Exxon Beats but Net Sinks - Analyst Blog

ExxonMobil Corporation (XOM) reported fourth quarter 2009 earnings of $1.27 per share, compared to the Zacks Consensus Estimate of $1.20 and year-earlier earnings of $1.54.

Earnings at XOM, though better than expected, were significantly lower than the year-earlier numbers due to lower refining and fuel margins as well as weak natural gas realizations. However, these were partly offset by higher crude realizations.

Exxon maintained its quarterly dividend of $0.42 per share and repurchased $2 billion worth of its own common stock. A $41 billion all-stock “Exxon-XTO Energy" merger will augment the company’s position in the development of unconventional resources, which is expected to create sustainable long-term value for XOM shareholders.

Behind the XOM Headline Numbers

Weak refining and marketing (R&M) margins hit all the super majors hard in the fourth quarter. Like Exxon, Chevron Corporation (CVX), ConocoPhillips (COP) and Hess Corporation (HES) were all affected by poor R&M margins.

However, with a sound cash position, solid credit profile and diverse asset base, both in terms of business mix as well as geographical footprint, Exxon remains better positioned than any of its peers.

The weak margins at XOM caused a 23% drop in earnings from the year-earlier quarter to $6.05 billion. Upstream earnings were up nearly 2.5% year-over-year to $5.78 billion, driven by higher crude oil realizations, partially offset by lower natural gas realizations.

The production of oil and natural gas averaged 4.18 million oil-equivalent barrels per day, up approximately 2% year over year. When adjusted for the impact of entitlement volumes and OPEC quota restrictions, production was up about 3%. Exxon’s refinery throughput averaged 5.38 million barrels per day, up more than 1% from the year-earlier level.

Exxon's total refined product sales of 6.49 million barrels per day were down 4% year over year, reflecting the depressed demand environment. Total product sales in XOM's Chemicals business increased almost 19% year over year.

Cash flow from operations and asset sales totaled $8.9 billion, down from $12.3 billion in the fourth quarter of 2008. Capital expenditures totaled $8.26 billion during the quarter, up 21% year-over-year. We are currently Neutral on ExxonMobil shares.
Read the full analyst report on "XOM"
Read the full analyst report on "CVX"
Read the full analyst report on "COP"
Read the full analyst report on "HES"
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