|Metric||Beat/Miss/Match||Reported Value||Analysts' Prediction|
|Upstream Segment Net Income||Miss||$2.6B||$2.7B|
Source: Predictions based on analysts' consensus from Visible Alpha
- Exxon's upstream segment net income was lower than what analysts expected.
- The upstream segment engages in the exploration, development, and production of crude oil and natural gas.
- First quarter results benefitted from higher commodity prices.
Exxon (XOM) Financial Results: Analysis
ExxonMobil Corporation (XOM) reported Q1 FY 2021 earnings that beat analyst expectations. Adjusted earnings per share (EPS) narrowly beat forecasts, rising 22.6% year over year (YOY). Revenue surpassed analyst estimates by a significant margin and was up 5.3% YOY, ending a streak of eight straight quarters of revenue declines. Exxon's upstream segment net income came in at $2.6 billion for the quarter, narrowly missing expectations. The company's shares were down about 0.5% in pre-market trading. Over the past year, Exxon's shares have provided a total return of 43.3%, well above the S&P 500's total return of 34.5%.
XOM Upstream Segment
Upstream operations involve the exploration and development of oil and natural gas properties as well as the extraction and production of crude oil and natural gas. Upstream may be contrasted with downstream operations, which refer to the production of refined oil products and comprise another one of Exxon's main business segments. Exxon also operates a chemical segment, which uses crude oil and natural gas to produce petrochemical feedstocks that are used in making medical equipment, electronics, clothing, vitamin capsules, tires, and many other products.
The chemical segment, which uses oil as an input, benefitted from lower oil prices last year and helped to offset the declines in Exxon's upstream and downstream segments, both of which depend on demand for crude oil and petrochemical products. But with oil prices climbing above $50 per barrel earlier this year, the attention is shifting to Exxon's upstream segment.
Upstream segment net income in Q1 FY 2021 rose 376.5% off the year-ago quarter's net income of $536 million, which was severely depressed due to the impact of the COVID-19 pandemic on global demand for oil. Chairman and CEO Darren Woods cited higher commodity prices as one factor contributing to the company's strong first quarter results. Total production volumes were up 98,000 oil-equivalent barrels from the final quarter of FY 2020. Exxon noted that the severe winter storm in Texas during the quarter resulted in lower liquids volumes. The winter storm reduced the company's first quarter earnings across all its businesses by nearly $600 million.
XOM Climate Initiatives
Exxon highlighted the creation of its new Low Carbon Solutions business, which it first announced earlier in the first quarter. The initial focus of the business is on carbon capture and storage (CSS), the process of capturing carbon emissions and storing them underground. Exxon said the technology is considered essential for helping society reach net-zero carbon emissions. The company also announced several other initiatives aimed at reducing emissions, including a new agreement with Porsche to test advanced biofuels as well as renewable, lower-carbon eFuels.
Exxon announced the election of three new board members: Michael Angelakis, Jeffrey Ubben, and Wan Zulkiflee. Ubben is an activist investor and a proponent of environmental, social, and governance (ESG) standards.
Exxon did not offer any forward earnings or revenue guidance in its earnings press release. Exxon's next earnings report (for Q2 FY 2021) is estimated to be released on July 29, 2021.
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