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ExxonMobil
It posted revised earnings for the first quarter that came in below expectations and the stock fell in pre-market trading on Friday.
Exon (stock bar: XOM) reported adjusted earnings of $2.07 per share, below expectations of $2.23 per share. The quarter included a fee of $3.4 billion, or 79 cents a share, from the company’s exit from Russia.
Exxon shares fell 0.9 percent to $86.42 on Friday. The stock has gained 41.2% this year.
Net profit for the period was $5.5 billion, or $1.28 per share. Revenue in the period was $90.5 billion, above analysts’ expectations of $82.8 billion, according to FactSet. Last year’s revenue was approximately $59.2 billion.
In an interview with BaronExxon’s chief financial officer, Kathy Michaels, said the loss of earnings was due in large part to the change in the value of the derivatives the company uses to hedge its refining operations. The dramatic change in the oil price during the quarter – with crude oil trading as low as $130 a barrel – had a major impact on the energy derivatives markets. Putting its asset prices on the market had a negative effect of $760 million on Exxon’s earnings for the quarter, which Michaels said was “very typical in a sharply higher price environment.”
In the absence of these changes and some unforeseen weather issues in Canada, the company’s core business has been doing well, Michaels said.
“It was a strong quarter when we look at core business performance, weather and timing influences aside, and we have very strong momentum in the second quarter,” said Michaels.
The company produced 3.7 million barrels per day, down 4% from the fourth quarter of 2021 due to weather-related delays, planned maintenance, lower maturities associated with higher prices, and divestitures.
“Earnings increased modestly, as strong margin improvement and underlying growth were offset by weather and timing effects,” CEO Darren Woods said in a statement. “The absence of these temporary effects in March provides strong and positive momentum for the second quarter.”
Exxon said structural savings exceeded $5 billion for the quarter compared to 2019, and the company is on track to surpass annual savings of $9 billion by 2023.
As the second quarter of 2022 approaches, Exxon expects corporate and financing expenses to be approximately $600 million.
Exxon boosted its stock buyback program to up to $30 billion through 2023, from its previous plan to buy back $10 billion in stock. At the current share price, that would amount to about 8% of the stock. Michaels said the company has made progress in reducing its debt, and is now at its minimum target debt-to-capital ratio. “We’re really satisfied with our strong balance sheet, our liquidity position and the continued momentum we’re seeing in the business,” she said.
Citi analyst Alistair Sim wrote that high oil prices and relatively low spending give Exxon “a great deal of financial flexibility.”
CFRA maintained a buy rating on the stock, with analyst Stuart Glickman saying he saw near-term catalysts as the oil producer made progress on its developments in Guyana and the Permian Basin.
The company earlier this week announced a cash dividend of 88 cents per share, the same level as the dividend paid in the first quarter. Exxon has been boosting its dividend since October through this quarter, after a pandemic stalled.
competitor
chevron
(
CVX
) also reported earnings on Friday, with a file profits Miss on rate basis.
The worse-than-expected performance of Chevron and Exxon came as a surprise on Friday, as analysts had been expecting a strong quarter across the board for oil companies fueled by higher prices. Oil Service Providers
Halliburton
(
halo
),
Schlumberger
(
SLB
), And
Kinder Morgan
(
KMI
All of them exceeded expectations when they reported earnings.
Write to Sabrina Escobar at [email protected]
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