ExxonMobil: Solid EPS, But Revenue Miss
Global energy giant ExxonMobil (NYSE:XOM) reported mixed fourth-quarter 2024 results on Friday, Jan. 31. Stronger-than-anticipated earnings resulted in adjusted EPS of $1.67, surpassing market estimates of $1.55. However, total revenue for the quarter was $83.4 billion, falling short of the anticipated $86.33 billion. Free cash flow of $8 billion came in well ahead of analyst estimates of $6.6 billion, but it was down nearly 30% year over year.
Despite the revenue miss, ExxonMobil successfully managed operational efficiencies, marking a resilient quarter.
| Metric | Q4 2024 | Analysts' Estimate | Q4 2023 | Change (YOY) |
|---|---|---|---|---|
| Adjusted EPS | $1.67 | $1.55 | $1.91 | (12.6%) |
| Revenue | $83.4 billion | $86.33 billion | $84.3 billion | (1.1%) |
| Net income | $7.61 billion | N/A | $7.63 billion | (0.3%) |
| Free cash flow | $8 billion | $6.6 billion | $11.3 billion | (29.2%) |
| Capital and exploration expenditures | $7.5 billion | N/A | $7.2 billion | 4.9% |
Source: ExxonMobil. Note: Analyst consensus estimates for the quarter provided by FactSet. YOY = Year over year.
ExxonMobil's Business Overview
ExxonMobil is a major integrated energy company, principally engaged in the exploration and production of crude oil and natural gas, as well as the transportation and marketing of petroleum products. Its operations span both upstream and downstream activities, which are critical to its revenue generation. Recently, the company has been focusing on cost efficiency and enhancing exploration and production activities, particularly in areas like the Permian Basin and Guyana. Successes in these fields are essential for maintaining profitability.
One of ExxonMobil's key initiatives is transitioning to lower-emission opportunities, positioning itself strategically within the evolving energy landscape. Considerable investment in carbon capture, hydrogen, and lower-emission fuels has been underway to align with global sustainability trends.
Quarterly Developments
During the fourth quarter, ExxonMobil demonstrated notable performance in its upstream operations, achieving record production levels. It recorded 4.3 million oil-equivalent barrels per day, marking the highest production in over 10 years, driven by significant output from the Permian Basin and Guyana. Full-year earnings for the Upstream segment increased by $4.1 billion compared to 2023, reaching $25.4 billion.
Conversely, the Energy Products segment saw quarterly earnings fall, affected by excess supply and weaker refining margins. Earnings plummeted to $402 million, a challenging contrast to the prior year's $12.1 billion, illustrating market pressures. Additionally, significant decreases in natural gas prices adversely impacted revenue.
The Chemical Products segment performed better, increasing its earnings to $2.6 billion, supported by improved margins and high-value product sales. Specialty products also contributed positively, with $3.1 billion in earnings, reflecting improved margins and sales volumes.
Amid these operational shifts, ExxonMobil announced an extension of its $20 billion annual share repurchase program until 2026, demonstrating enduring confidence in its cash generation capabilities. However, free cash flow dropped 29.2% to $8 billion from the previous year. The company returned $36 billion to shareholders last year, including $16.7 billion through dividend payments and $19.3 billion via share repurchases.
Looking Ahead
ExxonMobil's report didn't offer specific forward guidance. Elsewhere management has said its outlook includes extending the company's focus on lower-emission projects and technological innovations. Management remains optimistic, expecting continued momentum from strategic investments and operational synergies derived from mergers, such as the acquisition of Pioneer Natural Resources (completed in May 2024). This merger is anticipated to further bolster ExxonMobil's reserves and production capabilities.
In terms of financial guidance, the company remains committed to prudent capital allocation and maintaining a strong balance sheet, essential in navigating market fluctuations. Investors may note the importance of monitoring developments in the global energy transition and associated project successes, as these are pivotal to maintaining ExxonMobil's competitive edge and shareholder value in forthcoming quarters.
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