ExxonMobil (XOM) Misses Q4 Earnings On Lower Throughput

ExxonMobil Corporation (NYSE:XOM) posted lower-than-expected results in fourth-quarter 2017, thanks to lower refinery throughput. This was partially offset by higher liquid price realizations.

The company reported adjusted earnings of 88 cents per share, which missed the Zacks Consensus Estimate of $1.06. Also, the bottom line fell from the year-ago quarter level of 90 cents.

Total revenues in the quarter increased to $66,515 million from $56,399 million a year ago. However, the top line failed to beat the Zacks Consensus Estimate of $74,444 million.

Operational Performance

Upstream: Quarterly earnings — excluding U.S. tax reform and impairments — were $2.5 billion, reflecting an improvement of $1 billion from the year-ago quarter. Increased price realizations from liquids drove the upside.

Production averaged 3.991 million barrels of oil-equivalent per day (MMBOE/d), lower than 4.121 MMBOE/d in the year-ago quarter.

Liquid production fell year over year to 2.251 million barrels per day. However, natural gas production was 10.441 MMCF/d (millions of cubic feet per day), up from 10.424 MMCF/d in the year-ago period.

Downstream: The segment recorded profits — excluding U.S. tax reform and impairments — of $952 million. The figure is $289 million lower than the October-December quarter of 2016. Last year, the segment reported higher profit owing to proceeds from the sale of the retail unit in Canada.

ExxonMobil's refinery throughput averaged 4.2 million barrels per day (MMB/D), down almost 5% from the year-earlier level.

Chemical: After excluding U.S. tax reform, this unit contributed saw a $63-million rise in earnings from the prior-year quarter.

Financials

During the quarter under review, ExxonMobil generated cash flow of $8.8 billion from operations and asset divestments. The energy giant returned $3.3 billion to shareholders through dividends. Capital and exploration spending surged more than 100% year over year to almost $7.6 billion.

Q4 Price Performance

In fourth-quarter 2017, ExxonMobil gained 2% compared with the industry’s 6.6% rally.

Key Development

On Jan 30, ExxonMobil announced its intention to boost production from Permian Basin in West Texas and New Mexico. The company is willing to produce more than 600,000 barrels of oil equivalent per day within 2025 from the basin.

Over the long term, ExxonMobil is expected to allocate as much as $2 billion for developing midstream infrastructure related to transportation activities. This development will support the company’s operations in the Permian Basin.

Zacks Rank & Key Picks

ExxonMobil has a Zacks Rank #3 (Hold). A few better-ranked players in the energy sector are Statoil (OL:STL) ASA (NYSE:STO) , Pioneer Natural Resources Company (NYSE:PXD) and Cabot Oil & Gas (NYSE:COG) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Headquartered in Stavanger, Norway, Statoil is a major international integrated energy player. The company is expected to witness year-over-year earnings growth of 17.1% for 2018.

Headquartered in Irving, TX, Pioneer Natural Resources is an upstream energy firm. The company delivered an average positive earnings surprise of 67.6% for the preceding four quarters.

Headquartered in Houston, TX, Cabot is also an upstream energy company. The firm will likely see year-over-year earnings growth of 128.4% in 2018.

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