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ExxonMobil (XOM) Q2 Earnings Beat on Huge Demand Recovery

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Exxon Mobil Corporation’s (XOM - Free Report) second-quarter 2021 earnings per share of $1.10 — excluding identified items — beat the Zacks Consensus Estimate of $1.02 and significantly improved from the year-ago loss of 70 cents.

Total revenues of $67,742 million beat the Zacks Consensus Estimate of $63,731 million and improved from the year-earlier figure of $32,605 million.

The strong quarterly results were owing to improved realized oil and natural gas prices as well as higher chemical margins. The results also reflect significant recovery in demand for the company’s products from last year’s record lows caused by the COVID-19 pandemic. The downstream business, however, suffered due to planned maintenance and unfavorable foreign exchange.

Exxon Mobil Corporation Price, Consensus and EPS Surprise

Exxon Mobil Corporation Price, Consensus and EPS Surprise

Exxon Mobil Corporation price-consensus-eps-surprise-chart | Exxon Mobil Corporation Quote

Operational Performance

Upstream

The segment reported quarterly earnings of $3,185 million against a loss of $1,651 million in the year-ago comparable quarter. This upside was primarily driven by higher commodity prices and natural gas production volumes.

Operations in the United States recorded a profit of $663 million against a loss of $1,197 million in the June quarter of 2020. The company reported profits of $2,522 million from non-U.S. operations, which significantly improved from a loss of $454 million in the year-ago quarter.

Production: Total production averaged 3,528 thousand barrels of oil-equivalent per day (MBoe/d), lower than 3,638 MBoe/d a year ago, reflecting the impact of divestments and planned maintenances.

Liquid production decreased to 2,200 thousand barrels per day (MBbls/d) from 2,306 MBbls/d in the prior-year quarter. The underperformance was owing to lower production, primarily in Asia, Africa and Europe. Nonetheless, natural gas production was 8,294 million cubic feet per day (Mmcf/d), up from 7,990 Mmcf/d a year ago due to higher output from the United States, Europe, Asia and Africa.

Price Realization: In the United States, the company recorded crude price realization of $63.29 per barrel, significantly higher than the year-ago quarter’s $21.79. The same metric for non-U.S. operations rose to $60.52 per barrel from the year-ago figure of $20.91.

Natural gas prices in the United States were recorded at $2.78 per thousand cubic feet (Mcf), higher than the year-ago quarter’s $1.57. Also, in the non-U.S. section, the metric improved to $6.76 per Mcf from $4.07 in second-quarter 2020.

Downstream

The segment recorded a loss of $227 million against a profit of $976 million a year ago due to planned maintenance and unfavorable foreign exchange in the non-U.S. section.

ExxonMobil's refinery throughput averaged 3,858 MBbls/d, higher than the year-earlier level of 3,516 MBbls/d. Petroleum product sales also rose to 5,041 MBbls/d from 4,437 MBbls/d a year ago.

Chemical

This unit recorded $2,320 million profit, skyrocketing from earnings of $467 million in the year-ago quarter on significantly higher margins, and strong demand from U.S. and non-U.S. operations. Prime product sales rose to 6,513 thousand metric tons (kt) from 5,945 kt a year ago.

Financials

During the quarter under review, ExxonMobil generated cash flow of $10,280 million from operations and asset divestments. The company's capital and exploration spending declined 28.6% year over year to $3,803 million.

At the end of second-quarter 2021, total cash and cash equivalents were $3.5 billion and debt amounted to $60.6 billion, sequentially down from $63.3 billion.

Guidance

The energy giant reaffirmed its expectation for 2021 capital spending at $16-$19 billion. With first-half capital spending amounting to $6.9 billion, the majority of the planned expenditure will likely be carried out in the second half.

Latest Guyana Find

The company recently made a significant hydrocarbon discovery at Whiptail-1, located in the famous Stabroek Block offshore Guyana, wherein it has already made numerous world-class oil discoveries so far. The new find, wherein Hess Corporation (HES - Free Report) and CNOOC Limited are partners, adds to the previous estimate of gross recoverable resource of 9 billion boe. The location of the new find is around 4 miles southeast of Uaru-1 discovery.

Zacks Rank & Stocks to Consider

The company currently has a Zacks Rank #3 (Hold). Some better-ranked stocks from the energy space include Southwestern Energy Company (SWN - Free Report) and Braskem S.A. (BAK - Free Report) , each having a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Southwestern’s profits for 2021 are expected to jump 202.6% year over year.

Braskem’s bottom line for 2021 is expected to surge 326.7% year over year.