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Oil giant ExxonMobil reported better than expected second quarter earnings Friday before the market with strength in XOM’s upstream business offsetting weakness in the downstream and chemical divisions. Exxon also benefited from a tax-rate change in Alberta, Canada.

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

$0.73 Beat $0.66 EPS AND $69.091B Beat $65.202 billion revenue forecast

Earnings

Exxon Mobil Corp. (NYSE: XOM) reported Q2 earnings on Friday that beat analyst expectations, Earnings of 73 cents per share beat  66 cents expected by Refinitiv Revenue of $69.091 billion beat $65.202 billion expected, Net income fell 21% to $3.13 billion or $0.73 per share. The results were hurt by unscheduled maintenance in refining division and continued margin pressure due to lengthening supply in the chemical segment.

The earnings included a favorable identified item of about $500 million, or $0.12 per share assuming dilution, reflecting the impact of a tax rate change in Alberta, Canada.

  • Upstream income: $3.261 billion vs $3.15 billion forecast by StreetAccount
  • Downstream income: $451 million vs $626.7 million forecast
  • Chemicals income: $188 million vs $356.5 million expected.

 

Exxon Mobil Corporation NYSE: $XOM

Market Reaction Pre-market  $72.90 +0.44 (0.61%)

Highlights

“We continue to make significant progress toward delivering our long-term growth plans,” CEO Darren Woods said in a statement. “Our new U.S. Gulf Coast steam cracker is exceeding design capacity by 10 percent, less than a year after startup. Our upstream liquids production increased by 8 percent from last year, driven by growth in the Permian Basin, and we are preparing to startup the Liza Phase 1 development in Guyana, where the estimated recoverable resource increased to more than 6 billion oil-equivalent barrels.”

  • Capital and exploration expenditures were $8.1 billion, up 22% from the prior year, reflecting key investments in the Permian Basin.
  • Oil-equivalent production increased by 7% year-over-year to 3.9 million barrels per day.
  • Liquids production grew 8% driven by Permian Basin growth and reduced downtime, with limited impact from entitlement effects and divestments.
  • Natural gas volumes rose 5%, excluding entitlement effects and divestments.

Exxon Mobil Q2 2019 Earnings

Upstream

In the upstream segment, average crude prices were stronger than first quarter while natural gas prices declined with supply length and crude-linked LNG lag effects. Liquids volumes increased with unconventional growth and ramp-up at Hebron while natural gas volumes were down from the first quarter due to weaker seasonal gas demand in Europe.

Downstream

In the downstream segment, margins were fueled by industry after improving from very low levels in the first quarter on stronger gasoline margins, mainly in the US, despite remaining under pressure during the second quarter. Planned maintenance activity remained at a high level. In chemical segment, paraxylene margins weakened with lengthening supply from recent industry capacity additions and results were hurt by a significant increase in turnaround activity.

Chemical

In the chemical segment, supply length continues to impact margins for the third quarter due to lower scheduled maintenance. Corporate and financing expenses are anticipated to be $700 million to $900 million for the third quarter.;

Outlook

Looking ahead into the third quarter, the company expects upstream volumes to be in-line with the second quarter due to the absence of non-US tax item.

In downstream, Permian crude differentials are expected to narrow with additional takeaway capacity and refining margins are predicted to be in line with seasonal demand patterns on lower scheduled maintenance.

ExxonMobil Huge Liza Field Acerage in Guyana

$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 $XOM's production.

Liza HESS EXXON

 

Source: ExxonMobil, Alpha Street

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