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ExxonMobil (XOM) Q4 Earnings Lag Estimates on Weaker Margins

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Exxon Mobil Corporation XOM reported unimpressive fourth-quarter 2019 results due to weaker margins in the refining and chemical business. This was partially offset by higher crude price realization and strong liquids production.

The largest publicly-traded integrated U.S. energy company’s earnings per share of 41 cents missed the Zacks Consensus Estimate of 44 cents. Moreover, the bottom line declined substantially from the year-earlier period’s $1.51 per share.

Total revenues of $67,173 million missed the Zacks Consensus Estimate of $69,104 and deteriorated from the year-earlier figure of $71,895 million.

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

Quarterly earnings of $6.1 billion surged from $3.3 billion a year ago, primarily due to higher oil price realizations. While profits from the United States declined to $68 million in the quarter from the year-ago level of $265 million, the same from non-U.S. operations rose to $6.1 billion from year-ago quarter’s $3 billion.

Production: Total production averaged 4.018 million barrels of oil-equivalent per day (MMBoe/d), marginally higher than 4.010 MMBoe/d a year ago.

Liquid production increased to 2.436 million barrels per day (MMBbls/d) from 2.348 MMBbls/d in the prior-year quarter, courtesy of ramped-up activities in the prolific Permian Basin. While production from the United States rose significantly, it declined in Europe and Africa. Notably, natural gas production was 9.495 billion cubic feet per day (Bcf/d), down from 9.974 Bcf/d a year ago, due to lower output from Europe, Asia, Africa and Australia.

Price Realization:In the United States, the company recorded crude price realization of $55.61 per barrel, higher than the year-ago quarter’s $54.50. The same metric for non-U.S. operations rose to $56.61 per barrel from the year-ago level of $53.74. In contrast, natural gas prices in the United States were recorded at $2.16 per thousand cubic feet (Kcf), lower than the year-ago quarter’s $3.64. Similarly, in the Non-U.S. section, the metric fell to $5.89 per Kcf from $8.18 in fourth-quarter 2018.

Downstream

The segment recorded a profit of $898 million, representing a significant decline of $1,806 million from $2,704 million in the December quarter of 2018. The underperformance can be attributed to maintenance activities and contraction in the industry’s fuel margins. ExxonMobil's refinery throughput averaged 4.1 MMBbls/d, lower than the year-earlier level of 4.3 MMBbls/d.

Chemical

This unit recorded $355-million loss against $737-million profit in the prior-year quarter, owing to soft margins and increased feed costs. The company’s U.S. and Non-U.S. operations in the Chemical segment recorded quarterly losses against profits generated in the year-ago quarter.

Financials

During the quarter under review, ExxonMobil generated cash flow of $9.4 billion from operations and asset divestments, boosted by $3.1-billion Norway upstream asset sales, down from $9.5 billion a year ago. Owing to significant investments in the prolific Permian Basin, the company’s capital and exploration spending rose 8% year over year to $8.5 billion.

At the end of fourth-quarter 2019, total cash and cash equivalents were $3.1 billion, and debt amounted to $46.9 billion.

Zacks Rank & Stocks to Consider

ExxonMobil currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the energy sector include Marathon Oil Corporation (MRO - Free Report) , Chevron Corporation CVX and ConocoPhillips COP, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Marathon Oil’s revenues for 2020 are expected to rise 3% year over year.

Chevron’s bottom line for 2020 is expected to rise 15.4% year over year.

ConocoPhillips’ bottom line for 2020 is expected to rise 4% year over year.

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