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Oil giant ExxonMobil missed first quarter earnings but beat on revenue as $XOM worked on efficiency and strengthening cash flow. Adjusted production fell 3% year-over-year. Upstream revenue rose 55%, downstream revenue fell 16%.

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Earnings

Exxon Mobil Q1 18  EPS: $1.09  under the consensus stimate $1.13 Revenue at $68.21B beating the estimate of $63.60B. Upstream revenue soared  55% to $3.497 billion while downstream revenue fell 16% to $940 million. Capital expenditures rose 16.7% to $4.867 billion.

Exxon Mobil Corporation NYSE: XOM

Market Reaction: Pre-market 79.20 −1.66 (-2.05%)

First Quarter 2018 Highlights

Upstream:

  • ExxonMobil’s crude realizations were impacted by an increased discount in Western Canada, notably for heavy crudes, as Canadian supply exceeded pipeline and rail capacity.
  • The logistics constraints in Canada supported the decision to accelerate Syncrude turnaround activities into the first quarter.
  • Following a severe earthquake in Papua New Guinea on February 26, operations at the PNG LNG project were temporarily shut down while the company responded with humanitarian relief for impacted communities and worked to fully restore operations.
  • The project safely resumed LNG production ahead of schedule in mid-April.
  • The impact of the earthquake reduced earnings by $80 million and production by 25,000 oil-equivalent barrels per day.
  • The Hebron field in Canada, which started up last year, has ramped up to produce 14,000 oil-equivalent barrels per day in the first quarter with well performance exceeding expectations.
  • Development of the company’s U.S. unconventional acreage is progressing with 27 operated rigs in the Permian and four operated rigs in the Bakken.
  • Permian and Bakken unconventional production has experienced 18 percent growth year-over-year.

Downstream:

  • Global refining margins remained generally strong, especially in North America.
  • Petroleum product demand was seasonally lower.
  • Overall manufacturing reliability improved from one-time fourth quarter events.
  • A significant focus during the quarter was on returning the refinery in Joliet, Ill., back to full capacity in March, capturing attractive margins on weaker Canadian crude prices.

Chemical:

  • Integration of Jurong Aromatics Corporation into the existing Singapore business is progressing as planned, contributing 340,000 metric tons of sales during the quarter.
  • The North America Growth project is also progressing well with the new polyethylene lines in Mont Belvieu, Texas, increasing sales volumes in the quarter.
  • Incremental activity associated with startup and commissioning of these new facilities increased expenses during the quarter.
  • Within the base business, large planned turnarounds in the Middle East and the Gulf Coast were successfully completed. 

Acerage, Project Update

    • ExxonMobil announced its seventh oil discovery offshore Guyana with the completion of the Pacora-1 exploration well. The well encountered approximately 65 feet (20 meters) of high-quality, oil-bearing sandstone reservoir.
    • During the quarter, the company increased its holdings in Brazil’s pre-salt basins after winning eight additional exploration blocks, six of them to be operated by ExxonMobil, during the latest bid round.
    • The company added more than 640,000 net acres to its existing deepwater portfolio offshore Brazil, and is now one of the largest acreage holders among international oil companies in the country.
    • ExxonMobil announced that its estimate of the size of the natural gas resource at the P’nyang field in Papua New Guinea (PNG) has increased to 4.36 trillion cubic feet of gas, an 84 percent increase from the previous assessment completed in 2012. This increase, based on an independent recertification study, supports a potential three-train expansion concept of the PNG LNG plant.
    • ExxonMobil sold its 50 percent ownership interest in the Scarborough gas field, offshore Western Australia, to Woodside Petroleum Ltd. In the Downstream, the company closed several divestments, including distribution and marketing assets in South America, and retail sites in Europe.
    • During the quarter, ExxonMobil added to its exploration portfolio offshore West Africa by signing an agreement with the government of Ghana to acquire exploration and production rights for the Deepwater Cape Three Points block.
    • ExxonMobil also signed an agreement with a subsidiary of Galp Energia, SGPS, S.A. for a 40 percent farm-in to a deepwater license offshore Namibia. Both agreements are subject to government approvals. Investing for Growth
    • The company began commissioning its new ethane cracker in Baytown, Texas. The cracker, expected to start up mid-year 2018, will produce 1.5 million metric tons per year of ethylene feedstock for the new polyethylene lines at the company’s plastics plant in Mont Belvieu, Texas.
    • The company also continued its entry into Mexico’s fuels market with the opening of new Mobil-branded service stations operated by Grupo Orsan and Grupo Combured. The new stations will be supplied with gasoline and diesel produced by ExxonMobil’s refineries in Texas

Last Quarter Earnings: Exxon Misses Earnings on Lower Production

TradersCommunity Preview: Big Oil Earnings on Tap With Exxon, Chevron and Conoco

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

Treasury Department Dispute

Analysts have been cold on $XOM since April when it legally challenged the Treasury Department’s Office of Foreign Assets Control that states the company violated U.S. sanctions against Russia in 2014. The dispute is based on the interactions $XOM had with Rosneft, Russian oil company.

Source: ExxonMobil, Alpha Street

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