ExxonMobil first-quarter earnings down on lower refining margins, gas prices

ExxonMobil posted earnings of $8.2 billion for first-quarter 2024, down from $11.4 billion in first-quarter 2023. Excluding identified items, adjusted earnings were $8.2 billion, a decrease from $11.6 billion in the same quarter last year.

Earnings decreased as industry refining margins and natural gas prices came down from last year's highs. Timing effects from unsettled derivative mark-to-market impacts and other primarily non-cash impacts from tax and inventory adjustments as well as divestments contributed to the lower earnings. Strong advantaged volume growth primarily from Guyana and the Beaumont refinery expansion, and structural cost savings helped to offset lower base volumes from divestments, unfavorable entitlements and government-mandated curtailments, and higher expenses from scheduled maintenance.

In first-quarter 2024, the company generated cash flow from operations of $14.7 billion and free cash flow of $10.1 billion. Shareholder distributions of $6.8 billion in the quarter included $3.8 billion of dividends and $3 billion of share repurchases.

First-quarter upstream earnings totaled $5.7 billion, a $797 million decrease compared to the same quarter last year. The prior-year period was negatively impacted by tax-related identified items. Excluding identified items, earnings decreased $955 million driven by a 32% decrease in natural gas realizations and other primarily non-cash impacts from tax and inventory adjustments as well as divestments. These factors were partially offset by a 4% increase in liquids realizations and less unfavorable timing effects mainly from derivatives mark-to-market impacts.

Net production was 47,000 boe/d lower than the same quarter last year. However, excluding the impacts from divestments, entitlements, and government-mandated curtailments, net production grew 77,000 boe/d, driven by the start-up of the Payara development in Guyana. Payara reached nameplate capacity of 220,000 b/d in mid-January, ahead of schedule.

The company announced a final investment decision for the Whiptail development in Guyana. This is the sixth offshore project and is expected to add approximately 250,000 boe/d of gross capacity with start-up targeted by year-end 2027. Construction is under way on the floating production storage and offloading (FPSO) vessels for the Yellowtail and Uaru projects, with Yellowtail anticipated to start production in 2025 and Uaru targeted for 2026. In addition, one new exploration discovery was made this year in the Stabroek block.

In October 2023, ExxonMobil agreed to acquire Pioneer Natural Resources in a $59.5 billion all-stock transaction. The deal is expected to close in second-quarter 2024, pending regulatory approval.

Energy Products first-quarter earnings totaled $1.4 billion, a decrease of $2.8 billion compared to the same quarter last year due to weaker industry refining margins and unfavorable timing effects mainly from derivatives mark-to-market impacts. Earnings improvements from the advantaged Beaumont refinery expansion project, as well as structural cost savings, partly offset lower base volumes from divestments and higher scheduled maintenance expenses. Strong turnaround performance reduced labor costs and facility downtime, which helped to mitigate expenses related to the scheduled maintenance.

Chemical Products earnings were $785 million, an increase of $414 million compared to the same quarter last year. Despite continued bottom-of-cycle conditions, results improved with higher margins due to lower North American feed costs and higher margins from performance chemicals more than offsetting the decline in industry margins for polyethylene and polypropylene. Earnings were further supported by advantaged performance product volumes growth, reflecting advantaged investments including the recent Baytown chemical expansion. Base volumes also improved from lower scheduled maintenance and strong reliability during US Gulf Coast weather events.

Specialty Products earnings were $761 million, compared to $774 million in the same quarter last year. Improved finished lubes margins and structural cost savings offset weaker basestock margins and higher base expenses.