Exxon beats estimates, ends 2023 with a $36 billion profit (updated)
02/02/2024 13:26
(Adds CEO, analyst comment, updates share price, paragraphs
3-8)
By Sabrina Valle
HOUSTON, Feb 2 (Reuters) -
Exxon Mobil XOM.N on Friday posted a better-than-expected
$36 billion profit for 2023, lifted by fuels trading and higher
oil and gas production.
Profits from oil majors have been down in 2023 by about a
third from record levels in 2022, pressured as oil and gas
prices retreated after spiking when Russia invaded Ukraine.
Exxon Chief Executive Darren Woods said the industry "saw
energy prices and refining margins start to normalize in 2023."
Exxon's earnings in the latest quarter still beat
estimates and Woods signaled optimism about the coming year. He
raised Exxon's spending target after boosting capital spending
in the most recent quarter by 4% from a year ago.
Full-year capital expenditures in 2023 were $26.32
billion.
Exxon, he said, "opportunistically accelerated drilling
activity" in its two core oil production areas, the U.S. Permian
Basin and Guyana, and kick-start lithium production to supply
electric vehicle batteries.
Exxon "closed 2023 on a strong note" and enters 2024 in
a strong financial position, said Peter McNally, Global Sector
Lead for Industrials Materials and Energy at Third Bridge.
"But the big focus for investors will be the closing of
the acquisition of Pioneer Natural Resources," which will
dramatically increase investments in the U.S. Exxon expects to
close the deal in the second quarter.
Shares were down less than 1% in pre-market trading.
Exxon results included a $2.5 billion impairment charge for
California properties that it has been trying to sell for more
than a year. Excluding that charge, annual income fell 35% to
$38.57 billion.
Top oil producers are writing off unwanted assets and
cleaning up their balance sheets ahead of pending deals. Chevron
CVX.N has said it would take an about $4 billion impairment in
the fourth quarter, while Shell SHEL.L on Thursday took a $5.5
billion writedown.
Exxon agreed in October to buy rival Pioneer PXD.N to
bolster its U.S. shale oil production in the Permian Basin, and
Chevron proposed to purchase Hess Corp HES.N to get a foothold
in Guyana. Both deals are now expected to close mid-year.
TRADING BLOOMS
Brent crude futures in the fourth quarter averaged $82.85 a
barrel, a 7% decrease compared to the same period last year and
a 4% decline from the third quarter.
For the fourth quarter, Exxon reported a profit that beat
analysts estimates by 27 cents at $2.48 per share, or $9.96
billion, compared to $14.04 billion, or $3.40 per share, from a
year earlier.
The results were driven by higher trading profits in its
fuels business and increased oil and gas production in the U.S.
and Guyana, Chief Financial Officer Kathryn Mikells told
Reuters.
Fourth-quarter results were helped by Exxon's trading
division, which delivered a $1.1 billion boost to operating
profit from its fuels business. The company's decision to
combine global trading in a single division is paying off, she
said.
"That is definitely something that we would expect to see on
an ongoing basis embedded in our results," Mikells said. Gains
came from revising how its specifies and moves fuels, she added.
The company also exceeded its $9 billion cost cut target
from 2019 by $700 million.
Exxon distributed $32 billion to shareholders via buybacks
and dividends last year, up from $29.8 billion a year earlier.
The largest U.S. producer also said it planned $23 billion
to $25 billion in capital spending this year to prepares for
2025 projects.
(Reporting by Sabrina Valle; additonl reporting by Sourasis
Bose in Bengaluru. Editing by Gary McWilliams, Jamie Freed and
David Gregorio)
((sabrina.valle@tr.com; Twitter: @sabrinavalle;))