Key Takeaways

  • Exxon's upstream segment net income came in above consensus estimates, rebounding sharply from the year-ago quarter's pandemic-depressed lows.
  • The upstream segment is involved in the exploration and development of oil and natural gas properties as well as the extraction and production of crude oil and natural gas. It benefits from higher oil prices.
  • Earnings and revenue continue to rebound as the global economy recovers from last year's pandemic-induced shock.
ExxonMobil Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
EPS Beat $1.10 $0.96
Revenue Beat $67.7B $61.6B
Upstream Segment Net Income Beat $3.2B $3.1B

Source: Predictions based on analysts' consensus from Visible Alpha

ExxonMobil (XOM) Financial Results: Analysis

ExxonMobil Corporation (XOM) reported Q2 FY 2021 earnings that beat analyst expectations. Earnings per share (EPS) came in at $1.10, reflecting a sharp turnaround from the year-ago quarter's loss per share of $0.26 and surpassing consensus estimates. It represents the second straight quarter of positive EPS after four consecutive quarters of losses per share through FY 2020. Revenue exceeded analyst estimates by a significant margin, rebounding sharply off of last year's pandemic-depressed low. Exxon's upstream segment net income narrowly beat expectations. The company's shares were basically flat in pre-market trading. Over the past year, Exxon's shares have provided a total return of 44.2%, above the S&P 500's total return of 35.6%.

XOM Upstream Segment Net Income

Exxon's upstream segment posted net income of $3.2 billion, marking the second straight quarter of positive net income after three consecutive quarters of net losses. The upstream segment is one of the company's three main business segments. Upstream operations are involved in 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 engages in midstream operations, such as the operation of pipelines and storage facilities.

Exxon's upstream segment benefits from high crude oil prices and suffers when oil prices plunge, as they did early last year in the early stages of the pandemic. But as the global economy has begun to recover, so too have oil prices. That is helping to boost earnings for upstream operations. "Positive momentum continued during the second quarter across all of our businesses as the global economic recovery increased demand for our products," said Chairman and CEO Darren Woods.

XOM Climate Initiatives

Exxon highlighted that it had recently signed a memorandum of understanding to take part in a major carbon capture and storage (CSS) project in Scotland. Earlier this year, the company announced the launch of a new Low Carbon Solutions business focused on CSS. Exxon also signed a memorandum of understanding to explore CO2 infrastructure in France, specifically using CSS technology to reduce carbon emissions. These announcements come following the recent election of three new board members with backgrounds in clean energy who are expected to push the oil major to increase efforts to reduce its carbon footprint.

Exxon's next earnings report (for Q3 FY 2021) is estimated to be released on Oct. 28, 2021.