Exxon Stumbles on Production, Higher Costs (XOM, CVX, COP, BP, TOT, CHK)

Energy

Published: April 26, 2012 9:15 am

Last Updated: March 26, 2020 6:58 pm

The world’s largest publicly held energy company, Exxon Mobil Corp. (NYSE: XOM), was not expected to post first quarter EPS that matched last year’s first quarter. The same was true for ConocoPhillips (NYSE: COP), and is true for Chevron Corp. (NYSE: CVX), BP plc (NYSE: BP), and Total SA (NYSE: TOT), to say nothing of natural gas producer Chesapeake Energy Corp. (NYSE: CHK), which is expected to see EPS fall by -62%. Conoco did not disappoint and now neither has Exxon.

Exxon reported adjusted EPS of $2.00/share, below the consensus estimate of $2.09 and further below EPS of $2.14 in the same period a year ago. Revenue came in at $124.05 billion, also below the estimate of $124.76 billion, but about 8.8% higher than last year’s revenue of $114 billion. Net cash flow improved from $16.9 billion a year ago to $19.3 billion this year, due almost entirely to higher prices for crude oil.

The problem is that Exxon did not produce as much crude this year. Worldwide production totaled 2.214 million barrels/day of crude and natural gas liquids, down -7.7% from last year’s production of 2.399 million barrels/day. Worldwide natural gas production was also down -3.3%, and in the US natural gas production was up only about 1%.

Profits from the company’s upstream segment (exploration and production) were substantially lower:

Upstream earnings were $7,802 million, down $873 million from the first quarter of 2011. Higher liquids and natural gas realizations increased earnings by $980 million. Lower sales volumes decreased earnings by $850 million. All other items, primarily higher operating expenses and the absence of gains on asset sales, decreased earnings by $1.0 billion.

In the downstream segment (refining and marketing), profits rose $487 million, the largest part of which was asset sales of $320 million. International refining profits more than doubled, while US refining profits fell by -13%. And higher costs eroded profits here, too, by $40 million. Fortunately for Exxon, refined product sales of 6.3 million barrels/day at higher prices saved the day.

Both Exxon and Chevron announced dividend hikes earlier this week. Exxon is raising its dividend 21% to $0.57/share/quarter and Chevron is hiking its dividend by 11% to $0.90/share/quarter. Exxon also noted today that it would buy back $5 billion worth of common stock in the second quarter.

The two companies are not feeling particularly generous, of course. They are trying to keep investors happy in the face of lower profits. Don’t expect Chevron to beat its EPS estimate of $3.26 when it reports results tomorrow.

Exxon’s shares are down -1.3% in the pre-market at $85.70 in a 52-week range of $67.03-$88.13.

Paul Ausick

The Average American Has No Idea How Much Money You Can Make Today ^(Sponsor)

The last few years made people forget how much banks and CD’s can pay. Meanwhile, interest rates have spiked and many can afford to pay you much more, but most are keeping yields low and hoping you won’t notice.

But there is good news. To win qualified customers, some accounts are paying almost 10x the national average! That’s an incredible way to keep your money safe and earn more at the same time. Our top pick for high yield savings accounts includes other benefits as well. You can earn up to 3.80% with a Checking & Savings Account today Sign up and get up to $300 with direct deposit. No account fees. FDIC Insured.

Click here to see how much more you could be earning on your savings today. It takes just a few minutes to open an account to make your money work for you.

Our top pick for high yield savings accounts includes other benefits as well. You can earn up to 4.00% with a Checking & Savings Account from Sofi. Sign up and get up to $300 with direct deposit. No account fees. FDIC Insured.

¹https://www.fdic.gov/national-rates-and-rate-caps