How ExxonMobil Makes Money

Downstream business comprises the biggest share of revenue

ExxonMobil Corp. (XOM) is one of the biggest oil companies in the world. Its primary business is the exploration for, and production of, crude oil and natural gas, as well as the manufacture, trade, and transportation of crude oil, natural gas, petroleum products, and petrochemicals. It operates both upstream and downstream oil and gas segments, and a chemicals segment.

ExxonMobil operates within the highly competitive energy and petrochemicals industries. It faces competition from both private and state-owned companies around the world. Some of ExxonMobil's main competitors include Netherlands-based Royal Dutch Shell PLC (SHEL), Britain-based BP PLC (BP), France-based Total SE (TOT), Chevron Corp. (CVX), and Saudi Arabia-based Saudi Arabian Oil Co. (TADAWUL:2222), better known as Saudi Aramco.

Key Takeaways

  • ExxonMobil explores for, and produces, crude oil and natural gas, as well as petrochemicals and other related products.
  • The Downstream segment generates the most revenue, but the Upstream segment generates the most profit.
  • ExxonMobil said it would discontinue operations at its Sakhalin-1 project in Russia and make no new investments in the country in response to Russia's invasion of Ukraine.
  • ExxonMobil recently initiated share repurchases associated with its previously announced buyback program of up to $10 billion.

ExxonMobil's Financials

ExxonMobil announced in early February financial results for its 2021 fiscal year (FY), which ended Dec. 31, 2021. Net income attributable to the company's shareholders was $23.0 billion, a significant improvement from the net loss of $22.4 billion in the previous year, which was adversely impacted by the shock from the COVID-19 pandemic. Revenue for the year rose 57.4% to $285.6 billion, exhibiting a strong recovery from the previous year's pandemic-depressed lows.

ExxonMobil's revenue is comprised of sales and other operating revenue (97%), income from equity affiliates (2%), and other income (1%). The U.S. generated 38% of total sales and other operating revenue, while countries in the rest of the world generated 62% of the total, led by Canada, Singapore, and the U.K.

ExxonMobil's Business Segments

ExxonMobil operates through three principal business segments:

  • Upstream
  • Downstream
  • Chemical

It provides a breakdown of sales and other operating revenue, and of earnings for each of these segments. The company also provides results for a corporate and financing segment, which carries out general administrative support functions, financing, and insurance activities to support the operating segments and the company's low carbon solutions business. This segment generated an immaterial amount of revenue and a loss of $2.6 billion. The corporate and financing segment and any negative amounts in the segment breakdowns below are not included in the pie charts above.

Upstream

ExxonMobil operates worldwide producing millions of oil-equivalent barrels of net oil and natural gas per day. The company's upstream business includes exploration, development, production, and marketing. It is organized into five separate value chains:

  • Deepwater
  • Unconventional
  • LNG
  • Heavy oil
  • Conventional

The Upstream segment posted earnings of $15.8 billion in FY 2021, a dramatic turnaround from the loss of $20.0 billion reported in FY 2020. The segment accounted for more than 61% of total earnings across all segments. Sales and other operating revenue for the segment rose 49.8% to $21.8 billion, comprising about 8% of the total for the year.

Downstream

ExxonMobil is a leading manufacturer of fuels and lubricants and sells millions of barrels per day of petroleum products. Its Downstream segment is comprised of a portfolio of well-known brands and high-quality products, such as its Mobil 1 synthetic lubricant.

The Downstream segment posted earnings of $2.1 billion in FY 2021, a significant improvement from the loss of $1.1 billion in the previous year. The segment accounted for about 8% of total earnings across all segments. The segment generates the majority of the company's sales and other operating revenue at nearly 79% of the total. Sales and other operating revenue rose 54.7% to $218.0 billion in FY 2020.

Chemical

ExxonMobil is one of the world's largest chemical producers, selling millions of tonnes each year. The Chemical segment is comprised of a broad product portfolio that includes olefins, polyolefins, aromatics, and a variety of other petrochemicals. The segment is closely integrated with the company's Upstream and Downstream businesses.

The Chemical segment posted earnings of $7.8 billion in FY 2021, up 297.1% from the previous year. The segment accounted for over 30% of total earnings across all segments. Sales and other operating revenue for the segment grew 59.6% during the year to $36.9 billion, comprising about 13% of the total.

ExxonMobil's Recent Developments

On March 1, 2022, ExxonMobil announced that it would begin the process of discontinuing its operations at the Sakhalin-1 project in Russia in response to Russia's invasion of Ukraine. The company said that it was also working on steps to exit the project and would not be making any new investments in Russia.

On Feb. 1, 2022, the company announced in its earnings press release for the fourth quarter and FY 2021 that it had initiated share repurchases in the first quarter of FY 2022 associated with its previously announced buyback program of up to $10 billion over one to two years.

Article Sources
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  1. Exxon Mobil Corp. "Form 10-K for the fiscal year ended December 31, 2021," Page 1.

  2. Exxon Mobil Corp. "Form 10-K for the fiscal year ended December 31, 2021," Page 42.

  3. Exxon Mobil Corp. "Form 10-K for the fiscal year ended December 31, 2021," Page 6.

  4. Exxon Mobil Corp. "Form 10-K for the fiscal year ended December 31, 2021," Page 70.

  5. Exxon Mobil Corp. "Form 10-K for the fiscal year ended December 31, 2021," Page 105.

  6. Exxon Mobil Corp. "Form 10-K for the fiscal year ended December 31, 2021," Page 55.

  7. Exxon Mobil Corp. "Form 10-K for the fiscal year ended December 31, 2021," Page 104.

  8. Exxon Mobil Corp. "2020 Annual Report," Page XII.

  9. Exxon Mobil Corp. "2020 Annual Report," Page XIV.

  10. Exxon Mobil Corp. "Form 10-K for the fiscal year ended December 31, 2021," Page 27.

  11. Exxon Mobil Corp. "2020 Annual Report," Page XV.

  12. ExxonMobil. "ExxonMobil to discontinue operations at Sakhalin-1, make no new investments in Russia."

  13. Exxon Mobil Corp. "ExxonMobil earns $23 billion in 2021, initiates $10 billion share repurchase program."

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