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Exxon Mobil posted adjusted earnings for the first quarter that missed forecasts and stocks fell in pre-marketing trading on Friday.
Exxon (ticker: XOM) reported adjusted earnings of $ 2.07 per share, below the forecast of $ 2.23 per share. The quarter included fees of $ 3.4 billion, or 79 cents a share, since the company’s exit from Russia.
Shares of Exxon fell 0.9% to $ 86.42 on Friday. Shares rose 41.2% this year.
Net income for the period was $ 5.5 billion or $ 1.28 per share. Revenue for the period was $ 90.5 billion, higher than analysts’ estimates of $ 82.8 billion, according to FactSet. Annual revenue was nearly $ 59.2 billion.
In an interview with Barron’s, Exxon CFO Katie Mikkels said the loss of profits was largely due to a change in the value of the derivatives the company uses to hedge its refining operations. The dramatic change in the price of oil during the quarter – with crude oil trading up to $ 130 a barrel – had a major impact on energy derivatives markets. Marking its assets against market prices had a negative impact of $ 760 million on Exxon’s revenue during the quarter, which, according to Mikkels, is “quite typical in an environment of soaring prices.”
Without these changes and some unexpected weather problems in Canada, the company’s core business performed well, Mikkels said.
“It was a strong quarter when we look at the main business performance, leaving aside the influence of time and weather and carrying a very strong momentum in the second quarter,” said Mikkels.
The company produced 3.7 million barrels per day, down 4% from the fourth quarter of 2021 due to time delays, scheduled maintenance, lower rights due to higher prices and sales.
“Profits have increased moderately as strong margin improvements and key growth have been offset by time and time,” CEO Darren Woods said in a statement. “The lack of these temporary effects in March provides a strong, positive impetus for the second quarter.
Structural savings are more than $ 5 billion for the quarter compared to 2019, and the company is set to exceed $ 9 billion in annual savings by 2023, Exxon said.
From the second quarter of 2022, Exxon expects corporate and financial costs to be around $ 600 million.
Exxon has increased its share repurchase program to $ 30 billion by 2023 compared to its previous $ 10 billion share repurchase plan. At the current share price, this would amount to about 8% of the shares. Mikkels said the company has made progress in reducing its debt and is now at the bottom of its debt / equity target. “We feel really good about our strong balance sheet and liquidity position and the sustainable momentum we see in business,” she said.
Citi analyst Alistair Syme writes that high oil prices and relatively low costs give Exxon “a lot of financial flexibility.”
The CFRA maintains a Buy rating on the stock, with analyst Stuart Glickman saying it sees short-term catalysts as the oil producer makes progress in Guyana and the Permian Basin.
The company announced a cash dividend earlier this week of 88 cents a share, the same level as the dividend paid in the first quarter. Exxon increased dividends from October to this quarter, after a pandemic break.
Competitor Chevron (CVX) also reported gains on Friday, posting a loss of earnings on an adjusted basis.
The worse-than-expected performance of Chevron and Exxon came as a surprise on Friday, as analysts expected a strong quarter for all oil companies, fueled by higher prices. Oil service providers Halliburton (HAL), Schlumberger (SLB) and Kinder Morgan (KMI) exceeded expectations when reporting profits.
Write to Sabrina Escobar at sabrina.escobar@barrons.com
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