Exxon reaps windfall of up to $2.6 billion from oil and gas rally
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Exxon Mobil also said expects sequentially higher profit from oil and gas production.
PHOTO: REUTERS
HOUSTON (REUTERS, BLOOMBERG) - Exxon Mobil Corp signaled a return to annual profit for 2021 as stronger oil and gas prices drove a gain of up to US$1.9 billion (S$2.6 billion) in operating profits that exceeded one-time charges.
Gas prices added US$700 million to US$1.1 billion to earnings in the quarter that ends this week, Exxon said in a filing on Thursday (Dec 30). Oil, meanwhile, added another US$400 million to US$800 million, compared with third-quarter results.
The largest US oil producer issued a snapshot of final quarter results that showed it expects sequentially higher profit from oil and gas production. Operating profits in refining and chemicals will be flat to lower, a securities filing showed. Official results are due out Feb 1.
In 2020, Exxon suffered a historic US$22.4 billion loss on writedowns from falling oil prices and lower refining margins. Cost cuts coupled with energy price gains have allowed it to pay down debt and plot a share buyback programme next year.
Analysts forecast an adjusted profit of US$1.76 per share for the quarter, according to Refinitiv IBES data, compared to 3 US cents a share excluding writedowns a year-ago.
Thursday's regulatory filing signaled one-time charges for asset impairments and contractual costs could lower oil and gas earnings by up to US$1.2 billion. It did not provide details on the production assets affected.
Exxon also said lower margins in chemicals could lower results by US$600 million to US$800 million, compared to the US$2.14 billion third-quarter chemicals profit. Refining margins could stay flat or drop by US$200 million compared to the US$1.23 billion profit the previous quarter.
Offsetting the negative impacts, Exxon signaled mark-to-market gains of up to US$1.1 billion for oil and gas and in refined products. It also said proceeds from asset sales including its UK North Sea assets could deliver up to US$500 million.
The rosier outlook allowed Exxon to extend planned a US$20-25 billion per year outlay on new projects through 2027, including US$2.5 billion per year on carbon reductions, the company has said, adding it expects to double its pre-pandemic annual profit by 2025, the company has said.
About 60 per cent of its spending will be in key growth areas of US shale, Guyana, Brazil, LNG, and chemical products.
Exxon shares fell 36 cents or about 0.59 per cent on Thursday to close at $60.79. The stock is up 47 per cent so far this year but down 33 per cent over the last five years.
