ExxonMobil Earnings Miss Lofty Expectations on Weather and Timing Impacts, Takes Charges of $3.4 billion on Russian Exit.

Oil giant ExxonMobil reported first quarter earnings Friday that missed lofty expectations on a quarter where oil and natural gas prices hit long term highs. The quarter included charges of $3.4 billion, or 79 cents a share, from $XOM’s exit of Russia. Exxon boosted its stock repurchase program to up to $30 billion through 2023. Chevron also reported today.

ExxonMobil Inc. (NYSE: $XOM) Reported Earnings Before Open Friday

 $2.07 Missed $2.23 EPS and $90.50B Beat $82.8 billion revenue forecast

Conference call: 9:30 a.m

Exxon Q1 2022 Earnings

  • Exxon reported adjusted earnings of $2.07 a share, below forecasts for $2.23 a share.
  • The quarter included charges of $3.4 billion, or 79 cents a share, from the company’s exit of Russia.
  • Net earnings in the period were $5.5 billion or $1.28 a share.
  • Revenue in the period was $90.5 billion, higher than analysts’ forecasts of $82.8 billion, according to FactSet. Year-earlier revenue was almost $59.2 billion.
  • XOM produced 3.7 million barrels per day, down 4% from the fourth quarter of 2021 due to weather-related delays, planned maintenance, lower entitlements associated with higher prices, and divestments.
  • Structural savings were more than $5 billion for the quarter compared to 2019, and the company is on track to exceed $9 billion in annual savings by 2023, Exxon said.
  • Free cash flow during the quarter came in at $10.8b, or ~3.1% of Exxon’s current market cap; down from $15.0b in Q4.
  • Capital allocation – free cash flow more than covered the dividend, and Exxon repurchased $2.1b worth of shares in the quarter, or ~0.6% of shares outstanding; the company’s share repurchase program was increased from $10b to $30b.
  • Production – underlying production, excluding entitlement effects, divestments and government mandates, fell 2% sequentially on weather-related headwinds; production “fully recovered” by quarter end and the company remains on track to grow Permian volumes by 25% in 2022.
  • Going into the second quarter of 2022, Exxon anticipates corporate and financing expenses to be about $600 million.

Oil and gas prices have soared since the global economic lockdowns and widespread travel restrictions reversed. What the hardships did was lead XOM to sell off non-core assets such as its North Sea operations. This continues to put XOM in a much sturdier position and one able to benefit from the surge oil and gas prices leading to a dramatic turnaround to the point where it can increase its dividend and begin share repurchases.

“Earnings increased modestly, as strong margin improvement and underlying growth was offset by weather and timing impacts,” said CEO Darren Woods in a statement. “The absence of these temporary impacts in March provides strong, positive momentum for the second quarter.”

Stock Repurchases and Dividends

Exxon boosted its stock repurchase program to up to $30 billion through 2023. The company declared a cash dividend earlier this week of 88 cents a share, the same level as the dividend paid in the first quarter. Exxon had been boosting dividends since October up to this quarter, after a pandemic pause.

Capex

Exxon said it spent about $4.9 billion in capital in the first quarter, on pace with its plan to keep investments relatively modest, far lower than the last time oil prices were over $100 a barrel. Oil companies haven’t foprgotten the anti fossil fuel brigade and glee at negative oil prices.

The company last year set a conservative budget of $20 billion to $25 billion through 2027, 17% to 33% lower than pre-pandemic plans.

ExxonMobil Huge Liza Field Acerage in Guyana

ExxonMobil earlier in the year said that oil production started from the Liza field offshore Guyana, less than five years after the first discovery of hydrocarbons, well ahead of the industry average. Gross production from the Liza phase 1 development, located in the Stabroek block, is expected to reach a capacity of 120,000 gross barrels of oil per day in the coming months. XOM made a final investment decision during 2Q17 to proceed with the Liza field development located offshore Guyana, where production is expected to start in 2020. The company expects Liza to add up to 120,000 barrels of oil per day to 

Liza HESS EXXON

Source: ExxonMobil AlphaStreet

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