ExxonMobil Corp. (NYSE:XOM) posted better-than-expected third-quarter 2016 earnings. Project startups along with favorable volume and mix effects led to the outperformance. This was offset partially by lower oil and gas realizations, lower refining margins and an increased downtime in Nigeria.
The company reported earnings of 63 cents per share, beating the Zacks Consensus Estimate of 60 cents. The bottom line, however, deteriorated from $1.01 per share in the year-ago quarter.
Total revenue in the quarter decreased to $58,677 million from $67,344 million in the year-ago quarter. The top line also came in below the Zacks Consensus Estimate of $60,562 million.
Operational Performance
Upstream: Quarterly earnings for the segment declined $738 million from the third quarter of 2015 to $620 million. Lower realizations for liquids and gas affected earnings by $880 million. However, volume and mix effects helped earnings to rise by $80 million.
Production averaged 3.811 million barrels of oil-equivalent per day (MMBOE/d), down almost 3% year over year. Liquids production totaled 2.2 million barrels per day, down 120,000 barrels per day. Increased downtime in Nigeria led to the output decline, which was negated partially by project startups.
Natural gas production, however, was 9.6 billion cubic feet per day, up 77 million cubic feet per day from the prior-year period. Project startups led to the improvement.
Downstream: The segment recorded profits of $1.2 billion, down $804 million from the July to September quarter of 2015. Decreased refining margins hurt earnings by $1.6 billion.
ExxonMobil's refinery throughput averaged 4.4 million barrels per day, down 2.1% from the year-earlier level.
Chemical: This unit contributed approximately $1.2 billion, which is $56 million less than the third quarter of 2015. Weak margins lowered earnings by $10 million. However, favorable volume and mix effects drove earnings by $20 million.
Financials
During the quarter, ExxonMobil generated cash flow of $6.3 billion from operations and asset sales. The company returned $3.1 billion to shareholders through dividends. Capital and exploration spending decreased 45% year over year to $4.2 billion.
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Other News
ExxonMobil discovered potential recoverable oil resources on the Owowo field, located off the coast of Nigeria. The company estimates recoverable resources of 500 million and one billion barrels of oil. It is to be noted that the field was drilled safely to 10,410 feet at almost 1,890 feet depth of water.
Zacks Rank
ExxonMobil currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy sector are Ultra Petroleum Corp. (OTC:UPLMQ) , EQT Midstream Partners, LP (NYSE:EQM) and Helix Energy Solutions Group, Inc. (NYSE:HLX) .
Ultra Petroleum is likely to witness year-over-year earnings growth of 148.4% for the current year. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
EQT Midstream is projected to witness year-over-year earnings growth of almost 14% for the current year. It carries a Zacks Rank #1.
Helix Energy posted an average positive earnings surprise of 56.42% over the last four quarters. The company has a Zacks Rank #2 (Buy).
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