Why Exxon Mobil Earnings Dived in Q1

Exxon Mobil Corp. (NYSE: XOM | XOM Price Prediction) reported estimated first-quarter 2019 results before markets opened Friday morning. The integrated oil and gas giant posted quarterly diluted earnings per share (EPS) of $0.55 on revenues of $63.63 billion. In the same period a year ago, the company reported EPS of $1.09 on revenues of $68.21 billion. First-quarter results also compare to the consensus estimates for EPS of $1.69 on revenues of $64.82 billion.

Net income in the quarter dropped by 49% from $4.65 billion a year ago to $2.35 billion. Oil-equivalent production rose by 2.4% year over year in the first quarter, from 3.89 million barrels a day last year to 3.98 million barrels a day.

Earnings in the company’s upstream (exploration and production) fell by $268 million due to lower volumes even though prices were higher. Downstream earnings (refining and marketing) dropped by $2.96 billion year over year due to higher crude oil prices, higher maintenance costs and changes in mark-to-market derivatives.

Capital spending totaled $6.89 billion in the quarter, up nearly 42% year over year. Free cash flow tumbled from $6.7 billion to $2.5 billion.

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CEO and Chair Darren Woods said:

Solid operating performance in the first quarter helped mitigate the impact of challenging Downstream and Chemical margin environments. In addition, we continued to benefit from our integrated business model. We are making strong progress on our growth plans and expect to deliver sustained value for our shareholders. The change in Canadian crude differentials, as well as heavy scheduled maintenance, similar to the fourth quarter of 2018, affected our quarterly results.

The company did not provide guidance in its press release, but analysts are expecting second-quarter EPS of $1.07 on revenues of $72.64 billion, compared with EPS of $0.92 and revenues of $73.5 billion in the second quarter of 2018. For the full year, analysts are looking for EPS of $4.37 on revenues of $283.47 billion.

Exxon’s shares traded down about 2.5% shortly after Friday’s opening bell to $80.15. The stock’s 52-week range is $64.65 to $87.36. Analysts had a 12-month price target of $85.39 before this morning’s report.
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