ExxonMobil Corporation 's ( XOM ) first-quarter
2013 earnings of $2.12 per share beat the Zacks Consensus Estimate
of $2.03 by 4.4%. Earnings also improved 6% from last year's $2.00.
The improved performance reflects stronger margins in the chemical
business and lower costs (down by approximately 12.9% year over
Total revenue in the quarter decreased 12.3% year over year to
$108.8 billion, and missed the Zacks Consensus Estimate of $117.7
billion amid lower production.
Upstream: Quarterly earnings for the segment were more than $7.0
billion, down 9.8% from $7.8 billion a year ago. The decline was
primarily due to lower liquid realizations and higher operating
expenses. These were partly mitigated by improved natural gas
Production averaged 4.395 million barrels of oil-equivalent per
day (MMBOE/d), down 3.5% year over year. When adjusted for the
impact of entitlement volumes and OPEC quota restrictions,
production was down 1.2%.
Liquid production declined 0.9% year over year to 2.193 million
barrels per day due to field decline. This was partially offset by
the stepping up of West African ventures.
Moreover, the field decline resulted in the natural gas production
slump of more than 5.9% on an annualized basis.
Downstream: The segment recorded profit of $1.5 billion in the
first quarter of 2013 against $1.6 billion in the year-ago period,
mainly due to lower volumes and mix effects.
ExxonMobil's refinery throughput averaged 4.6 million barrels per
day (MMBPD), down 14.1% from the year-earlier level of 5.3
Chemical: This unit contributed approximately $1.1 billion to the
company's profits, up 62.2% from the year-earlier level of $0.7
billion. The outperformance was mainly attributable to higher
During the quarter, ExxonMobil generated cash flow from operations
and asset sales of $14.0 billion. The company returned more than
$7.6 billion to shareholders through dividends/share purchases. It
also repurchased 63 million shares for $5.6 billion. Capital
spending increased 33% year over year to $11.8 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 in efficiency and
cost control. The company's efforts to build an unconventional
resource portfolio both in North America and overseas is aimed at
increasing production through increased exposure to large energy
resources with long reserve life and low field declines.
With the spike in natural gas prices from higher demand,
ExxonMobil expects unconventional gas to play a dominant role in
the future supplies, owing to the rapid decline in conventional
production.BP PLC (BP): Free Stock Analysis ReportOCCIDENTAL PET (OXY): Free Stock Analysis
ReportROYAL DTCH SH-A (RDS.A): Free Stock Analysis
ReportEXXON MOBIL CRP (XOM): Free Stock Analysis
ReportTo read this article on Zacks.com click here.Zacks Investment
However, we remain skeptical due to the company's continued
disappointing production trend, which decreased for 7 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.
Among the integrated players, ExxonMobil and Occidental
Petroleum Corp. ( OXY ) beat their Zacks
Consensus Estimate. However the true picture about the integrated
players would emerge next week when the two goliaths Royal
Dutch Shell plc ( RDS.A ) and
BP Plc ( BP ) release their
versions of the first quarter.
ExxonMobil currently retains a Zacks Rank #3 (Hold).