Exxon surpasses earnings forecasts amid falling oil price

Exxon Mobil surpassed earnings forecasts for the first time in three quarters as gains from trading and rising production in Guyana helped cushion the blow from falling oil prices.

Adjusted fourth-quarter earnings of $2.48 (€2.28) a share were 26 cents higher than the Bloomberg Consensus estimate, helped by a $1.14 billion (€1.05 billion) boost from unsettled derivatives. Output from key fields in Guyana and the US Permian Basin expanded while the company’s refineries processed more crude than ever before.

“We’re continuing to grow our trading footprint and we saw strong trading results this year that flowed through” to the bottom line, chief financial officer Kathy Mikells said during an interview.

Exxon’s upbeat report follows a similar result at Shell, which kicked off Big Oil earnings season on Thursday with adjusted net income that was more than $1 billion (€900 million) higher than the average forecast. BP and TotalEnergies are scheduled to disclose results next week.

Exxon recently raised annual share buybacks to $20 billion (€18.4 billion), a level not seen since the heyday of historic profits more than a decade ago. The Texas crude giant and its Big Oil rivals are under pressure from investors to bolster cash flow by pumping more oil while simultaneously avoiding a price-killing supply glut.

Exxon is attempting to thread the needle with a $60 billion (€55 billion) takeover of Pioneer Natural Resources, which it expects to close around the middle of the year. The all-stock deal preserves cash for shareholders and widens Exxon’s portfolio of prime drilling targets in the Permian. Meanwhile, Chevron is taking a page from the same playbook with a $53 billion (€48.7 billion) deal for Hess.

Pivoting to more profitable oil production is a key part of chief executive officer Darren Woods’s plan to double earnings from 2019 to 2027. The Texas oil giant paid out the S&P 500’s fourth-largest combination of dividends and buy-backs during the past 12 months. Its stock declined more than 9 per cent last year despite a 24 per cent gain in the broader market.

Exxon ended the quarter with $31.6 billion (€29 billion) of cash, about 4 per cent lower than the previous period, mainly due to shareholder payouts. The company recorded a $2.3 billion (€2.1 billion) one-off loss, which it previously flagged was related to the declining value of oil wells and other assets in California. – Bloomberg