- Upstream segment net income came in below analysts' expectations.
- 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.
- Exxon recorded a $3.4 billion after-tax charge related to its Sakhalin-1 operations in Russia.
|ExxonMobil Earnings Results|
|Metric||Beat/Miss/Match||Reported Value||Analysts' Prediction|
|Upstream Segment Net Income||Miss||$4.5B||$8.0B|
Source: Predictions based on analysts' consensus from Visible Alpha
Exxon (XOM) Financial Results: Analysis
Exxon Mobil Corporation (XOM) reported Q1 FY 2022 earnings that came in well below consensus estimates. Earnings per share (EPS) missed analyst estimates by a wide margin but doubled from the year-ago quarter. The company recorded a $3.4 billion after-tax charge related to its planned exit from its Sakhalin-1 operation in Russia, which weighed on earnings. Exxon's revenue also missed expectations but was up 53.0% year over year (YOY) as it rebounded off of last year's pandemic-depressed levels. The upstream segment's net income was also much lower than analysts forecast.
The company's shares fell more than 1% in pre-market trading. Over the past year, Exxon's shares have provided a total return of 58.4%, well above the S&P 500's total return of 2.5%.
XOM Upstream Segment Net Income
Exxon's upstream segment posted net income of $4.5 billion, down 26.2% compared to the year-ago quarter. The $3.4 billion after-tax charge related to Sakhalin-1 mostly affected Exxon's upstream segment.
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 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 during the early stages of the pandemic. But oil prices sharply rebounded last year amid the economic recovery and have moved even higher this year amid the war in Ukraine. Oil prices have shot past $100 per barrel this year, the first time that has happened since 2014.
XOM Share Repurchase Program
Exxon noted that it has increased its share repurchase program. Previously, the company was authorized to repurchase up to $10 billion worth of its shares. It now expects to repurchase up to a total of $30 billion through 2023.
Exxon's next earnings report (for Q2 FY 2022) is expected to be released on July 29, 2022.
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ExxonMobil Corp. "ExxonMobil Announces First-Quarter 2022 Results," Page 4.
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CNBC. "Oil Surges Above $100 for the First Time Since 2014, Before Paring Gains."
ExxonMobil Corp. "ExxonMobil Announces First-Quarter 2022 Results," Page 2.
Investing.com. "Exxon Mobil Corp (XOM): Financials—Earnings."