Exxon Misses Earnings on Lower Production


Exxon production was lower by 1% but the higher realized prices helped there, going forward expect better margined projects contributing.

Free cash flow is key in the majors and $XOM generated free cash flow to cover both capital spending and the dividend. Through H116, Exxon generated $15.2 billion in operating cash flow, funding its $7.5 billion capital expenditure and $6.4 billion in shareholder distributions.

Capital spending is running below full-year guidance (much ado with weak demand and pricing so a prudent thing). Usually this is back-end-loaded with their two big acquisitions yet to be completed.

At this point still expect Exxon to fund and cover its dividend with ease. Significantly its break-even level is under $40/barrel, the lowest of the majors.