Just the facts
For the quarter, Exxon Mobil Corporation (NYSE:XOM) reported net income of $9.5 billion, or $2.12 per share. That was higher than the $9.45 billion and $2.00 per share for the first quarter of 2012. It also comfortably topped the $2.05-per-share consensus that the analysts who follow Exxon had anticipated. Revenues for the quarter were $108.8 billion, a reduction from last year’s $124.1 billion.
The revenue slide resulted from expected production declines, along with reductions in commodities realizations. Specifically, oil and liquids production was down 3.5% year over year, but slipped only 1.2% when allowing for the effects of entitlement volumes, OPEC quota effects, and divestments. At the same time, crude prices were down $8.66 a barrel from the comparable year-ago quarter.
On the natural gas side, the largest producer of that particular hydrocarbon in the U.S. participated in the price-driven production reduction that was initiated by Chesapeake Energy Corporation (NYSE:CHK), the nation’s No. 2 producer. As a result, gas production was 8.7% lower domestically, which led to a 5.9% global pullback in natural gas output.
Downstream, earnings were off slightly more than 2.5%. However, refinery margins were actually stronger than in the year-ago quarter — which led to a more than $1 billion, or 72%, ,hike in U.S. refining profits — but that strengthening was offset globally by increased expenses, reduced gains on asset sales, and foreign exchange effects. In a related area, earnings from chemicals grew by 62% to $639 million.
What lies ahead?
This look at the past quarter at Exxon Mobil Corporation (NYSE:XOM) is obviously instructional, but a focus on the future reveals far more about the company’s attractiveness as a Foolish energy investment. Indeed, I’m unable to muster any real surprise about the performance. (Indeed, as David Rosenthal, Exxon’s investor relations vice president, noted on the company’s call, first-quarter production volumes — apparently the main source of consternation among those who dropped the company’s share price 1.5% on Thursday — were “in line with the projection presented at the analyst meeting in March.”)
Also described at the March session, however, was the company’s intention to spend about $190 billion during the next five years on various projects. Upstream, between this year and 2017, ExxonMobil has 28 major oil and gas projects in the hopper, most of which are liquids-based. In total, these start-ups are expected to add about a million oil-equivalent barrels to the company’s production during the five-year span.
On the final day of the quarter, for instance, extraction began at its Kearl plant facilities in Alberta, Canada. With initial regulatory approval for 345,000 barrels a day of production, the facility’s early output number will be about 110,000 barrels a day.
Production also started during the quarter at the Telok gas field offshore Malaysia in the South China Sea. When completed, the project will consist of two four-legged gas satellite platforms, which will serve as a base for 14 development wells.
Downstream, the company is in various stages of construction on facilities in Singapore, China, and Finland. In the chemicals portion of its businesses, an expansion at a facility — also in Singapore — has been completed, a major elastomers plant is being developed in Saudi Arabia, and plans are under way for yet another expansion — this one at the company’s huge integrated Baytown complex east of Houston.
