Exxon beats estimates, ends 2023 with a $36bn profit

Houston — ExxonMobil on Friday posted a better-than-expected $36bn profit for 2023, lifted by fuels trading and higher oil and gas production.

Profits from oil majors have been down in 2023 by about a third from record levels in 2022, pressured as oil and gas prices retreated after spiking when Russia invaded Ukraine.

Exxon CEO Darren Woods said the industry “saw energy prices and refining margins start to normalise in 2023.”

Exxon’s earnings in the latest quarter still beat estimates and Woods signalled optimism about the coming year. He raised Exxon’s spending target after boosting capital spending in the most recent quarter by 4% from a year ago.

Full-year capital expenditures in 2023 were $26.32bn.

Exxon, he said, “opportunistically accelerated drilling activity” in its two core oil production areas, the US Permian Basin and Guyana, and kick-start lithium production to supply electric vehicle batteries.

Exxon “closed 2023 on a strong note” and enters 2024 in a strong financial position, said Peter McNally, global sector lead for industrials materials and energy at Third Bridge.

“But the big focus for investors will be the closing of the acquisition of Pioneer Natural Resources,” which will dramatically increase investments in the US Exxon expects to close the deal in the second quarter.

Shares were down less than 1% in pre-market trading.

Exxon results included a $2.5bn impairment charge for California properties that it has been trying to sell for more than a year. Excluding that charge, annual income fell 35% to $38.57bn.

Top oil producers are writing off unwanted assets and cleaning up their balance sheets ahead of pending deals. Chevron has said it would take an about $4bn impairment in the fourth quarter, while Shell on Thursday took a $5.5bn writedown.

Exxon agreed in October to buy rival Pioneer to bolster its US shale oil production in the Permian Basin, and Chevron proposed to purchase Hess Corp to get a foothold in Guyana. Both deals are now expected to close midyear.

Trading blooms

Brent crude futures in the fourth quarter averaged $82.85 a barrel, a 7% decrease compared to the same period last year and a 4% decline from the third quarter.

For the fourth quarter, Exxon reported a profit that beat analysts estimates by 27c at $2.48 per share, or $9.96bn, compared with $14.04bn, or $3.40 per share, from a year earlier.

The results were driven by higher trading profits in its fuels business and increased oil and gas production in the US and Guyana, CFO Kathryn Mikells told Reuters.

Fourth-quarter results were helped by Exxon’s trading division, which delivered a $1.1bn boost to operating profit from its fuels business. The company’s decision to combine global trading in a single division is paying off, she said.

“That is definitely something that we would expect to see on an ongoing basis embedded in our results,” Mikells said. Gains came from revising how its specifies and moves fuels, she added.

The company also exceeded its $9bn cost cut target from 2019 by $700m.

Exxon distributed $32bn to shareholders via buybacks and dividends last year, up from $29.8bn a year earlier.

The largest US producer also said it planned $23bn to $25bn in capital spending this year to prepares for 2025 projects.

Reuters