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Oil giant ExxonMobil missed second quarter earnings Friday before the market. However revenue beat. $XOM worked on efficiency and strengthening cash flow. CAPEX was up 69% with investments in Brazil, the U.S. Permian Basin and Indonesia.


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

$0.92 missed $1.27 EPS and $73.5 billion beat $72.67 billion forecast in revenue 

Earnings

Exxon Mobil  second quarter earnings missed: 92 cents per share vs $1.27, according to Thomson Reuters. Revenue: $73.5 billion vs $72.58 billion, according to Thomson Reuters, Compared with $3.4 billion a year earlier. 

Exxon Mobil Corporation NYSE: $XOM

Market Reaction > Pre-market 82.50 −1.74 (2.07%)

Highlights

  • Cash flow from operations and asset sales was $8.1 billion, including proceeds associated with asset sales of $307 million.
  • During the quarter, the corporation distributed $3.5 billion in dividends to shareholders.
  • Capital and exploration expenditures were $6.6 billion, up 69 percent from the prior year, reflecting key investments in Brazil, the U.S. Permian Basin and Indonesia. Project milestones increasing confidence in long-term growth plans
  • Permian and Bakken production up 30 percent from same quarter last year
  • Eighth discovery offshore Guyana; acquires new interest and acreage in Brazil

Upstream:

  • Crude prices strengthened in the second quarter, while natural gas prices were mixed.
  • U.S. tight oil growth in the Permian and Bakken continued, reaching over 250,000 oil-equivalent barrels per day in the second quarter, an increase of 30 percent from the same period last year. The Hebron field in Canada continued to exceed expectations, ramping up to 25,000 oil-equivalent barrels per day in the second quarter.
  • Natural gas volumes were impacted by lower seasonal demand in Europe, deliberate near-term shifting of investments in U.S. unconventionals from gas to liquids and downtime in LNG operations, notably in Qatar.
  • Production at Papua New Guinea returned to normal operations in April and reached record daily LNG production rates in June. Second quarter volume loss associated with the earthquake recovery was 17,000 oil-equivalent barrels per day.
  • Scheduled maintenance activities were undertaken to support operational integrity, largely in Canada at Syncrude, Cold Lake and Kearl, impacting volumes and expenses in second quarter.

Downstream:

  • Global refining margins strengthened during the quarter due to higher industry refinery maintenance activity and increased seasonal petroleum product demand.
  • Overall throughput and earnings were impacted by heavy turnaround and maintenance activities during the quarter. Planned turnarounds were successfully completed at the refineries in Saudi Arabia, Port-Jérȏme, France, Baytown and Beaumont, Texas, and Alberta, Canada.
  • Unplanned maintenance, a majority of which was carried-in from the first quarter, was largely completed during the quarter.
  • Growth in higher-value sales of retail fuels in the U.S., Belgium, the Netherlands and Luxembourg, combined with record quarterly sales of Mobil 1 lubricants in the U.S. and China, resulted in improved earnings during the quarter.
  • Depreciation in the Euro and British pound relative to the U.S. dollar negatively impacted earnings.

Chemical:

  • ExxonMobil continued to make significant progress in growing the Chemical business. Second quarter sales were the highest since 2007, and new volumes in Singapore and the U.S. contributed more than 530,000 metric tons of sales during the quarter. This included an additional 145,000 metric tons of high-performance products as the company continued to strengthen its leading position in this market.
  • Chemical margins weakened during the quarter as higher feed and energy costs outpaced stronger realizations. 

 XOM Earnings Q2 18via AlphaStreet

 

ExxonMobil Earnings Preview

What Analysts Will Be Watching

Exxon Mobil Corporation principal business is energy exploration and production of, crude oil and natural gas; manufacture of petroleum products; and transportation and sale of crude oil, natural gas, and petroleum products, $XOM.operates as a manufacturer and marketer of commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics; and various specialty products.

Look for capex, cash and Permian bottleneck and Syncrude breakdown impact. Dividends are huge with oil majors. Exxon's capex budget was $22 billion for 2017, updates on this are key with oil recovering so far this year.

JPMorgan's Phil Gresh reiterated a Neutral rating and an $88 price target on Exxon last week, In his note he said his earnings estimates are in line with consensus, but that "it feels like upside could be fairly limited." He notes that on the upstream (exploration) side, earthquake-recovery efforts likely hurt volumes, prices, and cash flows at the PNG LNG project that Exxon is spearheading, while maintenance and production issues in areas from Canada to Kazakhstan may also weigh on the quarterly results. Overall Gresh warns that Exxon could $XOM another year-over year and quarter-over-quarter production decline, the eighth quarterly production decline in the last 10 quarters.

Watch for $XOM  operating cash flow and how much goes in dividend payments. 

Permian updates are what we want. After the huge acerage buys at the start of last year Exxon announced last quarter another 22,000 net acres in the Permian Basin since split between the Midland Basin and the Delaware Basin. Guyana is another region we want to hear updates on. LNG and natural gas updates along with its massive polyethylene production expansion in Mont Belvieu are all areas to watch in this intergrated major.

Previous Earnings: 

 

Exxon Q1 Earnings Recap

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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