Exxon Mobil posted mixed fourth-quarter financial results Tuesday, beating earnings estimates but missing on revenue views. However, the energy giant, fueled by a "favorable market," reported record profits in 2022 and its highest annual revenue since 2013. The White House once again criticized energy companies late Tuesday. Exxon Mobil stock edged lower Wednesday.
In 2022, as the U.S. economy recovered from the Covid pandemic, Russia invaded Ukraine in February, sending oil, gasoline and natural gas prices soaring. This drove Exxon Mobil and Chevronand other energy stocks to the head of the stock market, with the companies posting record profits.
Exxon Mobil has averaged 185% EPS growth rate over the last four quarters. In the third quarter, Exxon Mobil and Chevron reported combined net income of more than $30 billion in the third quarter.
Tuesday evening, after Exxon record profit and its highest revenue in nearly a decade, President Joe Biden tweeted that energy companies are choosing to return money to investors instead of upping oil production.
"The only thing stopping Big Oil from increasing production is their decision to pay shareholders billions instead of reinvesting profits," Biden said.
"I'm doing my part to lower prices, it's time Big Oil did theirs," the president added.
This statement follows Chevron missed on earnings views while topping revenue estimates late last week. CVX had announced earlier it is launching a massive $75 billion share buyback and raising its dividend.
Throughout 2022, Biden criticized Exxon Mobil, Chevron and several other large producers for choosing to focus on returning money to shareholders instead of spending to increase production.
Late Friday, White House assistant press secretary Abdullah Hasan tweeted that "companies clearly have everything they need — record profits and thousands of approved permits — to increase production."
"The only thing getting in the way is their own decision to keep plowing windfall profits into the pockets of executives," Hassan wrote.
XOM Shares: Earnings
Estimates: Analysts predicted earnings growing 60% to $3.29 per share, and target a 15% sales advance to $97.35 billion. For the full year, Wall Street predicted EPS rising 158% to $13.92. That would top the prior record of $8.47 in 2008. Revenue forecasts see a 50% jump, to $425.94 billion.
Earnings: Exxon Mobil reported EPS growing 66% to $3.40 while revenue shot up 12% to $95.43. In 2022, Exxon Mobil earnings skyrocketed 160% to $14.06 per share. Sales edged up 45% to $413.68 billion.
The energy giant's free cash flow came in at $62.1 billion in 2022, an increase of nearly $23 billion. Exxon Mobil returned a total of $29.8 billion to shareholders through dividends and buy backs. The company added that it will return up to $35 billion to shareholders in 2023.
Exxon Mobil CEO Darren Woods said in a statement Tuesday that the company "clearly benefited from a favorable market" in 2022.
"Our plan for 2023 calls for further progress on our strategic objectives, which include leading the industry in safety, operating, and financial performance," Woods said.
The Five-Year Plan
Exxon Mobil had already announced its five-year corporate plan in early December, reporting it expects to maintain its annual capital expenditures at $20 billion to $25 billion through 2027. The oil giant is also planning to increase its share buyback program to $50 billion through 2024.
Investors will also have an eye on the company's cash balance. Exxon reported $29.7 billion at the end of Q4, after having $30.4 billion at the end of Q3, up almost 350% over the $6.8 billion reported at the start of the year.
Along with keeping its annual capital expenditures level through 2027, Exxon Mobil also plans to grow its carbon emissions-cutting investments to around $17 billion through the same period. This represents nearly a 15% increase from current levels. Exxon's capital investments in 2023 will be in the range of $23 billion-$25 billion.
The company projects earnings and cash flow will double by 2027, compared to 2019. Full year earnings in 2019 were $2.25 per share. Cash flow from operations in 2019 came in at $29.7 billion.
The Oil Market
Ministers from the Organization of Petroleum Exporting Countries and its allies, including Russia (OPEC+) met on Wednesday. The Joint Ministerial Monitoring Committee reviews the oil market but has not authority to change production quotas. The ministers did not make any recommendations to change current production policy.
U.S. crude oil futures skidded 3.1% to $76.41 per barrel Wednesday. Last week, U.S. crude had regained support above its 50-day moving average line, after settling above that line early last week for the first time since mid-November.
This followed optimistic oil demand forecasts from both the International Energy Agency (IEA) and OPEC.
The IEA estimates the recent easing of Covid restrictions in China will boost 2023 global oil demand to record highs. That news sent U.S. benchmark oil and U.K. benchmark Brent crude to their highest levels since early December. Estimates from the Paris, France-based IEA forecast China's reopening will drive global oil demand to a record high 101.7 million barrels per day (bpd) in 2023, up by 1.9 million bpd from 2022.
Exxon Mobil Shares
Exxon Mobil stock advanced early before falling 1% to 114.74 during market trade Wednesday. On Tuesday, shares dropped 1.8% early before advancing 2.3% to 116.21. The stock has formed a flat base and is around 1% up from a 114.76 buy point. Shares have been tracking with the S&P 500 for much of January.
ExxonMobil stock ranks 3rd in the Oil & Gas-Integrated industry group. XOM shares have an 97 Composite Rating out of 99. The stock has an 90 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for share-price movement. The EPS rating is 80.
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