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Exxon Mobil (XOM) Tops Q4 Earnings on Higher Realizations

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Energy giant Exxon Mobil Corporation (XOM - Free Report) posted strong fourth-quarter 2016 results. Increased realizations for liquids primarily drove the outperformance. However, the improvement was partially offset by lower refining and marketing margins.

The company reported earnings of 90 cents per share, which beat the Zacks Consensus Estimate of 72 cents. The bottom line also came in ahead of 67 cents per share in the year-ago quarter.

 

Total revenue in the quarter increased to $61,016 million from $59,807 million in the year-ago quarter. The top line also surpassed the Zacks Consensus Estimate of $60,606 million.    

Operational Performance

Upstream: Adjusted quarterly earnings for the segment increased $528 million from the fourth quarter of 2015 to $1.4 billion. Increased realizations for liquids favored earnings by a net amount of $510 million.

Production averaged 4.121 million barrels of oil-equivalent per day (MMBOE/d), down 3% year over year. Liquid production fell 4% year over year to 2.384 million barrels per day. Moreover, natural gas production decreased 2% from the year-ago period to 10.424 MMCF/d (millions of cubic feet per day). Field decline along with reduced entitlements resulted in the downside.

Downstream: The segment recorded profits of $1.2 billion. The reported figure is $110 million lower than the October–December quarter of 2015. Decreased refining and marketing margins hurt earnings by $570 million.

ExxonMobil's refinery throughput averaged 4.4 million barrels per day (MMB/D), down 0.5% from the year-earlier level.

Chemical: This unit contributed approximately $872 million. This is $91 million less than the fourth quarter of 2015. Unfavorable volume and mix effects lowered earnings by $30 million.

Financials

During the quarter, ExxonMobil generated cash flow of $9.5 billion from operations and asset sales. The company returned $3.1 billion to shareholders through dividends. Capital and exploration spending decreased 35% year over year to $4.8 billion. 

Price Performance

In the last three months, Exxon Mobil shares underperformed the Zacks categorized Oil & Gas-International Integrated industry. During the aforesaid period, the company’s shares gained 2% compared with 6.5% improvement for the broader industry.  

Zacks Rank

ExxonMobil currently has a Zacks Rank #3 (Hold).

Some better-ranked players in the energy sector include Imperial Oil Ltd. (IMO - Free Report) , Suncor Energy Inc. (SU - Free Report) and Denbury Resources Inc. (DNR - Free Report) . All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Imperial Oil is undervalued. This is revealed by its forward PE ratio of 16.4 compared with 21.7 for the broader industry.

Suncor posted an average earnings surprise of 40.55% in the last four quarters.

Denbury surpassed the Zacks Consensus Estimate in each of the last four quarters with an average earnings surprise of 283.33%. 

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