By Sheila Dang
HOUSTON (Reuters) -Exxon Mobil on Friday posted mixed fourth-quarter results that showed weakness in its refining and chemicals business, though it beat Wall Street’s profit estimate with higher oil and gas production.
Shares of the No. 1 U.S. oil producer declined 1.7% to $107.72 in afternoon trading, which was in line with a drop in the broader S&P 500 Energy Sector index.
Global oil demand lagged expectations in 2024, pushing down crude and fuel prices and impacting the industry. Exxon competitors Chevron and Shell’s earnings this week were also hit by the declining performance of the refining sector. Chevron posting a loss in its refining business for the first time since 2020.
Exxon’s adjusted profit for the fourth quarter was $7.39 billion or $1.67 per share, beating analyst estimates of $1.56, LSEG data showed.
Earnings from oil and gas production were $6.28 billion, up from $4.15 billion in the same quarter last year. Production, including from the Permian basin and lucrative projects in Guyana, reached 4.6 million barrels of oil equivalent per day, growing from 4.58 million in the third quarter.
During a conference call with analysts, Exxon CEO Darren Woods said the company aimed to be efficient with spending plans and would only pursue investments, including in the low carbon solutions business, if it was confident it could generate high returns.
Exxon laid out a five-year plan in December to increase project spending to boost oil and gas output by 18% by 2030.
“We’re not going to go ahead with them until we’re convinced that the value is there,” Woods said. He added that Exxon would evaluate opportunities in the Gulf of Mexico if U.S. President Donald Trump’s administration opens more areas for oil and gas exploration.
Chevron became one of the first companies to refer to the ocean basin as Gulf of America on Friday, following Trump’s executive order to rename it. Woods stuck to the name Gulf of Mexico during the call with analysts.
Total adjusted earnings for 2024 were $33.46 billion, down from $38.57 billion the year earlier.
CHEMICAL AND REFINING SLUMP
Exxon’s results were helped by favorable tax and year-end adjustments, said Paul Cheng, an analyst at Scotiabank, in a research note. Lower corporate costs also enabled the company to beat profit estimates, said RBC Capital Markets analyst Biraj Borkhataria.
Earnings from producing gasoline and diesel were $323 million, a large fall from $3.2 billion a year earlier. The startup of new oil refineries by other companies in Asia and Africa led to higher global fuel supply, even as demand for gasoline and diesel lagged expectations.
The refining business remains under pressure as the additional supply enters the market, Chief Financial Officer Kathryn Mikells said in an interview.
“That’s really what we’re watching as we look ahead to 2025,” she said.
Adjusted profit from producing chemicals fell 76% from the third quarter to $215 million due to weaker margins and seasonally higher expenses, the company said. The figure is the worst since 2019, Borkhataria said.
The company continues to expect a decision by September in its arbitration challenge to Chevron’s acquisition of oil producer Hess, Mikells said. If Chevron proceeds, it would gain a foothold in Guyana’s oil projects.
While the deal has been approved by U.S. regulators, Exxon and China’s CNOOC, Hess’ partners in the Guyana oil joint venture, say they have a contractual first right to buy Hess’ stake.
Shareholder returns via buybacks and dividends, a cornerstone of Big Oil’s strategy to court investors, totaled $36 billion in 2024, up from $32 billion the previous year. The company plans to repurchase $20 billion in shares annually through 2026.
(Reporting by Sheila Dang in Houston; editing by Simon Webb, Michael Perry, Jason Neely and Nick Zieminski)
