Exxon Q3 Earnings: $11.3 Billion Cost Savings, Rising Production, Dividend Hike And More
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Nov 01 2024
0mins
Should l Buy XOM?
Source: Benzinga
Financial Performance: Exxon Mobil reported third-quarter revenues of $90.016 billion, below expectations, while net production increased by 5%. Adjusted net profit was $8.61 billion, down from the previous quarter but adjusted EPS beat consensus estimates.
Cost Savings and Dividend Increase: The company achieved $11.3 billion in cumulative cost savings since 2019 and plans to reach $15 billion by 2027. Additionally, Exxon raised its dividend by 4% to $0.99 per share, with total shareholder distributions for the year reaching $26.1 billion.
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Analyst Views on XOM
Wall Street analysts forecast XOM stock price to fall
19 Analyst Rating
12 Buy
7 Hold
0 Sell
Moderate Buy
Current: 148.690
Low
114.00
Averages
132.17
High
158.00
Current: 148.690
Low
114.00
Averages
132.17
High
158.00
About XOM
Exxon Mobil Corporation is an energy provider and chemical manufacturer. The Company’s principal business involves exploration for, and production of, crude oil and natural gas; the manufacture, trade, transport and sale of crude oil, natural gas, petroleum products, petrochemicals and a wide variety of specialty products; and pursuit of lower-emission and other new business opportunities, including carbon capture and storage, hydrogen, lower-emission fuels, Proxxima systems, carbon materials, and lithium. Its Upstream segment explores for and produces crude oil and natural gas. The Energy Products, Chemical Products, and Specialty Products segments manufacture and sell petroleum products and petrochemicals. Energy Products segment includes fuels, aromatics, and catalysts and licensing. Chemical Products segment consists of olefins, polyolefins, and intermediates. Specialty Products segment includes finished lubricants, basestocks and waxes, synthetics, and elastomers and resins.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Buffering Inventory Effects: Management noted that oil in transit, strategic petroleum reserve releases, and commercial inventory drawdowns have temporarily mitigated market pressures, but as inventories near minimum levels, this buffer will disappear, potentially leading to price spikes.
- Market Recovery Expectations: Traders on prediction marketplace Kalshi see a 52% chance that traffic returns to normal by September 1, with a 44% chance by August 1, reflecting cautious optimism about future supply recovery.
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- Market Impact Assessment: Exxon executives caution that the closure of the Strait of Hormuz has not yet fully impacted global oil markets, suggesting that prices could rise further as commercial inventories approach minimum operating levels, indicating market sensitivity to supply disruptions.
- Buffering Inventory Effects: Management noted that oil in transit, strategic petroleum reserve releases, and commercial inventory drawdowns have temporarily mitigated market pressures, but as inventories near minimum levels, this buffer will disappear, potentially leading to price spikes.
- Market Recovery Expectations: Traders on prediction marketplace Kalshi see a 52% chance that traffic returns to normal by September 1, with a 44% chance by August 1, reflecting cautious optimism about future supply recovery.
- Reshaping Global Energy Security: Exxon anticipates that this crisis will reshape global energy security thinking, with many countries likely to establish strategic petroleum reserves, thereby seeking protection against future disruptions and further driving market demand.
See More
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- Surge in Oil Prices: The war with Iran has caused WTI crude prices to rise by 85% to over $100 per barrel, leading to record depletion of global oil stockpiles and creating market uncertainty.
- Caution from Major Players: Oil giants ExxonMobil and Chevron are maintaining their capital spending plans, with Chevron's budget set at $18 billion to $19 billion, ensuring flexibility in a volatile market environment.
- Proactive Smaller Firms: ConocoPhillips has raised its capital budget from $12 billion to $12.5 billion to increase Permian activity in response to supply disruptions and higher oil prices, aiming to maintain operational efficiency.
- Increased Drilling Activities: Diamondback Energy plans to add 2 to 3 drilling rigs to boost production, raising its capital spending from $3.75 billion to $3.9 billion to meet the urgent market demand for oil.
See More
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- Strong Earnings Performance: Shell reported adjusted earnings of $6.92 billion for Q1, exceeding analyst expectations of $6.1 billion, demonstrating the company's resilience and operational efficiency amid global energy market disruptions.
- Dividend and Buyback Adjustments: The company announced a 5% increase in its dividend to $0.3906 per share while reducing its quarterly buyback from $3.5 billion to $3 billion, reflecting prudent capital management strategies.
- Rising Debt Levels: Shell's net debt rose to $52.6 billion at the end of Q1 from $45.7 billion at the end of last year, primarily due to the negative impact of rising oil prices on inventory values, although analysts view this as a minor negative factor.
- ARC Resources Acquisition: Last month, Shell announced a $16.4 billion acquisition of Canadian ARC Resources, aimed at strengthening its resource base in low-carbon intensity production, which is expected to support future output growth.
See More
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- Tech Stocks Rally: The Nasdaq 100 surged 2.08% to reach an all-time high on Wednesday, driven by stellar earnings from chipmakers and AI infrastructure firms, particularly Advanced Micro Devices, which rose over 17% as it raised its full-year sales forecast, reflecting strong investor optimism about ongoing AI investments.
- Crude Oil Plunge: WTI crude oil prices fell more than 7% to a two-week low as market expectations for a US-Iran peace agreement increased, easing inflation fears and contributing to stock market gains, with the 10-year Treasury yield dropping to a one-week low of 4.33%.
- Employment Data Impact: The April ADP employment report indicated that US companies added 109,000 jobs, below the expected 120,000, yet the market remains optimistic about the Fed's monetary policy, believing it will help maintain a low interest rate environment.
- International Market Surge: Overseas stock markets closed sharply higher, with the Euro Stoxx 50 rising 2.68% and China's Shanghai Composite gaining 1.17%, indicating a positive global market response to the US economic recovery, further boosting investor confidence.
See More
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- Supply Chain Disruption: The blockade of the Strait of Hormuz by Iran has led to a 30% drop in global jet fuel exports in April, down to 1.3 million barrels per day, directly impacting air travel in Europe and Asia and potentially causing significant disruptions this summer.
- Price Surge: As of May 1, jet fuel prices in Europe have doubled to $187 per barrel, forcing Lufthansa to cut 20,000 short-haul flights, highlighting the immense pressure fuel costs are placing on the airline industry.
- Alternative Supply Efforts: The EU is actively seeking jet fuel supplies from the U.S., with exports to Europe surging over 400% to 94,000 bpd in April, demonstrating a proactive response from U.S. refiners like Valero and Marathon Petroleum to global demand.
- Future Risks: As the market relies on commercial inventories to mitigate supply disruptions, countries dependent on energy imports may face critical shortages by June or July, with the broader economic impacts becoming increasingly apparent.
See More
Trump Meets Oil Giants to Discuss Venezuela
- High-Level Meeting: President Trump revealed on Wednesday that he met with top officials from Chevron and ExxonMobil a day earlier to discuss matters related to Venezuela, indicating the administration's concern over the situation in the country.
- Energy Policy Impact: This meeting could influence U.S. energy policy towards Venezuela, particularly in the context of global energy market instability, as the Trump administration may seek to optimize energy supply through collaboration with major oil companies.
- Corporate Involvement: The participation of Chevron and ExxonMobil, as the largest oil companies in the U.S., underscores the significant role of corporations in international politics, which may affect future investment decisions and market dynamics.
- Geopolitical Considerations: Trump's discussions with oil giants not only involve business interests but may also reflect U.S. geopolitical strategy in Latin America, especially in addressing Venezuela's economic crisis and political turmoil.
See More
