we were able to make significant simplifications in that structure and then reduce numbers. And that also allows us to concentrate consolidate some of the responsibility. So as we've made those changes with time, we've been able to shape the portfolio of the management committee members and focus them on core areas. And so, we're in a position today where as we've consolidated those responsibilities and focus them, that we're creating a management committee position that's much more aligned today with what would be typical CFO type responsibilities versus in the past where we had much broader number of businesses and therefore, a much broader reporting relationship up into Dallas. So that simplification has enabled our ability to focus and bring these portfolios in line with what would be some more industry standard opportunities, which then led us, and through Board discussions last year, to start thinking about how we can expand the capabilities, the skill sets, the experience on the management committee, and bring in what we think is some relevant experience into a portfolio that's consistent with and shaped with outside industry experience, and the - obviously understanding the industry is going to be an important role with that. I think we've got a pretty capable team and organization that understands that industry very well. It's going to support Kathy with respect to that, as she comes up the learning curve there. But I also think she will bring in a lot of perspective from the outside that's very relevant to the business, along some of those core areas, including procurement and supply chains, and some the other areas of responsibility. So I think there is - that change in our structure and approach to running the business has opened up some nice opportunities and we think bringing in that diversity of thought, experience, and perspective is actually going to benefit, and obviously we'll supplement that with our industry knowledge. I think the mix will be a very powerful combination. Operator: We'll go next to Doug Leggate with Bank of America. Doug Leggate: Darren, I'm going to try and ask this as eloquently as I can, if you can bear with me for a minute, to address the 800-pound gorilla in the room, which obviously was the Board changings. The press would have us believe that you lost a climate fight. But all the discussions that we've had with some of your large shareholders suggest it was an issue of capital discipline, spending, dividend protection. And my question really is that Exxon is already a leader in carbon capture. You're already leading through the methane partnership. You've been doing a lot of things for a long time, and you have got one of the best portfolios of growth opportunities in the industry that can drive sustainable dividend growth. A lot of your peers mismanaged the cycle. Now, where some might say you spend a little bit too aggressively, the bottom line is, you've still got those opportunities. So can you give us some assurances that just to tick a box, you're not going to sacrifice returns relative - on a relative basis across the portfolio? Darren Woods: I think that's an easy answer to give you, Doug. That has been a primary focus for us for a long, long time, it's certainly when I've been in the job. And as you know from past conversations, the work that we've been doing to reshape the organization, to get more effective at running the business, and then importantly, recapitalizing the business with advantaged assets and supply has been a really important focus, and I think the work that we've done in the past has put us in a very solid position to continue to contribute. I think everybody on the Board is realistic with respect to the challenges facing society with this transition and the work that's going to be required by everybody, ourselves, the rest of industry, governments around the world, other industries, and consumers to make changes on that transition and that will take time. And I think as you look at a lot of the independent third-parties' assessments, they all recognize that this is a challenging area that's going to require a lot of work and expertise in that our industry has an important role to play in helping with that transition, but very importantly, and continuing to meet the need for energy and existing sources of energy. And so, that's the balance that we're trying to strike. And of course, I think one of the - and how that transition evolves and the uncertainty associated with it, obviously everyone could take a different view on that. Our view is the way you help manage some of that uncertainty while you're continuing to meet current demand is to make sure that what you're doing is very advantaged, and on the left-hand side of the cost of supply curve, which is what we've been focused on, what we've been talking about. So, we think we've got a really good portfolio of high-return projects that are advantaged versus the rest of industry. And so, as time goes on and that uncertainty begins to manifest itself, we think irrespective of how that - the shape of that curve, we're still going to be in a very good position. And so, I think strong recognition within the Board that's the advantage that we've created, and I think commitment to continue to leverage that advantage as we look at opportunities in this space of transition. And the final point I would make to try to reassure you, Doug, is, I think, one of the - if you go back 18 months, I would say, the litmus test for whether or not somebody was committed to helping manage the transition was whether we are investing in solar and wind. Of course, we were concerned about the returns you can generate in that and the value that we bring to that sector. My sense is, over the last 18 months, the broader conversation has quickly evolved and there is this recognition today that more solutions are needed and solutions that fit into our skill set and solutions where we have been working on creating advantage. So, I'm confident that as the need for carbon capture is recognized and projects are being advanced in that space, for biofuels or hydrogen, that the work that we've done and the technology and the fundamentals of carving out advantage there, that we will generate a above industry, above average return for the things that we do in that space. Doug Leggate: Go ahead. Jack Williams: I would just add to that real quick. If you think about the projects that I talked about, the Chemical and Downstream projects, the Permian and Guyana, very, very good strong returns, industry leading returns from that portfolio. I feel as good about that portfolio as I've ever felt in terms of the projects - project returns we have, Doug. So, I think we're pursuing high returns. Doug Leggate: Yes, Thank you for the full answer, guys. My follow-up actually, Jack, is for you and hopefully, it's a quick one after that full answer. It really is a follow-up on the Downstream comment earlier, one of the questions about consecutive quarters of weakness, but I would also - my question, I guess, is Chemicals is hitting on all cylinders, and I understand your business after over 25 years, Jack. It's been about optimizing between those two. So to the extent you can, can you characterize to what extent decisions made to maximize Chemical's profitability may be detrimental in your system to refining? Should we look at the two businesses together? And I guess that - what I'm really trying to get at is coming out of this recovery, when would you see the investments in refining specific start to show up as improved returns. Jack Williams: Yes. Doug, I think you're getting at the value of the integrated sites and the tight integration between our Chemicals and Downstream organizations, which is absolutely valuable and we can look at those integrated sites and find several hundred million dollars a quarter of value-add, real bottom line value-add with all of these streams moving back and forth. And what we're doing, I think, an even better job of in recent years is looking at the whole portfolio together. And for instance, the Singapore project is a both a Downstream and Chemicals project and you'll see more of those, I think, where we're involving both sides of the business and creating additional value there. So, I think that integration, we view is a real strength going forward, as you think about the whole energy transition and to move forward there, I think it's going to be even more valuable, as we think about molecule management and increase in the value of all those molecules coming into our integrated complexes. Darren Woods: I think, the other point I'd add, Doug is, you're right about is a little artificial to split between refining and chemical, because you've got molecules flowing back and forth, and the only other point I would add to what Jack said was if you think in the area of recycling plastic and some of the work we've been doing for advanced recycling, we're actually using our refinery footprint to recycle plastic into the Chemical business. And so, it is somewhat arbitrary. We try to make sure we understand the drivers behind each of those, but where you choose to draw the line, obviously, is an internal choice, and we're not thinking about it so much along those lines, it's really around how do you maximize the value at the whole. Operator: We'll go next to Sam Margolin with Wolfe Research. Sam Margolin: A couple of operating questions for me. There is a pretty clear inflection in Upstream U.S. earnings even compared to sort of the last cycle, right, when oil prices may have been very strong, but Upstream had a lot of capital employed and there was differentials. Now, all that seems to be out and Upstream net income in the U.S. is better than it's been in a long time. So I wonder if that's on plan. It seems like it is, because you invested a lot in infrastructure to enhance that, but just if that's altering any of your conceptions of sort of capital allocation and CapEx tilting here, particularly with respect to the Permian. Jack Williams: Yes, let me, - I'll answer that one, Sam. I think when you're talking about U.S., you talking about the Permian. That's what - from the Upstream perspective, that's what's going to be driving our results there. And I think the slide I showed pretty much demonstrated why that - - you're seeing that bottom line earnings improvement. We're really improving the development efficiency in the Permian, really hitting on all cylinders, getting the sort of efficiencies that we've been targeting for last couple of years, and really hitting those three priorities we talked about, in terms of increasing cash flow and capital efficiency, and really driving those development costs. So as we look going forward in the Permian, we're going to be looking at making sure we hold on to those efficiencies that we've captured, making sure that we - those we sustainable, and then continue to work the technology there, and we see some additional benefits of technology being applied to that program. And as we do that, you get confidence that those benefits are sustainable, we've got the technology built in and we'll be growing that program over time. Darren Woods: Yes, I'd add, Sam, that we are actually ahead of our plan with respect to the improvements and the work that we did early on with the delineation, the infrastructure we put aboveground, all of that, spending at the front end to position ourselves as we move forward. And if you recall, the talk we had about technology and what we wanted to do there, that's all coming to fruition. And then, I think as we move forward, it's how we make sure we're continuing to leverage that effectively, and that's an ongoing area of focus and discussion because we see good value there, good opportunities, but we're going to make sure that we hang on to the gains and continue to leverage that effectively. Jack Williams: So, we have the first train of the large infrastructure plant we have up in Poker Lake is full, and we have that connected to our Wink terminal, and our Wink terminal connected all the way into the Gulf Coast. So we have set up that infrastructure now and it's starting to click in terms of bottom line performance. Sam Margolin: Thanks. And then just a follow-up on asset sales, you're paying down debt organically at a pretty healthy pace here. Asset sales were important in prior calls, because they were built into your production outlook too, and it created sort of a flat production outlook, even though you are reinvesting a lot in new assets. I wonder if asset sales are still something that is important to the program, or if we should think about kind of net production growth with a lower emphasis on asset sales over the next four years? Darren Woods: Yes. Sam, I'd tell you that the emphasis has not changed and I think the way you've characterize it isn't exactly how we were thinking about. Our drive for divestments and asset sales is really around focusing on concentrating our assets in the areas where we have advantage, where we can leverage some of our organizational capabilities, and so it's really around focusing the portfolio and highgrading it, and that continues to be a really important part of our work there. And so, that whole divestment discussion that we've had in the past continues to hold. You'll recall, last year we said, given the market dynamics and the impact of the pandemic that that was probably going to slow the pace of those. It certainly didn't slow our activities, and I would tell you today, our activities haven't slowed, and what we're seeing now with additional buyer interest, my expectation is, as we move forward, if we can find deal space there, we'll continue to continue to see those things play themselves out. Operator: We'll go next to Roger Read with Wells Fargo. Roger Read: Coming back to some of the opening comments you had, Darren, and some of the questions you've got on here, as we think about new Board, strategies that you've had, maybe some changes, do you think we wait until next March at the Investor Day for any sort of new unveiling of what a different Board could provide, or do you think from what you've seen so far, most of what we've heard makes sense right, get the balance sheet fixed, you've already made a lot of changes on the CapEx front, you do have a tremendous backlog of projects across the Upstream and the Chemicals and Downstream, which you've highlighted here, or do you think that we're in kind of a stasis and we simply have to wait six months to find out anything you run different? Darren Woods: No, I would say - I think, actually, we started a different approach last year that was maybe overwhelmed or mixed up with some of proxy action that was going on, but we had committed last year to start a more of a continuum and discussions and talking and put less emphasis on the Investor Day big bang and more, what I would say is, continuing dialog about where the business is going. And so, after we had our plan endorsed by the Board, we put out a press release that gave some highlights. I talked about it in our fourth quarter call and then rolled into the Investor Day. I would tell you that continues to be the new approach that we want to take. I think that was reinforced by a lot of the discussions that we had with shareholders and this desire for continued transparency and more engaged dialogues. And so, we're committed to continuing to do that. My expectation was, as the Board goes through its deliberations, as our organization develop plans and options, that you're going to see a more of a continuum in the discussion and the evolution of those plans going forward. I think again, I'd just reiterate, if you look at the foundational elements of our strategy, which is really leveraging the strengths of our corporation, the technology, the ability to scale, our projects organization, the capital capabilities that we have, a lot of those fundamentals, those have not changed. And the work that we are doing in technology to advance as what we believe are going to be important solutions to adjust to address transition - the transition, that hasn't changed. In fact, what I would tell you is, there's probably even more appetite around that. So if you think about the fundamentals, what we can bring to the equation, and then what's needed, given that those remain fairly constant, I think, I wouldn't see huge shifts in the strategy, but you may see accelerations, additional emphasis in areas, and continuing to leverage on those cores and how they manifest themselves. We're committed to leveraging the new perspectives and experience and capabilities we've brought into the Board. That was part - in part, some of the reasons that we made some of those changes. And so, we've got a really good experience set today, and how we leverage that in our thinking and what opportunities that develops, I think we'll come out of our strategy and plan discussions and we'll talk to you all about that as that thinking evolves and gets translated into plans and actions. Roger Read: That is great, thanks. Glad it won't be months of wondering what's next. Second question I had for you, looking at the Upstream performance this quarter, which actually was pretty good and then dovetailing that with the expectation for the additional $3 billion of OpEx savings, which I recognize is spread across the company, but if we look at your peer that reported today, they returned about the same amount of net income on a lower production volume number. And I know at any quarter, there is moving parts and doing an exact comparison is a little bit unfair, but it is a meaningful number of equality across two different companies. And I was wondering as you think about the OpEx savings to come, that $3 billion, and the Q2 performance, kind of where you think you are today and where you think you might be by the end of 2023 when all that's run through, as we think about profitability of the Upstream? Darren Woods: Well, I would - I guess, a couple of thoughts with respect to that - to your question, Roger. First of all, I'd link back to the comment that we had in the Downstream, not all volumes are created equal. And so, when you talk about Upstream and volumes, I think you really got to step back and look at the mix of those volumes and the resource types that you're in and the location of the resources. And so, I think again, while it ultimately is a function of what you deliver and so, no excuses there, it's just understanding that and what leverage you have to affect it, which ties into - so I think you start with your portfolio and how do you feel about that and where are the opportunities to improve it are, which comes back to the capital we've been investing in the Upstream with the view that we got to - we're focused on bringing in more profitable, higher-value barrels and the divestment work that we've been doing, which we just touched on, which is taking the areas, the volumes in some of the projects were an asset that you feel like it may have a higher value to others and shifting those out of our portfolio. So that highgrading of the portfolio and the resulting change in the mix of our barrels and volumes, I think, is a very important part of the equation and one of the things we've been very focused on. I would just tell you, that is a big driver as you look across the competitive landscape, and one of the reasons why we've been so focused on that space. And then above and beyond that, when you think about the organizational construct, how you're managing that, the focus that you've got, end-to-end focus along that value chain, that has been a very big change that we've made in the organization. I think we're seeing the benefits of that today in how we're running Upstream, and my expectation is we'll continue to see additional benefits manifest themselves with time. And that's with respect to effectiveness and responding more effectively to market signals and delivering value there, and it's also a function of efficiency in terms of additional cost reduction. So, I would expect to continue to see an evolving, improving business in the Upstream, just as I expect to see that in our Chemical and Downstream business. Roger Read: Great, thank you. Jack Williams: In addition, Roger, to the divestments and the OpEx and efficiency work we're doing, just the profitability of the investments, I've mentioned earlier, there is not any other - Guyana doesn't have a peer out there right now, and we have a large position there and continue to grow it. So it's going to make a big impact over time. Darren Woods: Operator, we probably have time for one more question. Operator: Certainly. Our last question will be from Jason Gabelman with Cowen. Jason Gabelman: Yes. Thanks for squeezing me in, guys. I first wanted to come back to shareholder distributions, if I can. It looks like the quarterly dividend has been flat for, now, a couple of years. Can you just discuss if there was start, an increase in the dividend this quarter, what needs to happen to increase the dividend moving forward, and maybe connect that to debt levels, and connected to that, what do you consider some sort of shareholder distribution strategy that gives cash to shareholders as oil prices are kind of above any long-term trend you expect? And then my second question is on Chemicals. It seems like the segment kind of has a lack of transparency with two respects, one in their performance product earnings, and two, on benefits to greenhouse gas emissions. So on the performance products, can you discuss what that's contributing currently, if there was kind of an outsized benefit because of the overall Chemicals' environment strength, and what kind of a normalized earnings looks like moving forward in that performance products? And then related to emissions, you mentioned that the performance products really helped with emissions reductions, but Exxon maybe doesn't get that benefit because it's not like a Scope 3 reduction, or your own emissions reductions. Is there any thought to supporting kind of emissions reporting scheme that awards Exxon for producing products that helps the world reduce emissions, even if it doesn't reduce your own emissions? That's it. Sorry, I know that was a lot, but I appreciate it. Darren Woods: I appreciate your questions, Jason, and I'm going to - I will let Jack talk to the chemical piece of your question and I'll address the capital allocation. I will though, just on the Chemical one, we do look at that in terms of the product emissions and we do recognize the opportunity that Chemicals brings in terms of helping society achieve that lower emissions. That is something that we talk a lot about. We've - gas is another one I would add, with respect to the alternatives that are out there today. So it is an important part of the equation that we think about and continue to work. And I'm less focused on how you take credit for it, more focused on making sure that it happens. But I'll let Jack spend some more time on that. With respect to your capital allocation and the dividends, I would tell you that the foundational elements of our capital allocation remain unchanged with respect to making sure that we're finding high-return, industry-advantaged investments, because that underpins basically everything else we do for the long term. We are a capital-intensive industry and so you better be making sure that you've got a good program of investments in capital, particularly in the depletion side of the business. And maintaining the balance sheet has always been an important part we do down heavily and that advantage paid off last year, and we're going to rebuild that. So as you said, that's part of our strategy. And then shareholders distributions have been the third leg of that stool and an important aspect. And so with respect to that question you heard, we think we've got a good plan on our investments and the range that we'll be investing going forward. We're making good progress on the debt, particularly given the higher-price environments than anticipated. And then on distribution, it is part of the conversation and discussions we've had. I would tell you, we have always felt a very strong commitment to our base shareholders to deliver on a dividend, a reliable and growing dividend, and that continues to be part of the conversation, and I would say the Board would like to continue to deliver on that commitment. And so we're continued - we're committed to that, a reliable dividend and one that grows with time. And obviously, if we're maintaining capital in the range that we won't - we get our debt back to levels that assure us the ability to ride through the cycles, and we've got a manageable dividend that's reliable and growing, recognizing anytime you raised the dividend, that brings of the burden up. We want to - we're going to continue to do that, but at the same time there, we want to manage that total outlay in the dividend. And so, buybacks and other distributions become part of that equation, particularly when to redistribute cash. So that's all on the table, and I think as we move through this year, and depending on where price is at, those opportunities will grow in relevance. And with a capital program that's pretty well defined and a debt that we - objective that's pretty well defined, you've got this opportunity on the distributions that I think the Board will continue to evaluate as we go forward. Jack Williams: So back on the performance products, there are - it's about, think about - that's about a third of our product portfolio in Chemicals, and I showed you that's going to grow at 70% by 2027 and, importantly, grow earnings more, and that's because that 10% to 25% uplift we generally get on our performance products. And I think that was demonstrated, if you look at this quarter. A lot of - almost all the chemical companies benefited from the dynamics we had in the quarter, but you saw the earnings power of our Chemicals company because of this higher margin, because of the technology we bring in those performance products. And the other advantage those have and when you think about all our investments going forward, these investments are focused on generating those performance products, and they're not more capital-intensive, this is catalyst technology. So it's not more capital-intensive and yet, we get - we're having - we're generating a product that gets 10% to 25% more margin. So you can imagine those investments look more profitable as well. So it's a key part of our strategy going forward and we're - we'll just continue to double down on that in terms of the technology improvements and growing those products preferential to the rest of our Chemical portfolio. Stephen Littleton: Okay, Thank you. I want to thank Darren and Jack for joining us on the call. And I also want to thank all those on the line. We appreciate your interest and opportunity to highlight our second quarter results. We hope you enjoy the rest of your day. Thank you, and please be safe. Operator: And this concludes today's call. 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.