Exxon Signals Fourth Quarterly Profit in a Row Despite Charges

By Reuters
Reuters
Reuters
December 31, 2021 Updated: January 1, 2022

HOUSTON—Exxon Mobil Corp. on Thursday signaled a return to annual profit for 2021 as stronger oil and gas prices drove a gain of up to $1.9 billion in operating profits that exceeded one-time charges.

The largest U.S. oil producer issued a snapshot of final quarter results that showed it expects sequentially higher profit from oil and gas production. Operating profits in refining and chemicals will be flat to lower, a securities filing showed. Official results are due out Feb. 1.

In 2020, Exxon suffered a historic $22.4 billion loss on writedowns from falling oil prices and lower refining margins. Cost cuts coupled with energy price gains have allowed it to pay down debt and plot a share buyback program next year.

Analysts forecast an adjusted profit of $1.76 per share for the quarter, according to Refinitiv IBES data, compared to 3 cents a share excluding writedowns a year-ago.

Thursday’s regulatory filing signaled one-time charges for asset impairments and contractual costs could lower oil and gas earnings by up to $1.2 billion. It did not provide details on the production assets affected.

Exxon also said lower margins in chemicals could lower results by $600 million to $800 million, compared to the $2.14 billion third-quarter chemicals profit. Refining margins could stay flat or drop by $200 million compared to the $1.23 billion profit the previous quarter.

Offsetting the negative impacts, Exxon signaled mark-to-market gains of up to $1.1 billion for oil and gas and in refined products. It also said proceeds from asset sales including its U.K. North Sea assets could deliver up to $500 million.

The rosier outlook allowed Exxon to extend planned a $20–25 billion per year outlay on new projects through 2027, including $2.5 billion per year on carbon reductions, the company has said, adding it expects to double its pre-pandemic annual profit by 2025, the company has said.

About 60 percent of its spending will be in key growth areas of U.S. shale, Guyana, Brazil, LNG, and chemical products.

Exxon shares fell 36 cents or about 0.59 percent on Thursday to close at $60.79. The stock is up 47 percent so far this year but down 33 percent over the last five years.

By Sabrina Valle

Reuters