ExxonMobil Earns $4 Billion in Second Quarter of 2018

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Exxon Mobil Corporation today announced estimated earnings of $4 billion in the second quarter of 2018.

This is an increase from the $3.4 billion earned in the second quarter of 2017.

In a statement from the company this morning, it was noted that key projects including those in Guyana and Brazil are on par to meet the company’s objectives outlined in its long-term earnings growth plans.

Exxon noted that the company continued to rapidly advance the Liza Phase 1 project with the start of development drilling offshore Guyana.

The company and its co-venturers have so far discovered estimated recoverable resources of more than 4 billion oil-equivalent barrels on the Stabroek Block.

Development drilling began in May for the first of 17 wells planned for Phase 1, laying the foundation for production startup in 2020.

See Full statement below:

IRVING, Texas–(BUSINESS WIRE)–Exxon Mobil Corporation (NYSE:XOM):

First
Second Quarter Quarter First Half
2018 2017 % 2018 % 2018 2017 %
Earnings Summary
(Dollars in millions, except per share data)
Earnings (U.S. GAAP) 3,950 3,350 18 4,650 -15 8,600 7,360 17
Earnings Per Common Share
Assuming Dilution 0.92 0.78 18 1.09 -16 2.01 1.73 16
Capital and Exploration
Expenditures 6,627 3,925 69 4,867 36 11,494 8,094 42

Exxon Mobil Corporation today announced estimated second quarter 2018 earnings of $4 billion, or $0.92 per share assuming dilution, compared with $3.4 billion a year earlier. Cash flow from operations and asset sales was $8.1 billion, including proceeds associated with asset sales of $307 million. During the quarter, the corporation distributed $3.5 billion in dividends to shareholders. Capital and exploration expenditures were $6.6 billion, up 69 percent from the prior year, reflecting key investments in Brazil, the U.S. Permian Basin and Indonesia.

Oil-equivalent production was 3.6 million barrels per day, down 7 percent from the second quarter of 2017. Excluding entitlement effects and divestments, liquids production increased as growth in the Permian and Bakken in the U.S. and Hebron in Canada more than offset decline and higher downtime driven by scheduled maintenance. Natural gas volumes decreased 10 percent, excluding entitlement effects and divestments, largely due to a continuing shift in U.S. unconventional development from dry gas to liquids and to downtime in Qatar, Australia, and Papua New Guinea.

“Key projects in Guyana, the U.S. Permian Basin, Brazil, Mozambique and Papua New Guinea are positioning us well to meet the objectives we outlined in our long-term earnings growth plans. The high quality of these resources, combined with our strengths in project execution and innovation, will generate strong value over time,” said Darren W. Woods, chairman and chief executive officer. “Second quarter results were primarily impacted by significant scheduled maintenance undertaken to support operational integrity. In addition, while we were pleased with the return of full production following the PNG earthquake, extended recoveries from first quarter operational incidents in the Downstream were disappointing. However, good progress was made during the second quarter in fully recovering from these incidents.”

Second Quarter 2018 Business Highlights

Upstream:

  • Crude prices strengthened in the second quarter, while natural gas prices were mixed.
  • U.S. tight oil growth in the Permian and Bakken continued, reaching over 250,000 oil-equivalent barrels per day in the second quarter, an increase of 30 percent from the same period last year. The Hebron field in Canada continued to exceed expectations, ramping up to 25,000 oil-equivalent barrels per day in the second quarter.
  • Natural gas volumes were impacted by lower seasonal demand in Europe, deliberate near-term shifting of investments in U.S. unconventionals from gas to liquids and downtime in LNG operations, notably in Qatar.
  • Production at Papua New Guinea returned to normal operations in April and reached record daily LNG production rates in June. Second quarter volume loss associated with the earthquake recovery was 17,000 oil-equivalent barrels per day.
  • Scheduled maintenance activities were undertaken to support operational integrity, largely in Canada at Syncrude, Cold Lake and Kearl, impacting volumes and expenses in second quarter.

Downstream:

  • Global refining margins strengthened during the quarter due to higher industry refinery maintenance activity and increased seasonal petroleum product demand.
  • Overall throughput and earnings were impacted by heavy turnaround and maintenance activities during the quarter. Planned turnarounds were successfully completed at the refineries in Saudi Arabia, Port-Jérȏme, France, Baytown and Beaumont, Texas, and Alberta, Canada. Unplanned maintenance, a majority of which was carried-in from the first quarter, was largely completed during the quarter.
  • Growth in higher-value sales of retail fuels in the U.S., Belgium, the Netherlands and Luxembourg, combined with record quarterly sales of Mobil 1 lubricants in the U.S. and China, resulted in improved earnings during the quarter.
  • Depreciation in the Euro and British pound relative to the U.S. dollar negatively impacted earnings.

Chemical:

  • ExxonMobil continued to make significant progress in growing the Chemical business. Second quarter sales were the highest since 2007, and new volumes in Singapore and the U.S. contributed more than 530,000 metric tons of sales during the quarter. This included an additional 145,000 metric tons of high-performance products as the company continued to strengthen its leading position in this market.
  • Chemical margins weakened during the quarter as higher feed and energy costs outpaced stronger realizations.

Strengthening the Portfolio

  • ExxonMobil announced its eighth oil discovery offshore Guyana at the Longtail-1 well, creating the potential for additional resource development in the southeast area of the Stabroek Block. ExxonMobil encountered approximately 256 feet (78 meters) of high-quality, oil-bearing sandstone.
  • The company continued to rapidly advance the Liza Phase 1 project with the start of development drilling offshore Guyana. Development drilling began in May for the first of 17 wells planned for Phase 1, laying the foundation for production startup in 2020. The company and its co-venturers have so far discovered estimated recoverable resources of more than 4 billion oil-equivalent barrels on the Stabroek Block.
  • ExxonMobil completed the purchase of half of Equinor ASA’s interest in the BM-S-8 block offshore Brazil, which contains part of the pre-salt Carcara oil field. Production from the field is expected to start in 2023-2024. The company also increased its holdings in Brazil’s pre-salt basins after winning the Uirapuru exploration block with co-venturers Equinor ASA and Petrogal Brasil SA during Brazil’s fourth pre-salt bid round. ExxonMobil now has interests in 25 blocks offshore Brazil.
  • Qatar Petroleum agreed to partner with ExxonMobil by acquiring a 30 percent interest in two ExxonMobil affiliates, ExxonMobil Exploration Argentina SRL and Mobil Argentina SA, which hold interests in the Vaca Muerta unconventional shale oil and gas plays in Neuquén Province, Argentina. This agreement expands the successful partnership with Qatar Petroleum, and underscores the commitment to develop Argentina’s resources to further support domestic production.
  • ExxonMobil and Eni SpA announced that marketing efforts are underway for the Rovuma LNG project, which will produce, liquefy and sell natural gas from the Area 4 block offshore Mozambique. The company is in active negotiations on binding sales and purchase agreements for Rovuma LNG.

Investing for Growth

  • The company started production of hydrogenated hydrocarbon resin and halobutyl rubber at its integrated manufacturing complex in Singapore. The new resins plant is the world’s largest with a capacity of 90,000 metric tons per year, and the new 140,000-metric-ton-per-year butyl plant will produce premium halobutyl rubber used by manufacturers for tires that better maintain inflation and improve fuel economy.
  • ExxonMobil acquired PT Federal Karyatama, one of Indonesia’s largest manufacturers and marketers of motorcycle lubricants, which expands the company’s position in an important international market. The acquisition includes the Federal Oil brand and a 700,000-barrel-per-year blending plant in Cilegon, Indonesia.
  • ExxonMobil and SABIC announced the creation of a new joint venture to advance development of the Gulf Coast Growth Ventures project, a 1.8-million-metric-ton-per-year ethane cracker currently planned for construction in San Patricio County, Texas. The facility will also include a monoethylene glycol unit and two polyethylene units. Construction of the project is pending completion of the environmental permitting process. The plant is expected to be operational in the 2021-2022 timeframe.
  • ExxonMobil and Plains All American Pipeline LP have signed a letter of intent to pursue a joint venture to construct a pipeline system to transport crude oil and condensate from multiple locations in the U.S. Permian Basin to the U.S. Gulf Coast. The proposed common carrier pipeline system would be designed to ship more than 1 million barrels of crude oil and condensate per day, providing a safe, efficient and cost effective option to transport ExxonMobil and other third-party production to market destinations in Texas.

Advancing Innovative Technologies and Products

  • ExxonMobil announced it is progressing a multi-billion dollar project at its integrated manufacturing facility in Singapore to expand lubricant basestocks production to meet growing demand. The company plans to apply proprietary technologies to convert heavy by-products to high-quality basestocks designed to help blenders achieve greater formulation flexibility and meet future lubricant performance expectations. Project startup is anticipated in 2023.
  • ExxonMobil announced greenhouse gas reduction measures that are expected to lead to significant improvements in emissions performance by 2020, including a 15 percent decrease in methane emissions and a 25 percent reduction in flaring compared with 2016. The company also announced its intention to improve its industry-leading energy efficiency in refining and chemical manufacturing facilities. Since 2000, ExxonMobil has spent more than $9 billion on lower-emission energy solutions such as cogeneration, flare reduction, energy efficiency, biofuels, carbon capture and storage and other technologies.
Earnings and Volume Summary
Millions of Dollars 2Q 2Q
(unless noted) 2018 2017 Change Comments
Upstream
U.S. 439 (183) +622 Higher liquids prices and increased liquids volumes, partially offset by higher expenses
Non-U.S. 2,601 1,367 +1,234 Higher prices, partially offset by lower volumes and higher expenses reflecting increased maintenance activity
Total 3,040 1,184 +1,856 Prices +$2,380, downtime / maintenance

-$230, lower volumes due to entitlements

-$120, other -$170 including higher exploration and production expenses

Production (koebd) 3,647 3,922 -275 Liquids -57 kbd: net liquids growth of 25 kbd more than offset by divestments, lower entitlements and scheduled maintenance

 

Gas -1,307 mcfd: decline largely in U.S. aligned with value focus, higher downtime, lower entitlements and divestments

Downstream
U.S. 695 347 +348 Higher margins capturing crude differentials, sales growth, partially offset by downtime / maintenance
Non-U.S. 29 1,038 -1,009 Sales growth, more than offset by lower margins, downtime / maintenance, unfavorable foreign exchange impacts and lower divestment gains
Total 724 1,385 -661 Margins +$260, sales +$100, downtime / maintenance -$620, unfavorable foreign exchange impacts -$240, lower divestment gains -$130
Petroleum Product Sales (kbd) 5,502 5,558 -56
Chemical
U.S. 453 481 -28 Volume growth, more than offset by higher expenses
Non-U.S. 437 504 -67 Volume growth, more than offset by lower margins
Total 890 985 -95 Volume growth +$120, margins -$210, other

-$10

Prime Product Sales (kt) 6,852 6,120 +732 Project growth and acquisitions
Corporate and financing (704) (204) -500 Absence of favorable tax items, lower U.S. tax rate and higher pension-related costs; in line with expectations

 

Earnings and Volume Summary
Millions of Dollars 2Q 1Q
(unless noted) 2018 2018 Change Comments
Upstream
U.S. 439 429 +10 Stronger liquids prices and higher liquids volumes, largely offset by higher expenses and lower gas prices
Non-U.S. 2,601 3,068 -467 Higher liquids prices, more than offset by absence of the Scarborough sale (-$366), downtime / maintenance and lower seasonal volumes
Total 3,040 3,497 -457 Higher prices +$540, lower divestment gains

-$420, downtime / maintenance -$210, lower volumes due to seasonal demand -$180, other -$190

Production (koebd) 3,647 3,889 -242 Liquids -4 kbd: net liquids growth of +50 kbd, more than offset by scheduled downtime and divestment impacts

 

Gas -1,425 mcfd: lower seasonal demand

Downstream
U.S. 695 319 +376 Higher margins and sales growth, partially offset by downtime / maintenance
Non-U.S. 29 621 -592 Higher margins and sales growth, more than offset by downtime / maintenance and unfavorable foreign exchange impacts
Total 724 940 -216 Higher margins +$630, sales +$50, downtime / maintenance -$620, unfavorable foreign exchange impacts -$210, other -$70
Petroleum Product Sales (kbd) 5,502 5,432 +70
Chemical
U.S. 453 503 -50 Volume growth, more than offset by higher expenses and lower margins
Non-U.S. 437 508 -71 Lower expenses, more than offset by unfavorable foreign exchange impacts and weaker margins
Total 890 1,011 -121 Volume growth +$50, lower margins -$90, unfavorable foreign exchange impacts -$50, other -$30
Prime Product Sales (kt) 6,852 6,668 +184 Project growth and acquisitions
Corporate and financing (704) (798) +94 Favorable tax items and lower financing costs

 

Earnings and Volume Summary
Millions of Dollars YTD YTD
(unless noted) 2018 2017 Change Comments
Upstream
U.S. 868 (201) +1,069 Higher liquids prices, higher liquids volumes and favorable mix, partially offset by higher expenses
Non-U.S. 5,669 3,637 +2,032 Higher prices and the gain on the Scarborough sale ($366), partially offset by lower volumes and higher expenses
Total 6,537 3,436 +3,101 Prices +$3,830, downtime / maintenance

-$350, lower volumes due to entitlements

-$230, other -$150

Production (koebd) 3,768 4,036 -268 Liquids -87 kbd: growth in North America, more than offset by lower volumes from divestments, entitlements, and decline

 

Gas -1,090 mcfd: decline in U.S. aligned with value focus, higher downtime, lower entitlements and divestments

Downstream
U.S. 1,014 639 +375 Higher margins and sales growth, partially offset by downtime / maintenance
Non-U.S. 650 1,862 -1,212 Sales growth, more than offset by weaker margins, downtime / maintenance, unfavorable foreign exchange impacts and lower divestment gains
Total 1,664 2,501 -837 Margins +$230, sales +$120, downtime / maintenance -$670, unfavorable foreign exchange impacts -$220, lower divestment gains -$220, other -$80
Petroleum Product Sales (kbd) 5,467 5,477 -10
Chemical
U.S. 956 1,010 -54 Volume growth, more than offset by higher expenses
Non-U.S. 945 1,146 -201 Volume growth, more than offset by lower margins
Total 1,901 2,156 -255 Volume growth +$220, margins -$460, other

-$20

Prime Product Sales (kt) 13,520 12,192 +1,328 Project growth and acquisitions
Corporate and financing (1,502) (733) -769 Absence of favorable tax items, lower U.S. tax rate, and higher pension and financing related costs

 

Cash Flow from Operations and Asset Sales
Millions of Dollars 2Q
2018 Comments
Net income including noncontrolling interests 3,986 Includes $36 million for noncontrolling interests
Depreciation 4,589
Changes in working capital (1,333) Mainly driven by inventory and seasonality in payables
Other 538 Includes pension fund impacts
Cash Flow from Operations (U.S. GAAP) 7,780
Asset sales 307
Cash Flow from Operations and Asset Sales 8,087
Millions of Dollars YTD
2018 Comments
Net income including noncontrolling interests 8,769 Includes $169 million for noncontrolling interests
Depreciation 9,059
Changes in working capital (982) Mainly driven by inventory build
Other (547) Timing of equity company dividends partly offset by pension fund impacts
Cash Flow from Operations (U.S. GAAP) 16,299
Asset sales 1,748
Cash Flow from Operations and Asset Sales 18,047

First Half 2018 Financial Updates

During the first half of 2018, Exxon Mobil Corporation purchased 5 million shares of its common stock for the treasury at a gross cost of $425 million. These shares were acquired to offset dilution in conjunction with the company’s benefit plans and programs. The corporation will continue to acquire shares to offset dilution in conjunction with its benefit plans and programs, but does not currently plan on making purchases to reduce shares outstanding.

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