ExxonMobil's (XOM) Q4 Earnings Beat on Downstream Strength
Exxon Mobil CorporationXOM reported strong fourth-quarter 2018 earnings despite weakness in crude prices. Robust downstream profits, owing to impressive margins from North American crude differentials, and ramped-up liquids production from the prolific Permian primarily supported the outperformances.
Investors cheered ExxonMobil's quarterly earnings and the stock rallied more than 2% in pre-market trading .
The largest publicly-traded integrated energy company's earnings per share of $1.51 - after adjusting non-recurring items - surpassed the Zacks Consensus Estimate of $1.08. The bottom line also improved from the year-earlier adjusted figure of 88 cents.
Total revenues of $71,895 million missed the Zacks Consensus Estimate of $74,177 million. However, the top line improved from $66,515 million recorded a year ago.
Upstream : Quarterly adjusted earnings were recorded at $3.7 billion, up from $2.5 billion in the year-ago quarter. Higher seasonal demand, along with strengthening prices of natural gas & liquefied natural gas (LNG) primarily drove the upside. This was negated partially by weakening oil prices through the October-December quarter of 2018.
Total production averaged 4.010 million barrels of oil-equivalent per day (MMBOE/d), marginally higher than 3.991 MMBOE/d a year ago.
Liquid production increased year over year to 2.348 million barrels per day (MMB/D) from 2.251 MMB/D, thanks to ramped-up activities in the prolific Permian. However, natural gas production was 9.974 BCF/d (billions of cubic feet per day), down from 10.441 BCF/d in the year-ago quarter.
Downstream: The segment recorded profits of $2.7 billion, surged from $0.9 billion in the October-December quarter of 2017, thanks to strong margins from North American crude differentials.
ExxonMobil's refinery throughput averaged 4.3 million barrels per day (MMB/D), higher than the year-earlier level of 4.2 MMB/D.
Chemical: This unit contributed to the company's $744 million profit, down from $935 million in the prior-year quarter, owing to weak margin.
During the quarter under review, ExxonMobil generated cash flow of $9.5 billion from operations and asset divestments, up from $8.8 billion in the year-ago quarter. The energy giant returned $3.5 billion to its shareholders through dividends. Capital and exploration spending was down 13% year over year to $7.8 billion.
Exxon Mobil Corporation Price, Consensus and EPS Surprise
To combat low production of oil & natural gas over the years and double its earnings and operating cash flow within 2025, ExxonMobil has taken a bold step of streamlining its world-wide exploration operations.
With the restructuring, ExxonMobilhas decided to form three new upstream firms by reportedly folding seven companies. The new companies will be ExxonMobil Upstream Oil & Gas Company, ExxonMobil Upstream Business Development Company and ExxonMobil Upstream Integrated Solutions Company.
Zacks Rank and Key Picks
Currently, ExxonMobil carries a Zacks Rank #5 (Strong Sell). Some better-ranked players in the energy space include Jones Energy, Inc. JONE , RGC Resources Inc. RGCO and Sunoco LP SUN , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Jones Energy expects 2019 earnings to grow 19% year over year.
RGC Resources delivered average positive earnings surprise of 87.64% in the preceding four quarters.
Sunoco LP pulled off average positive earnings surprise of 18.39% in the trailing four quarters.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.