) fourth-quarter 2012 earnings of $2.20 per share (excluding
special items) beat the Zacks Consensus Estimate of $1.99 by
10.6%. Earnings also improved 11.7% from last year's $1.97. The
improved performance reflects stronger refining margins and lower
costs (down by approximately 6.8% year over year).
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Total revenues in the quarter decreased 5.3% year over year to
$115.2 billion, but surpassed the Zacks Consensus Estimate of
Full year 2012 adjusted earnings came in at $9.70 per share,
beating the Zacks Consensus Estimate of $7.86 and up 15.2% from
$8.42 a year ago.
Total revenues in 2012 decreased marginally by 0.8% to $482.3
billion on an annualized basis. However, it was ahead of our
projection at $461.4 billion.
Upstream: Quarterly earnings for the segment were $7.8 billion,
down 12.1% from $8.8 billion a year ago. The decline was
primarily due to lower sales volumes and lower liquid
realizations. These were partly mitigated by improved natural gas
Production averaged 4.293 million barrels of oil-equivalent per
day (MMBOE/d) during the quarter, down 5.2% year over year. When
adjusted for the impact of entitlement volumes and OPEC quota
restrictions, production was down by 2.1%.
Liquid production declined 2.1% year over year to 2.203 million
barrels per day due to field decline. This was partially offset
by the stepping up of West African ventures along with lower
Moreover, the field decline resulted in the natural gas
production slump of more than 8% on an annualized basis.
Downstream: The segment recorded profit of $1.8 billion in the
fourth quarter of 2012 against $0.425 billion in the year-ago
period, mainly due to margin improvement.
ExxonMobil's refinery throughput averaged 4.8 million barrels per
day (MMBPD), down 7.9% from the year-earlier level of 5.3 MMBPD.
Chemical: This unit contributed approximately $1.0 billion to the
company's profits, up 76.4% from the year-earlier level of $0.5
billion. The outperformance was mainly attributable to higher
During the quarter, ExxonMobil generated cash flow from
operations and asset sales of $14.0 billion. In 2012, the company
returned more than $30 billion to shareholders through
dividends/share purchases. It also repurchased 59 million shares
in the fourth quarter for $5.3 billion. Capital spending during
the quarter surged 24% year over year to $12.4 billion.
We believe that ExxonMobil is the world's best-run integrated oil
company, based on its track record of superior return on capital
employed. The company boasts diversified operations across the
world with several new projects coming online through 2013.
ExxonMobil's strength is in its balanced operations, strong
financial flexibility and continuous improvement on efficiency
and cost control. The company's efforts to build an
unconventional resource portfolio both in North America and
overseas aims at increasing production through increased exposure
to large energy resources with long reserve life and low field
declines. Despite the collapse in natural gas prices, ExxonMobil
expects unconventional gas to play a dominant role in the future
supplies, owing to the rapid decline in conventional production.
Amongst the integrated super majors, ExxonMobil and
) beat the Zacks Consensus Estimate, but
Royal Dutch Shell plc
) delivered weaker-than-expected fourth-quarter 2012 earnings.
) will release results next week.
However, we remain skeptical due to the company's continued
disappointing production trend, which decreased for 6 quarters in
a row. The company stumbled on the production front, generating
lower volumes, aggravated by lower liquid price realization. We
see ExxonMobil struggling to grow production volumes over time.
ExxonMobil currently retains a Zacks Rank #3 (Hold).