Exxon Mobil Corporation (XOM) on Q3 2021 Results - Earnings Call Transcript

Operator: Please standby. We're about to begin. Good day, everyone, and welcome to this ExxonMobil Corporation, Third 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, sir. Stephen Littleton: Thank you. And good morning, everyone. Welcome to our Third 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 Kathryn Mikells, our Senior Vice President and Chief Financial Officer. The full set of presentation slides, and prepare remarks were made available on the Investor Relations section of our website earlier this morning along with our press release. During our call this morning, Darren will provide a few additional opening comments, and reference a select number of slides from that presentation leaving more time for your questions. We expect to conclude the call at 9:30 AM Central Time. I would also like to draw your attention to the cautionary statement on Slide 2, and to the supplemental information at the end of the presentation slides on the website. I will now turn the call over to Darren. Darren Woods: Thank you, Stephen. Good morning. It's good to be with you today to discuss our strong third quarter results, and the progress we're making in growing shareholder value, and of course, to take your questions. I'd like to start by welcoming Kathy to the call, her first in what I know will be many. I can tell you that Kathy has hit the ground running, seamlessly joined the management team and has been broadly welcomed by the organization. While early in our tenure, we're already benefiting from her diverse experiences, and wise counsel. Since we posted a full set of slides and remarks on the website, I'll keep my comments brief this morning. Starting with an overview of the work we're doing to position the Company to sustainably grow shareholder value. Our first priority was to significantly grow the value of our base business to achieve industry-leading earnings and cash flow growth. This is work that has been ongoing for some time. It's built on the significant the changes we have made to our organization and the increased focus on fully leveraging all of our competitive advantages, in technology, scale, integration, functional excellence, and most importantly, our people. It has also allowed us to improve operating performance, drive down cost, and develop a portfolio of industry advantaged high return investments. Our businesses are driving returns and generating cash to maintain a strong balance sheet and fund future investments. The work we began in 2018 to develop opportunities in carbon capture and later low emission fuels, plays to our competitive strengths, positions us to build a successful low carbon solutions business, and take a leading role in driving to a lower carbon future and hard to decarbonize areas. At the same time, we have to ensure our plans are robust to a wide range of future scenarios, including net zero pathways and the continuing use of hydrocarbons. Our low carbon solutions business draws on the same core capabilities in competitive strengths used in our established businesses. This gives us optionality and builds resiliency into our plans. As the future takes shape and demand shift across our businesses, we will maintain our advantage. Now, I will turn to our third quarter performance. The value of the organizations hard work I just highlighted is showing itself as the market recovers. In the third quarter, we delivered excellent operational and financial performance with improved earnings and cash flow. We significantly improved our cash position, reduced total debt, progressed key projects, and set a number of best-ever operational milestones. Earnings for the quarter were $6.8 billion. Year-to-date earnings surpassed $14 billion on the strength of our upstream portfolio and industry-leading chemical and downstream businesses. Last year during the pandemic, we worked to improve our cost structure by $3 billion versus 2019. That progress continued in the third quarter. Our structural costs are now $4.5 billion lower than 2019 on an annual basis. With a clear line of sight to continued improvements. Strong earnings and sound CapEx management resulted in Cash Flow after CapEx and dividends of $5.2 billion. We paid down approximately $4 billion of debt during the quarter and increased the dividend, maintaining 39 consecutive years of annual dividend growth. Good progress and improving the earnings power of our business coupled with solid operating performance in a rapidly improving market, provides a good foundation for developing our future plans. We will finalize our plans over the course of November and will provide additional details in early December. I would like to take the opportunity of this call to provide a brief overview of some key planned priorities and objectives. Starting with our operations. In 2020, we delivered industry-leading performance in safety and reliability. Our go-forward plans intend to sustain that leadership position. We also established objectives to significantly reduce emissions intensity by 2025. Our focus in this effort, more than paid off. We now expect to meet our objectives this year and are working to significantly raise the bar and reset our 2025 objectives. We're also ahead of schedule on our work to improve our cost structure, we expect to deliver more than the $6 billion in structural savings by 2023. We continue to find additional synergies and greater efficiency throughout our new organization. We expect to keep our capital spend within the previously communicated range of $20 to $25 billion. This represents a significant reduction versus our pre-pandemic plans. Over the changes we've made to our businesses are new project organization, and improved use of technology. We expect to deliver the same growth in earnings and cash flow as our pre-pandemic plans, offsetting the pandemic induced delays. In addition, we can free up funds to grow our low carbon solutions business and further accelerate efforts to reduce emissions. From 2022 to 2027, our cumulative capital investment in emission reduction projects is expected to be $15 billion. This year we made substantial progress in restoring the strength of our balance sheet. By year-end, we expect to be well within the debt-to-capital range of 20 to 25%. On Wednesday, we announced an increase in our dividend, adding to what is already a very attractive yield. In addition, given the improvements in our business and market conditions, we are expanding shareholder distributions by up to $10 billion over 12 to 24 months, through repurchase program beginning next year. Our plans are being built from the bottoms-up, with strong line ownership and a commitment to deliver. They are flexible and can be adjusted to adverse market conditions. They strike a strong balance across our capital allocation priorities, drive continued efficiencies and significantly grow earnings and cash flow while competitively positioning us for a wide range of future scenarios, including net 0 pathways. We look forward to sharing more details with you later this year and into the first quarter of next year. With that, I will now turn it back to Steven. Stephen Littleton: Thank you, Darren. Operator, please open the phone lines for the first question. Operator: Thank you, Mr. Littleton, the Questions-and-Answer session will be conducted electronically. Instructions] We request that you limit your questions to one initial with one follow-up, so that may take as many questions as possible. Your first question will come from the line of Jeanine Wai with Barclay. And Ms. Wai your line may be on mute. Looks like she disconnected. We'll take our first question instead from Doug Leggate with Bank of America. Doug Leggate : , thanks. Good morning, everyone and welcome, Kathy, and looking forward to working with you over the next several years, hopefully. Darren, I want to kick off just by the comment on the -- commend your restraint against the ludicrous question you were faced with yesterday. I'm not sure all of it stood up to the same level of patience through that testimony. And that -- at least usually it's my first question, which is you're -- you've got a new board, or at least a refresh board and you've now come out with this updated low carbon gas investment strategy going forward. I'm just curious when the new board members have got to look under the hoods at the relative investment opportunities you have, the carbon intensity of those, the returns, the cash -- free cash margin expansion opportunities, and so on. I'm just curious how perceptions of the new board members relative to what external perceptions might be, how those have evolved as you've had a chance to present your strategy to those . Darren Woods : Thank you, Doug, and good morning. I think maybe just start with maybe a little broader comment on the board and the discussions we've been having, which I would tell you, it's -- we've got additional diversity of perspective in the board. It's bringing a very engaged board across the entire group, and a lot of good constructive discussions. And to your point, I think as folks come into the Company and look under the hood and get an understanding of how we approach and look at these businesses, the opportunities that we have and how our advantages manifest themselves in those opportunities. I think there's a generally, I'd describe it a sound solid consensus across the board in terms of the recognition of the strength of the portfolio that we have, and a recognition of the industry-leading position that our investment in our projects have. I would also say, and as you know, we -- you mentioned low carbon investments. We launched that business earlier this year, but if you'll recall from our Investor day, I talked about that in the context of ventures that we established starting back in 2018, looking at carbon capture opportunities, and then a little later on the low emission fuels opportunities. And what we're focused on there was, how do we find these investment opportunities to help drive lower emissions going forward? But do that in a way that's accretive to the shareholders, and one that distinguishes us from the rest of industry. And so, it's really looking for a formula that leverages our existing competitive advantages. And what we tried to share in the Investor Day last year and we'll continue to talk about and spend more time talking about the Investor Day next year, is we think we have found a really good mix of opportunities that are very well aligned with our core capabilities. And therefore, as we move forward, can invest in both our established businesses. Given some of the policy that exist around the world, there are opportunities to invest in a low carbon solutions business and still generate a very solid return from that. And then as we move and the growth manifests itself across that portfolio. Because we're drawing on the same capabilities, we have the ability to shift resources with -- between those and make sure that we're responding to the developments in the marketplace. And that strategy, that discussion that we've been having with the board, I think is recognized as a unique capability that this Company has. Our global footprint gives us exposure to a very broad set of markets and as those markets develop somewhat uniquely with respect to the transition, we can adjust our approach in those markets selectively to make sure that we're on the front end of that and taking advantage of the opportunities as they develop. So, I think there's a strong recognition of the advantages that we bring to this space as a whole. Doug Leggate : Well, thanks for that. If you feel the answer, Darren, I don't want this to be my follow-up. Just a clarification. The 15 billion is about 8%, I guess, consistent with I think the other USPI so we shouldn't expect a big strategic pivots here, aka some of the European models, is that fair? Darren Woods : I think that's right. And you know Doug it's -- this is -- I've been pleased with what I would say is a broader and growing recognition of the challenges of addressing this space and the number of solutions that are going to be needed. And in particular, a number of areas that we don't have complete solutions yet and the need for companies like ExxonMobil to help develop those. So, we as you know, resisted what we think are some of the more, we call it commodity opportunities in this space and focused on where we don't have good solutions and where we can leverage a unique capability and therefore generate what we think will be unique returns. And that portfolio that we're talking about today, we're leveraging some proprietary technology to boost the returns there. And so, our approach here is not going to be what I would call an industry standard, it's going to be advantaged projects like we've tried to generate in the rest of the portfolio. I think as you think about that 15 billion, part of it's around our growth projects and making sure that we are building resiliency into those growth projects by putting in the necessary investments in technology to lower the greenhouse gases. So those projects become that much more robust. And the returns that we're showing for those projects comprehend that spend to lower the emissions. And then we've got new opportunities that we're pursuing that take advantage of some of the policy that are -- that's out there and generate returns. And then we're building and seeding what I would say the development of much larger scale projects that's going to require additional policy. And we're doing the work in anticipation of that, recognizing that as that policy front develops, we will be in a position to take advantage of that with projects that we've developed in anticipation of it. Doug Leggate : Thank you. My proper follow-up if I may, I'd like to ask Kathy a question if that's okay and also commend Stephen, for the prepared remarks put up in the slide deck, that's a terrific for your disclosure. Thank you for that. Kathy, my question for you is, as an outsider so to speak coming in. What do you see is the appropriate capital structure, dividend policy, dividend metrics like coverage and so on for a Company like ExxonMobil? How should we expect your stamp to be on that shareholder return dividend policy and so on going forward. Kathy Mikells : Sorry. To take a step back and say, how do we think about capital allocation for the business, Doug. And I would start with, first of all, we've got to invest in the advantaged projects that we have that on very strong returns and that's from Guyana to things like bio-fuels project. Obviously, we've been very focused on maintaining a strong dividend. I think the Company did a great job as it went through the pandemic, really protecting that dividend and that's a priority for us. And with that, I have a strong balance sheet, and you've seen our focus over the course of this year and strengthening the balance sheet. In this quarter, we reduced debt by about $4 billion. After we consider those priorities, if we've got available cash, we will then look to distribute that to shareholders and you've obviously seen that in the buyback announcement that we had. I think it's important also to just recognize that the Company looks to have a balanced approach and maintain flexibility would have seen the Company reduce its capital expanding pretty significantly, in part to protect the dividend as the pandemic was ensuing. And so, we do have flexibility as we think about capital allocation, but those are our priorities. Obviously, share repurchase programs are an efficient way to distribute capital to shareholders, but that's how we think about it. Doug Leggate : Nice stuff. Welcome again and thanks for taking my questions. Kathy Mikells : Thank you. Darren Woods : Thanks Doug. Stephen Littleton: Thanks, Doug. Operator: All right. We'll go back to Jeanine Wai with Barclays. Jeanine Wai : Hi. Good morning, everyone, and thanks for getting me back in the queue. Apparently, I don't know how to operate my work phone anymore after maternity leave, so thank you. Stephen Littleton : Morning. Jeanine Wai : Good morning. Maybe just following up on Doug's question, but asking it in a little different way, can you just talk about how the new board is weighing evidence that increased oil and gas investment is probably warranted, not just from Exxon, but globally against what's becoming essentially a mandate from investors to allocate capital to the energy transition, and how does that seemingly dual mandate square with the current medium-term CapEx range? We know you reiterated it, but we understand that the low carbon solution and emission reductions that will now have a larger share and that CapEx spend is extending beyond the medium-term range. Darren Woods : I'll start off with that and then if Kathy 's got anything to add on I'll pass it onto her. You talked about a dual mandate and that's really the challenge that we face as a Company. And I think more broadly as a society which is clearly a drive to move to a lower emissions energy system and a lower emissions future. But at the same time recognizing that the need for energy today is real and continuing to grow. And I think striking that balance and thoughtfully moving forward and trying to make sure that as you're transitioning from one source to another, that you do in a way that it doesn't penalize populations and compromise people's standards of living. You see a little maybe evidence of the challenge there when you look at what's happening in Europe and some of the constraints as we've come out of the pandemic to depletion business and the lack of investment that the industry broadly had in 2019 going into -- severely into 2020 and still coming out of that in 2021. And then the growth in demand, you put those two together lack of demand, lower supply growing lack of -- lower supply and lower investments and then the growth in demand, you get these pinch points. And so, I think the board and management were very conscientious of that and recognize our challenge is to leverage our perspective, the experience that we have in this space, our understanding of it and to try to strike the appropriate balance and make sure we're moving forward at a pace. In fact, leading industry. As we drive to the slower emissions future, but not leave whole communities behind and penalize them with respect to their standards of living and access to affordable and reliable energy, and the investments that we're making, I think strike that balance. I've been very pleased that the work that we started back in 2018, 2019, and all -- and through 2020. difficult to see during the pandemic with the collapse in the demand. But I think today as we come out of that and you see the market recovery, the benefits of those structural changes that we have made are manifesting themselves. We're able to generate the same kind of value with a lot less capital in a lot less expense and that's been because of the work we've done with our organization and the emphasis on leveraging our competitive advantages and foremost among those, our people and the work that they've done through this timeframe and the technology that we've had to bear and some fair and some of this work. We -- if you look at the capital portfolio that we had coming into the pandemic, none of the projects -- we haven't dropped any of the projects. We're still moving those forward. As you know, we paused them. But if you look at the spend associated with those projects, we've actually managed to bring that spend down. And I think that's a testament to our new project’s organization. A lot of good work manifesting itself in the results that you're seeing and in the future that we're laying out, the ability to do what we said we were going to do more efficiently, and then expand into the lower carbon area, where we're finding with the work that we've done opportunities in that space as well. Jeanine Wai : Hey, great. Thank you. And then I guess my second question -- our second question is on the share repurchases. So, for the repurchases over the next 12 to 24 months, how did you decide on the up to $10 billion level and the 2-year time frame, and I guess we're just curious about what conditions will determine the pace and the ultimate amounts? Kathy Mikells : Sure. Overall, we decided the amount in the pacing looking out at our future plans and what our expectations were against the capital allocation priorities that I walked through earlier relative to the free cash flow that we're expecting we're going to generate. Now, obviously market conditions have a lot to do with exactly what that's going to turn out to be, hence the range that we provided and the range in timing that we provided. But I think you should start off thinking about that as rateables over that two-year range that we discussed. And then we'll assess market conditions in terms of adjusting the pace of the program over time. Jeanine Wai : Great. Thank you. Operator: Next question will be from Phil Gresh with JPMorgan. Phil Gresh : Hey, good morning. I want to get your thoughts on asset sales first. As the slides highlight, you're making some progress in certain opportunities there. In the past, you've talked about a broader $15 billion program pre - COVID. And I'm just wondering how you're thinking about asset sales as part of your portfolio optimization or streamlining over the long term and does the $15 billion-plan still hold as we look out these next few years? Darren Woods : Good morning, Phil. Thanks for the question. Yeah, I would tell you the work that we did prior in announcing that divestment was really around high grading the portfolio, and what we laid out was what we thought was the opportunity. That portfolio set in terms of the assets that we're looking at hasn't changed from the standpoint of anything coming out. In fact, what I would say is we continue to evaluate where we can better leverage our competitive strengths and high-grade that portfolio, I think you'd see the opportunity set that underpins that divestment portfolio growth. And then of course, our ability to execute those opportunities and high graded the asset portfolio will be a function of, obviously finding buyers who put a value on that, that's consistent with what we think we need in order to take that out of the portfolio. So that's work going on. I would tell you; we did a lot of work last year maintaining our push in this space, but not willing to really push anything out to a market where we didn't see the value that we expected to get. I think as the markets now recover, much more attractive market to sell into, and we're seeing the kind of buyer response and valuations that we think are more consistent with what we're looking for. So, my view is we'll see continued progress in that space and I would expect it to pick up here compared to certainly 2020 when the market was much more challenging. Phil Gresh : Got it. And if I could ask just one more question on the buybacks, the strength in chemicals right now, the improving downstream environment, it would seem like you should be able to cover your dividend at about $50 Brent, looking at 2022, even if CapEx were higher in that $20 to $25 billion range. And if I were to layer in $5 billion of buybacks, that'd be about $10 in the oil price. So, it would seem like the ratable plan could be covered at maybe $60 Brent and obviously prices are higher than that. I'm just curious if you think that math is reasonable and if it is right that maybe excess cash could still go to either more buybacks or towards more Balance Sheet deleveraging and just how you think about those. Thank you. Darren Woods : Again, I'll start off and then if Kathy has got anything to add, invite her to chip in there. I would say your break-even calculations are significantly higher than what ours are. And of course, one of the issues is we haven't had the opportunity to take you through the plan that's in development and the reviews that we're having with our board. That's I think to come, but the work that we've been doing and what I've referenced here so far on the call with respect to the OpEx reductions that we're seeing in the opportunity frankly that we see going forward, and the capital productivity that we're now demonstrating. And I'd put that really in two buckets. 1, is the project organization which I continually refer back to, but to me it's been such a huge success to leverage what were very strong organizations across the corporation, centralizing that, bringing it together, and making sure that we're putting the best resources in the target -- on the projects that best fit the need. Their capabilities are really resulting in some significant capital efficiency improvements. And the other thing -- the other bucket would be technology. We laid out a plan -- I'll just focus on the Permian for now, but we laid out a plan there to pre-invest, to do a lot of delineation to understand what we had there. We were working on bringing in some technology, doing quite a bit of trialing and testing, which again required some upfront capital. We put in an -- if you recall what I call the long ball game, which is leveraging ExxonMobil 's strengths into a Permian and move from what was I considered a short game and the Permian to a long ball and that's paying off and we're seeing that work that we're doing out in the Permian deliver the same value for a lot less spend. And that's a function of that organization and the work that they've been doing to really drive their efficiencies, but also to fully leverage the capability of the broader ExxonMobil corporation and our technology portfolio. So that's how I'd say we're going to be able to do everything we've talked about. And frankly, depending on how the market is. As you know, it's really hard to call the market and we built some plans with some pretty wide ranges and we're robust to some very low-price environments going forward that won't compromise the capital allocation balance that we've talked about. And if we find the market is higher than that low side, we will have additional cash and resources to work on and give that challenge to Kathy, but maybe let her talk about that for a minute. Kathy Mikells : Just one other thing that I'd address which you referenced and that's continuing to strengthen our balance sheet. We clearly intend to do that. And so, at the end of this quarter, our leverage ratio landed at I think technically 25.3. And we've talked about the fact that as we look at the fourth quarter, we expect to move into a more comfortable zone within that range and further reduce that in the fourth quarter. As we look out to next year, we do have debt coming due, which we would expect to retire, and so I would expect to see a bit of a further reduction in debt moving towards the lower end of that range over time. Again, we're looking to strike the right balance and, on the share, repurchase side, what the commodity cycle looks like as we enter 2022, is going to have a lot in determining what the rate and pace of the share repurchase program looks like. Phil Gresh : I appreciate the additional thoughts. Thanks. Darren Woods : Thanks, Phil. Operator: And next we'll go to Devin Mc Dermott with Morgan Stanley. Devin Mc Dermott : Hey, good morning. Thanks for taking my question. Darren Woods : Good morning, Devin. Devin Mc Dermott : Hey. So, the first one I wanted to ask on is just on some of the cost and efficiency trends. You've done a really good job executing on some of the structural savings that you talked about previously and the latest message is now to exceed the $6 billion target by 2023. I was wondering if in light of that you comment on whether or not you're seeing any inflationary trends across the portfolio, be it through labor, inflation, service cost inflation, and the extent you are some of the ability to offset that as we look into 2022 and beyond. Darren Woods : Sure. I would tell you I don't think we're immune to the pressures that are impacting just about every other business out there all around the world. And so, we certainly seeing some aspects of that in our business if I start with the big spend area with respect to our capital in projects. think somewhat, maybe counter-intuitively, the fact that we were working on those going into the pandemic and we went into the pandemic, I think we took somewhat of a longsighted approach with respect. We didn't just step out of those projects, instead we worked with our partners and contractors to think about how we put these projects on pause and then bring them back up in a thoughtful way as and when the market would enable that. And so, the work that we did last year and working with our partners allowed us to give them some certainty around work and opportunities going forward. And we were able to lock in some of the market factors at that point in time. In the capital space, I think we've done a pretty good job and will be pretty well positioned to offset a lot of those -- or not experience a lot of those inflationary pressures. In the base business certainly the higher price of energy is impacting our manufacturing. We're advantaged in that space generally because most of our facilities are more energy efficient than our competitors and so while that's raising cost across the board with that advantage, we're able to stay below where the rest is. And of course, market prices move in these commodity markets based on the marginal cost for the suppliers but the last barrel supply. So that's we're able -- I think that's being offset with the margins. And then, I'd say more generally, what's left with respect to supply chain and inflationary pressures with the organizations that we have in place, and them up and running now, and then a much richer environment with higher margins and more activity. They are able to take the efficiencies and the synergies that we've captured with new organization and the different approaches that we're now taking and apply that in a more, let me call it, target-rich environment. So, we're able to find those efficiencies and offset a lot of inflation. So, the different aspects happening in different parts of the business. But generally, that inflationary pressure, we're managing to basically cope with it and still deliver on the earnings growth that we set for ourselves, the target we set for ourselves. Devin Mc Dermott : Great. Very helpful. And my second question is on the Permian. Very strong results in the quarter, a pretty sizable increase in the production expectation for this year, as well. I was wondering if you could talk a little bit more about some of the trends you're seeing there from an operational improvement in capital efficiency standpoint, knowing that you did some of the pre -investment that you mentioned before, that's helping on the efficiency side here and then also the cadence that's kind of spend in activity as we look into 2022. Darren Woods : Sure. Well, as you know, we had this contiguous acreage that we recognize would be advantaged with respect to trying to develop what would be -- I'll call it a more manufacturing approach in the Permian. You'll recall we made some upfront investments around, 1 delineating that acreage to make sure we knew what we had, because I think as Neil's talked in the past about, not all of that acreage is the same. The reservoirs are different as you move around that -- the area up there, and so making sure that we were thinking -- focusing on the areas where we had the highest productivity. But at the same time making sure that any area that we approach, that we optimized everything in the subsurface and weren't going for just high initial rates, but instead looking at maximum recovery. And that's paid off. We invested in the corridors, we invested in the infrastructure to make sure that we are in a position to once we focused in on and identified the areas, we wanted to develop that we could do that in a very cost-efficient way and that is now paying off. As you look at what we're doing in the Permian, it is much more of a manufacturing mindset and very focused on efficiencies. And you're seeing that in the results and some of the metrics that are out there. And then the third area is, and it continues to, I think yield benefits is, thinking about how we bring our fundamental science and technology capabilities from the broader organization, from some -- from our corporate research group and bring that into play here in the Permian and then the unconventional space. And that is paying off as well, we've gotten I think some very positive results from some of our technologies that we've brought into the field. We're continuing to try our new technology. So, my expectation is we'll continue to see that manifest itself in better production and better capital efficiency and that's those would be the three pieces of the equation that I think are resulting in the performance that you're seeing. With respect to the overall activity, what we're trying to do is make sure that we stay within the boundaries of what I just talked about and not as we maximize what we can do within that space, making sure we don't get ahead of the technology work that we're doing and making sure we don't get outside those core doors and some of those optimized areas of production. And that's the balance and the debate that we're striking. And we may see a couple more rigs come on here as we go forward in staying within that same philosophy. I wouldn't see us starting to venture out into other areas that are outside, that optimize space and plan until we've done the work to optimize plans around that next tier of opportunities out there. Devin Mc Dermott : Great. Well, congrats on the great results. Thanks for taking my questions. Operator: Next, we got Sam Margolin with Wolfe Research. Sam Margolin : Good morning. Thank you. Darren Woods : Morning Sam. Sam Margolin : First question is on, back to the capital program and I recognize that we're in front of the board process and things are still being hammered out, but I think the way that the market is conceptualizing the range is that the spend for the underlying asset base today, including the growth projects is probably tighter than the range that you've communicated and the top end of the range is sort of a rainy day fund for a special opportunities that arise either in the low carbon sphere or otherwise. Do you think that's a fair assessment as we think about 2022? And I think it flows into an earlier point about breakeven as well. How do we think about the outflow on CapEx within the range which obviously influences that commodity price break-even assessment? Kathy Mikells : Sure. Obviously, this year, our capital spending has been purposefully constrained and we think we're going to come in, I'd say at the lower end of that $16 billion to $19 billion range we've provided. We are expecting higher CapEx in the fourth quarter and a significant increase as we head into 2022. What underpins that is further investments in Guyana, focused on Auraiya (ph) Yellowtail appraisals, in Brazil is now moving into the startup of drilling and so more significant spending heading into there. We obviously paused a number of downstream and chemical projects. Those are restarting, and so we'll start to see that spend in the fourth quarter and kick up pretty significantly into 2022. And I'd also mention that as we will look to accelerate our reductions in greenhouse gas, emissions and intensities specifically will be spending a bit more in that area. If you think about how that is going to cause us to kick up, I'd say that clearly will put us in that 20 to 25 billion range, and then clearly, we would leave ourselves some level of flexibility in that range for things that we can't fully anticipate as we sit here today. Sam Margolin : Thanks. That's very helpful. And then just a follow-up on carbon capture. The Reconciliation Bill is in the process now, there have been a few different drafts that have come out each with seems like distinct kind of carbon capture language and incentives in them. As you think about ExxonMobil 's plan and proposition in that asset class, how are the early returns that you've seen in these draft bills and do you think they're sufficient to drive a real acceleration in activity for you there? Darren Woods : Well, the way I would look at it, Sam, I think trying to predict what's coming out of that political process is, I don't know if it's as hard or harder than trying to predict where prices are going to go. So maybe just spend a little time talking about the philosophy that we've taken with respect to developing the low carbon business and again, I would start with foundationally the work that we're doing has to leverage some advantage. We want to make sure that the investments that we're making here, we bring some unique value to and expect that unique value than manifest itself. In value for our shareholders. And so that's the foundation and I mentioned this carbon capture venture that we started back in 2018 in the low emission fuels and was how do we take advantage of the portfolio of technologies that we have and the skills and capabilities of our people to find ways to do this that are different and better than the rest of industry. So that's the foundation. Then as a philosophy, making sure that we develop a portfolio that is accretive with existing policy. So not betting on the comp, not thinking that something is going to pop here and then developing projects that ultimately disappoint us. And so that -- and given that we've got a really broad footprint, we're able to tap into different policies around the world. And there are a number of governments since we launched low carbon solutions that have reached out to us, and want to work with us to understand how we can -- what we can bring to the equation to help advance some of their objectives. And so those discussions are happening, but I would say there's a fundamental layer of investment that is accretive with existing policy. Don't look -- don't need more help. Then there's the other tier where certainly would not be regret investments, but we would need to see some additional policy tests to make those -- to give us the returns that we would expect given the resources we're bringing to bear with -- for those projects. And those are another we need to develop those now, because if we wait until the policies in place, will be behind the game. And so, we're being very thoughtful around developing those projects. It also informs what we're going to need, and so that we can very clearly articulate the policymakers all around the world, what would be required, and it starts this down what I would call that learning curve to better inform policymakers and then position us to respond to the policy as and when it comes. Because I think one thing is very clear, in order for society to achieve this longer-term ambition, we're going to need different policies, additional policies around the world. We want to be helped to lead the industry, and the drive to lower emissions and then to take advantage and influence some of those policies. Sam Margolin : Thank you very much. Darren Woods : Sure. Operator: Next, we'll go to Roger Read with Wells Fargo. Roger Read : Good morning. Darren Woods : Good morning, Roger. Roger Read : Just wanted to probably a little bit follow-up and the questioning that Phil was doing earlier as we think about the 2025 goal of roughly $30 billion in earnings, we take this quarter and annualize it, not realize that's and just playing what math more than trying to force you into a corner, but you'd be at about $27 billion, and yes, prices are higher on the commodity front versus the $60 real, but what I wanted to understand as we look at the cash OpEx reduction that's pretty identifiable, then you have the portfolio. And growth component. Where would you say you are on the portfolio and growth component today? And how should we think about that, maybe stair-stepping in over the next couple of years again against the sort of $60 real environment. Darren Woods : Let me just start in terms of how we think about that and make sure that we're holding ourselves in the organization to a standard that doesn't require market helps. So, the comment that we're making with respect to doubling the earnings and cash flow potential of the business. We try to normalize for price environment. So, we're not going to take any help from the market or assumed up from the market, but instead, assume constant price basis and make sure that the work that we're doing, our structural improvements, and so that if the markets there -- inconsistent, then we'll double it, if it's higher, we'll do even more than that, and if it's lower, we'll still be in a very robust position. And so that's how we think about it in this year's -- certainly this quarter's margins are not consistent with the basis that we're using for longer term. We are getting some advantage from the market today. We don't assume that it's something that manifest itself through the plan. And so that's I think an important foundation to evaluate the comments that were making. Talked about a structure efficiency that's obviously huge part. And as I said, when we get through the plan, get that endorsed, and when we come out, start speaking and take you through their Investor Day, we'll spend more time explaining where some of those savings are coming from. That'll be a really important contributing factor. And then with respect to the projects in the businesses, I think as you look across each of those, the projects are delivering what we expected. In fact, in many cases, delivering more than we had anticipated for the things that we started off. I'll give you just a couple of examples, if you look at investments that we've already made in the Gulf Coast and our chemical plants, those are running well above the AR basis, reliability and throughput much higher than we expected. So that's delivering more value. You look at the Rotterdam hydrocracker out in Europe, and that was a new-to-the-world technology, upgrading very low value streams into high value lubricant products that is performing very, very well and delivering well above the basis. And so -- and if you look at our chemicals business and the high-performance products, a lot of the growth and value that we see in that business comes from continuing to penetrate the market with these differentiated high value products and the chemical organizations doing a great job at continuing to grow that and to demonstrate the value of those technical benefits to our customers so that they in turn can realize some benefit from those products. Those are all working very well. And finally, in the downstream. a lot of work to make sure that we are driving efficiencies into that business and then squeezing, upgrading every molecule we can into the higher value segments, the projects that we've talked about in that space are doing just that, just high grading the molecules and getting more value, and when you combine that with reduced cost, refine business is better positioned, and of course the lubricants business, again, a differentiated high-value, technology-driven products. They are really doing very, very well, growing their business. And this year we're seeing record earnings in there. So can you look at across one of the advantages of having such a diverse portfolio is it gives us a lot of strength and levers to pull, to grow value. And so, you see that and all of them. And then of course, the final point I would make is and I've been making throughout this call is we're able to deliver those a lot of those projects in those benefits at a much lower cost, a lot less capital. And so that's playing into the benefits that we've laid out in the deck. Roger Read : Okay. Great. Thanks. And then follow-up question. LNG markets have gone -- they've been really strong I guess, let's say, Global Gas. We know that over the last couple of years there seem to be some hesitancy from consumer side on signing term contracts. You're -- you've got some projects obviously, that are potentially ready to go and some others that are in process. And I was just wondering, any clarity you can offer in terms of changing customer behavior, or willingness to sign term contracts in the LNG market right now? Darren Woods : No, I think certainly, if anything, what I would suggest is that some of the challenges that they're seeing in the global gas market just reinforces the importance of secure sources of supply and the reliable source of supply. And so, I don't -- we haven't seen what I would say is any material shifts in terms of how the market and the consumers in those markets are looking at the opportunities in this space. Kathy Mikells : Yeah. And our portfolio is heavily weighted to long-term contracts. About 80%, so we'd expect that to continue to be the case. Roger Read : Thank you. Operator: All right. Next, we'll go to Neil Mehta with Goldman Sachs. Neil Mehta : Good morning, team. Darren have you -- guys have a unique perspective into the state of global oil and liquids demand given your large downstream footprint, will love your perspective of where you see us real-time in the demand recovery, how you see the path forward and then how that ties into whether we're going to see refining margins back to mid-cycle or above in 2022. Darren Woods : Yeah. Thanks. Good morning, Neil. So, what I would say is we are definitely seeing around the world a recovery with respect to economic activities and of course with that comes the recovery in energy demand. I would say that it stops and starts so to speak, as you move around the world with some of the variance that we're seeing with COVID slow things down and then pick back up again. But generally, as you look around the world, seeing recovery, if you look across what I would say the primary transportation. fuels. Let's say road transport, commercial transport, heavy-duty transport, those are getting back to where they were historically. And so, I would say the recovery -- you can clearly see that recovery is in place. The thing that's lagging, which I'm sure we all recognize given our own personal circumstances is air travel is lagging of that recovery. It is improving, continues to improve quarter-on-quarter. We saw an improvement this quarter. And so, I think ultimately when you see that demand balance recover and when I say demand balance, I mean across a barrel of crude as it moves into the transportation markets. It's going to require air travel to get back to where it was. And then it'll just be a function about how strong that economic growth is that drives that -- the activity and then the demand. And that will of course be balanced with the amount of capacity that is available to meet that demand. So as always, supply and demand balance will be the primary factor. There's been a lot of refinery closure, in a lot higher rate than there has been. These high energy prices through gas and LNG are going to put some additional pressure on some of the less advantaged refineries. So, I think we got to see how that plays out, but our view is, this -- the downstream business, when it has a peak or goes through a tight supply demand balance, it doesn't last very long. So, we're really gearing that business up to be successful and at very low margin environment. And we're leveraging and focusing our efforts on refineries that are integrated with our chemicals business and integrated with our lubricants business so that we aren't dependent and reliant upon just the fuels market, but instead have a much more diversified product slate that taps into some of the higher value products. Kathy Mikells : And then I'd just comment as we look at industry utilization it's kind of approaching, I'll call it the lower-end of what the 10-year range would look like. So as Jack recovers here slowly over time, that should give us some further opportunity for improvement. Neil Mehta : Thanks team. The follow-up is on the clean energy announcement today. The $15 billion of capital, how should we think about the returns associated with that, and is there a target that you have in mind? I go back to one of your competitors inventory transition day where they said $10 billion of capital and maybe a billion dollars of cash flow in the out-years. Do you anticipate providing a quantification of cash flow associated with those $15 billion of investments, and how do you think about the hurdle rates in terms of those investments? And a tie into that, as you think about bio-fuels versus hydrogen, versus carbon capture, is there anything that really stands out as having outsized economic return at this point? Kathy Mikells : Sure. So , I would start with by taking a step back and saying, we expect double-digit returns across all of our business and we don't look at this business really any differently. If I look specifically at the capital that I'd say is targeted towards the low carbon solutions business so different from the emissions reductions that we're making across our own portfolio, either our existing business or the growth projects and looking to offset those incremental emissions that would come with growth projects. What I'd say is we look at that and say we think we can see really strong double-digit returns coming from there. Now, we have a lot of biofuel projects that are embedded there, which are supported by current policy. There's Takona project up in Canada would be a great example of that. Clearly, we are seeing some investments. Darren referenced the Houston Hub project where we have to seed those investments today. Carbon capture doesn't need fuller policy support. We referenced that earlier in the discussion today. But if we don't start to see the planning for those investments, we will be behind when the policy support comes. And it's clear if we're going to make more progress towards a lower carbon future, more policies support does have to come. That is how we're thinking about it, and we see great opportunities in the space that we're targeting where we think the Company really brings advantage. Carbon capture, hydrogen, biofuels is our current focus, and we think we're going to be able to prosecute those projects and earn good returns. Darren Woods : And I would add to that, Neil. If you think -- just take biofuels, as Kathy mentioned, Strepto interproject. And that's not what I would say is an industry standard biofuels project. We're leveraging our process, technology -- our catalyst technology to try change the value proposition there. And that's true with what we're looking at in hydrogen. And obviously we've got some work that we're doing and carbon capture. So, in all those areas, it's coming back to -- and the challenge, given the organization, the standard we're holding ourselves to, we've got to find a way to do this, meet this demand as this need of a lower-carbon, lower emissions future, but doing it in a way that's advantaged and therefore brings value to shareholders. And that we're not letting go there, we're making sure that the organization understands we're going to do both. Not an or equation. Neil Mehta : Very clear. Thank you, guys. Stephen Littleton : So, Operator, Darren, and Kathy we probably have time for one more question. Darren Woods : Okay. Operator: Okay. So, we will take our last question from the line of Paul Cheng with Scotiabank. Paul Cheng : Thank you. Good morning. Darren Woods : Good morning Paul. Paul Cheng : Two questions please. Good morning. First is for four Cap rate and that maybe let me add my welcome to the end of the line. You are the first person from outside joined the Company management committee. And also, with that quite frankly, for the past, say, 30 year, ExxonMobil haven't official CFO grow. So, half that you jaw enough that you have been there for several months. How you think about the process in the What's your O and M as well as the criteria, Do you see that's room for change or adjustment or that you think the current process is pretty good and you don't really have any changes that need to be made? So that's the first question. For the second question, Darren, when we are looking at your CapEx has always been for at least that for the past 18 months at 20, 25 billion for the next several years. You maintain that, but your spending for the low top and is going to be increased by roughly $2 billion a year from previously may maybe 5, $600 million to say 2.5 billion now. If the incremental spending is all being absorbed because you doing better in other business. And be able to squeeze or this savings or that some NCA SI (ph) project has been pushed out, if they are, what are those and what does the low top in business say you targeting I think is 10% plus return. Is that going to be better than the project that you have pushed out and what we voted said is Mosambi (ph) is noticeable missing in your press release when you're talking about the strategic investment, can you give an update on that? Thank you. Kathy Mikells : Hey. Well, I will start in and I guess the first thing that I would say is, I've been really pleased with how the organization has actually welcomed me. You can imagine coming into a Company like ExxonMobil. I would say I was a little bit anxious about what the receptivity would be, and both at the management committee, I'd say across the senior leadership team and across the Company, people have just been really welcoming, which has been terrific. The other thing I would say is as I look at many of the companies’ processes, I'm really pleased by how rigorous and thorough they are. ExxonMobil puts a lot of work behind things before it comes out and then makes decisions and talks about those things. And so, you mentioned our FID process, which I think is incredibly rigorous. And the Company added sometime back a process that they call red blue team, which is literally putting really smart people and competing them against each other to say, hey, as we're going to FID this project, tell us what a different perspective is, and whether the project could be even better than what our base economics are, and tell us what a different perspective might be in terms of what some of the call it hidden risks might be in the project, and have we evaluated all of that? And that's the process where I'd say we take all of those learning's and then the base economics, how we're managing the risks of the projects, just get improved to an even greater level. So, I'd say I've been really pleased just by the thorough work that's done across the Company. And I'd take that even into a different area we haven't talked about it on the call, but obviously net zero is the topic of the day and the Company is clearly doing a lot of work in terms of its own scenario analysis. We talked a lot about the announcement we made in increasing our investment in the low carbon emission space and again, all I would comment on is that the rigor of the work that you see at the Company is incredible. The work that we're doing on a site by site, location by location basis in staring at our cost curves and the plans and how we're going to reduce our own carbon footprint. I just think it is incredibly thorough and detailed and it's what enables us to really stand strongly behind our plan. So anyway, I've been really pleased and I'm really happy with just how the organization has accepted me as an outsider. Darren Woods : I will just add, Paul, I think it doesn't feel like Kathy is an outsider quite frankly, I mean, she has come in and joined the team and I'm not sure that anybody on the management committee thinks of her any different than the rest of us, so it's been I think a really nice fit, and she brings in a different perspective which is very valued and it's added to the discussions and the debates that we've been having and we're going to continue to have. With respect to the questions that you've asked me, I didn't quite catch the last one, but I'll address your first around the incremental spending and how given we haven't changed the range, but it feels a little bit like the portfolio mix is changing. How do we -- where did that come from? How do we think about that? And so, what I would tell you is probably 3 components of how with our evolving plans and the work that we're doing in particularly the additional spend in low - carbon solutions, how we're doing that within the same band of the range of capital that we've projected or given all of you. Savings is clearly one of them and I've mentioned that quite a bit throughout the call, so I won't go back around that again, but that has made a difference, the ability -- you remember what we said we wanted to do was double earnings and double cash flow, and that's been the objective. It hasn't been a volumes game, it hasn't been our capital spend game is around how do you do that and do it in most effectively, and as we've found ways to do it more effectively, that's allowed us to take off some of the capital spending. That's an important component of it. There are -- there have been some shifting as there always is in this space and so if you think about some of the LNG projects there has been some movement on that Mozambique and the work that we've been doing there and the collaboration with Total with some of the issues that we've seen in Mozambique. That has slipped some, but we're still committed to that project. We see that as a valuable opportunity, but we're going to have to do that in the time frame available to us with some of the constraints that we see today. So, there is some movement in some of those projects. Obviously, we delayed the downstream and chemical projects. Those are coming back up again, but that shifted the pattern a little bit, so there's some of that in there. And then the third bucket I would say is we always left ourselves some headroom, and that headroom is -- continues in there. We've got flexibility. We never -- there's always -- I think the question out there about where we had 20 and where we had 25. I'd say we're somewhere around there and it moves from year-to-year, and we give ourselves a little bit of space, recognizing that things are going to move around very difficult to predict some of the scheduling movement around there. That's how I would think about it, those three buckets. And frankly, the way we judge that is ultimately does that movement inhibit our ability to deliver on the value proposition that we laid out. And that was -- is one of the points that why we really want to emphasize that we are going to deliver on the earnings and cash flow growth, which is what we have been driving the organization to do because we believe ultimately that underpins growing TSR total shareholder return. And the last point, Kathy you have -- Kathy Mikells : I think you already touched a little bit upon what I thought was your last Paul, and that was about Mozambique. And our core project is clearly moving forward and you touched upon the project that we pause simply because of the security situation on the ground, which we'll continue to look at and revisit overtime. Paul Cheng : Still -- you guys are still committed to that because I think there's some market rumors that Exxon may be whatever you want to get -- to be in that projects. Darren Woods : Yeah, I wouldn't put a lot of faith in the market rumors that you guys know, Paul, there is a lot of people talking. Most of them don't have a good understanding of the discussions that we're having and how -- we see that as a very competitive resource. It's large. We've got opportunities with Totale that we've been working on. They're committed to the project. We got really good working relationship with them as well as our other partners and our existing but I think we'll continue to develop that. We think that's going to be very competitive in the long term and something that's going to be needed so that we're committed -- we continue to be committed to them. Paul Cheng : Thank you. Stephen Littleton : Okay. Darren and Kathy, we want to thank you for joining us and for all on the call. Thanks for your time and above all questions this morning, we hope you enjoy the rest of your day. Thank you and please be safe. Operator: 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.