Exxon Reports Better-Than-Expected Earnings in Q4

Exxon, the largest oil company in the United States, has announced better-than-expected earnings for the fourth quarter of the fiscal year. The company's stock has already risen by 1.8% in premarket trading, reaching $104.13.

Strong Performance in Q4

Exxon Mobil recorded adjusted earnings per share of $2.48, surpassing the consensus estimate on FactSet of $2.20. However, it is important to note that despite this positive outcome, the annual earnings for the year amounted to $36 billion, reflecting a significant 35% decrease compared to the record profits achieved in 2022.

Underlying Challenges

The decline in oil and gas prices, coupled with asset write-downs in California as mentioned in a January regulatory filing, have adversely affected Exxon's overall results. As a result, analysts predict a 35% year-over-year contraction in the company's fourth-quarter earnings.

Projections and Market Impact

In terms of projected figures, analysts anticipate that Exxon earned $2.20 per share from $90 billion in revenue for Q4, a decline from the $3.40 per share earned from $95 billion of revenue during the same period last year. It is worth noting that the stock price has already fallen around 14% below its previous record highs, indicating that the anticipated earnings decline has already been factored into the current valuation.

This is breaking news; stay tuned for more analysis on Exxon's earnings.

Exxon's Growth Plans and Investor Focus

Exxon investors are eagerly awaiting the company's growth plans, as Exxon predicts a doubling of earnings by 2027 compared to 2019 levels. However, there are a few uncertainties within this plan that investors are closely monitoring.

Acquisition Concerns

One significant aspect of Exxon's growth strategy is its acquisition of Pioneer Natural Resources, which would secure its position as the leading oil producer in the Permian Basin of Texas and New Mexico. However, the Federal Trade Commission has requested more information about the transaction, potentially leading to regulatory challenges.

Offshore Expansion in Guyana

Another key element of Exxon's growth plan involves a major production boost from offshore wells in Guyana, an oil-rich area believed to hold billions of barrels of oil. Unfortunately, Venezuelan President Nicolás Maduro has recently made claims that Venezuela owns some of the acreage off the coast of Guyana. This territorial dispute has sparked aggressive statements and military exercises by Venezuela.

While Exxon maintains that Maduro's claims have no impact on their plans for Guyana, investors may seek further clarification on the seriousness of this threat.

Dividend Pressure

In addition to growth plans and acquisition concerns, Exxon might face pressure to increase its dividend following Shell's announcement of a dividend hike. Currently, Exxon stock yields 3.7%.