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ExxonMobil Third Quarter 2022 Results

Share Print Bookmark    |    Friday,October 28,2022

Exxon Mobil Corp. reported its third quarter 2022 results.

Exxon announced third-quarter 2022 earnings of $19.7 billion, or $4.68 per share assuming dilution. Third-quarter results included net favorable identified items of nearly $1 billion associated with the completion of the XTO Energy Canada and Romania Upstream affiliate divestments and one-time benefits from tax and other reserve adjustments, partly offset by impairments. Capital and exploration expenditures were $5.7 billion in the third quarter, bringing year-to-date 2022 investments to $15.2 billion, on track with full-year guidance of $21 billion to $24 billion.

CEO Darren Woods commented: "Our strong third-quarter results reflect the hard work of our people to invest in and build businesses critical to meeting the demand we see today. We all understand how important our role is in producing the energy and products the world needs, and third-quarter results reflect our commitment to that objective."

"The investments we've made, even through the pandemic, enabled us to increase production to address the needs of consumers. Rigorous cost control and growth of higher-margin petroleum and chemical products also contributed to earnings and cash flow growth in the quarter. At the same time, we are expanding our Low Carbon Solutions business with the signing of the largest-of-its-kind customer contract to capture and permanently store carbon dioxide, demonstrating our ability to offer competitive emission-reduction services to large industrial customers around the world," concluded Woods.

Financial Highlights

• Third-quarter earnings were $19.7 billion compared with $17.9 billion in the second quarter of 2022. Excluding identified items, earnings of $18.7 billion were up $1.1 billion versus the prior quarter as higher natural gas realizations, record throughput in Energy Products, and continued cost control, were partially offset by lower crude realizations and moderating industry refining margins.

• Cash increased by $11.6 billion in the third quarter with free cash flow of $22 billion. Shareholder distributions were $8.2 billion for the quarter, including $3.7 billion of dividends and $4.5 billion of share repurchases, bringing year-to-date repurchases to $10.5 billion, consistent with the company's plan to repurchase up to $30 billion of shares through 2023.

• The Corporation declared a fourth-quarter dividend of $0.91 per share, payable on December 9th. The increase of $0.03 per share reflects confidence in our strategy, businesses performance, and financial strength, and marks 40 consecutive years of annual dividend growth. A reliable and growing dividend shows the company's commitment to return profits to shareholders, of which approximately 40% are individual investors.

• Net-debt-to-capital ratio improved to about 7%, reflecting a period-end cash balance of $30.5 billion. The debt-to-capital ratio is now 19%, just below the low-end of the company's target range.

• Asset sales and divestments resulted in $2.7 billion of cash proceeds during the quarter, bringing year-to-date proceeds to nearly $4 billion.

Upstream Highlights

• Upstream third-quarter 2022 earnings were $12.4 billion compared to $11.4 billion in the second quarter. Excluding identified items, earnings were $11.8 billion, an increase of $0.8 billion from the previous quarter. Gas realizations increased 22% on European supply concerns and efforts to build inventory ahead of winter, more than offsetting the impact of decreasing crude realizations, which were down 12% on modest supply increases. Earnings also benefited from higher volumes and improved mix from growth in the company's advantaged assets in Guyana and the Permian.
• Oil-equivalent production in the third quarter was 3.7 million barrels per day. Absent divestments and the Russia exit impact, sequential quarter volume growth was more than 50,000 oil-equivalent barrels per day.
• The Permian delivered record production in the quarter of nearly 560,000 oil-equivalent barrels a day.
• Offshore Guyana quarterly average gross production increased to nearly 360,000 oil-equivalent barrels per day, with Liza Phase 1 and 2 production exceeding design capacity by more than 15,000 barrels per day. In addition, two new discoveries were announced in the Stabroek block, adding to the company's extensive portfolio of development opportunities.
• Earnings excluding identified items increased $7.9 billion relative to the third quarter of 2021. This improvement was driven by a 172% increase in natural gas realizations and an increase of nearly 40% in crude realizations. Oil-equivalent production grew approximately 50,000 barrels per day despite a reduction of 75,000 barrels per day from divestments.
• Year-to-date earnings excluding identified items were $30.7 billion, an increase of $21 billion versus the first nine months of 2021 on higher crude and natural gas realizations. Excluding impacts from divestments, oil-equivalent production grew nearly 90,000 barrels per day.
• Earlier this month, first LNG production was achieved from Mozambique's Coral South Floating LNG, contributing new supply amid growing global demand.
• The company completed the sales of XTO Energy Canada and the Romania Upstream affiliate, resulting in earnings of $0.6 billion and more than $2 billion in cash proceeds during the quarter. In addition, an agreement was announced with Green Gate Resources E, LLC, for the sale of ExxonMobil's interest in the Aera oil-production operation in California, which is expected to close in the fourth quarter.

Leading the Drive to Net Zero

Carbon Capture and Storage

• ExxonMobil and CF Industries, a leading global manufacturer of hydrogen and nitrogen products, have entered into the largest-of-its-kind commercial agreement to capture and permanently store up to 2 million metric tons of carbon dioxide (CO2) emissions annually from CF Industries' manufacturing complex in Louisiana. The project, which is scheduled to start up in early 2025, supports Louisiana's objective of net zero CO2 emissions by 2050.
  
  As part of the project, ExxonMobil signed an agreement with EnLink Midstream to use EnLink's transportation network to deliver CO2 to secure, permanent, underground geologic storage. The 2 million metric tons of captured emissions is the equivalent of replacing approximately 700,000 gasoline-powered cars with electric vehicles.
  
  This landmark project represents large-scale, real-world progress on the journey to decarbonize the global economy. Carbon capture and storage is a safe, proven technology that can enable some of the highest-emitting sectors to meaningfully reduce their emissions, and the company expects this technology to play an important role in the energy transition.
  
  Constructive policy such as the U.S. Inflation Reduction Act will provide support to carbon capture and storage projects like this, promoting the development of low-carbon energy in the United States. Carbon capture and sequestration provisions provide incentives that make CO2 capture more economic, including for less concentrated CO2 streams and for those streams in areas without close proximity to permanent storage.

• The Bureau of Land Management approved a proposal to sequester carbon deep under federal land in Lincoln and Sweetwater counties in Wyoming. This is the first project of its kind to be approved on land managed by the Bureau of Land Management and, once completed, will provide the opportunity for permanent underground storage of CO2 that is generated as a by-product of helium and natural gas production at the ExxonMobil Shute Creek Plant.

Biofuels and Hydrogen

• Imperial Oil Ltd., an ExxonMobil majority-owned affiliate, announced a long-term contract through which Air Products will supply lower-carbon hydrogen by pipeline from its hydrogen plant, currently under construction in Edmonton, to Imperial's Strathcona refinery. The lower-carbon hydrogen will be used in production of renewable diesel that substantially reduces greenhouse gas emissions relative to conventional production. The Strathcona refinery project is expected to produce approximately 20,000 barrels per day of renewable diesel, which could reduce emissions in the Canadian transportation sector by about 3 million metric tons per year, the equivalent to taking approximately 650,000 passenger vehicles off the road¹.

Energy Products

• Energy Products third-quarter 2022 earnings totaled $5.8 billion compared to $5.3 billion in the second quarter. Industry refining margins remained strong on high global diesel demand, yet declined 30% from second quarter levels due to higher refinery runs and flat U.S. gasoline demand. The impact of lower industry refining margins was partially offset by higher aromatics, marketing and trading margins. In addition, record throughput¹ on strong reliability, improved product yields, and lower turnaround activity also contributed to the earnings improvement.
• Earnings increased $5.3 billion compared to the third quarter of 2021 due to stronger industry refining margins, positive derivative mark-to-market effects and higher volumes.
• Year-to-date earnings of $10.9 billion compared to a loss of $1.2 billion in the same period last year, driven by stronger industry refining margins and increased volumes on strong reliability and lower scheduled maintenance.
• Third-quarter refining throughput was 4.2 million barrels per day, up 177,000 barrels from the second quarter. This reflects best ever quarterly refining throughput in North America and the highest globally since 2008¹.

Chemicals

• Chemical Products third-quarter 2022 earnings were $0.8 billion compared to $1.1 billion in the second quarter. Solid earnings reflected reliable operations and cost discipline, partially offsetting the negative impact on volumes and margins from bottom-of-cycle conditions in Asia Pacific and softening demand in Europe and North America, with regional pricing moving closer to global parity. Record quarterly sales volume for performance polyethylene helped upgrade product mix, which served as a partial offset to lower volumes.
• Earnings were $1.2 billion lower compared to third-quarter 2021 on weaker industry margins and lower sales, reflecting softening market conditions.
• Year-to-date earnings totaled $3.3 billion compared to $5.6 billion in the first nine months of 2021, driven by lower margins on rising feed and energy costs, higher project and planned maintenance expenses, and unfavorable foreign exchange effects.

Specialty Products

• Specialty Products third-quarter 2022 earnings were $0.8 billion compared with $0.4 billion in the second quarter. The strong quarterly performance was driven by improved margins reflecting tight market conditions, partly offset by lower sales from a reliability event resolved within the quarter.
• Compared to the same quarter last year, earnings declined $0.1 billion. Margins were robust, but down year-on-year reflecting a higher feed cost environment.
• Year-to-date earnings of $1.7 billion decreased from $2.1 billion in the same period last year, primarily due to lower margins on higher feed costs and energy prices, partly offset by higher sales.

Corporate

• Corporate and Financing reported net charges of $0.2 billion in the third quarter of 2022 compared to $0.3 billion in the second quarter. Excluding favorable identified items of $0.4 billion related to tax and other reserve adjustments, net charges were up $0.3 billion, reflecting the absence of the prior quarter's favorable one-time tax impacts.
• Net charges excluding identified items of $0.6 billion in the third quarter of 2022 were in line with the same quarter of 2021.
• Year-to-date net charges excluding identified items of $1.4 billion were down $0.6 billion from last year, mainly due to decreased pension-related expenses and lower financing costs.