Best Quarterly Results Since 2017 Posted By Exxon; Will Resume Share Buybacks

Exxon Mobil announced on Friday that it will resume a share repurchase program next year, citing stronger earnings prospects following quarterly results that exceeded analysts’ expectations.

The world’s largest oil producer reported an adjusted profit of $1.58 per share, topping the Refinitiv expectation by two cents, helped by oil and gas prices that have more than quadrupled in the previous year.

The greatest refining profit in at least two years, skyrocketing natural gas costs, and energy shortages propelled oil to a three-year high in the third quarter. Crude oil prices have risen to a near seven-year high.

In early trade, the stock was up 1.4 percent to $65.24.

In prepared remarks, Chief Executive Darren Woods stated that all three of the company’s divisions generated stronger returns against the background of an improving global economy.

Its refining earnings were particularly impressive, having recovered to pre-pandemic levels after four quarters of deficits.

On the strength of worldwide demand, oil and gas profits jumped to about $4 billion, compared to a $383 million loss a year before. Profits in the chemical industry fell from last quarter’s peak, but more than quadrupled from the same time the previous year.

“These factors contributed to significant free cash flow during the quarter, which enabled us to further reduce debt and more than cover the dividend,” the company said in prepared remarks.

Exxon announced plans to spend $15 billion between 2022 and 2027 to reduce carbon emissions, a day after Exxon’s Woods testified before Congress to address the company’s earlier denial of global warming.

Exxon said its strong cash flow expectation will allow it to pay the carbon reductions and begin share buybacks next year, as part of a commitment to spend up to $10 billion on repurchases through 2023.

Exxon curtailed share repurchases in 2016 because to poor results, stating that it will only buy back shares to counter dilution from executive compensation schemes rather than giving cash to shareholders.

In the third quarter, the oil major earned $6.75 billion, or $1.57 per share, compared to a loss of $680 million, or 15 cents per share, in the same period the previous year.

Higher oil and gas volumes, increased European seasonal gas demand, and the $1 billion sale of its UK North Sea assets are expected to help the company’s current quarter.

Exxon’s stock has risen more than 50% this year as earnings have recovered from last year’s catastrophic loss, but it remains below where it traded in early 2020. The corporation was able to repay around $11 billion in debt taken on last year to support its dividend thanks to this year’s performance.

“Results shows the company’s renewed confidence in its business by being able to spend significantly more next year, spend more on low carbon solutions while raising the dividend and starting to buy back stock”, said Anish Kapadia, director of energy at Palsies Advisors consultancy.

(Adapted from Investing.com)



Categories: Economy & Finance, Entrepreneurship, Regulations & Legal, Strategy, Sustainability

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