ExxonMobil Earns $4 Billion in Second Quarter of 2018

Source Press Release
Company ExxonMobil 
Tags Unconventional Resources, Upstream Activities, Capital Spending, Financial & Operating Data
Date July 27, 2018

Exxon Mobil Corporation (NYSE:XOM):

First                 
    Second Quarter        Quarter        First Half     
    2018    2017      2018      2018    2017   
Earnings Summary                                 
(Dollars in millions, except per share data)                                 
Earnings (U.S. GAAP)    3,950    3,350    18    4,650    -15    8,600    7,360    17 
                                 
Earnings Per Common Share                                 
Assuming Dilution    0.92    0.78    18    1.09    -16    2.01    1.73    16 
                                 
Capital and Exploration                                 
Expenditures    6,627    3,925    69    4,867    36    11,494    8,094    42 
                                 

Exxon Mobil Corporation today announced estimated second quarter 2018 earnings of $4 billion, or $0.92 per share assuming dilution, compared with $3.4 billion a year earlier. Cash flow from operations and asset sales was $8.1 billion, including proceeds associated with asset sales of $307 million. During the quarter, the corporation distributed $3.5 billion in dividends to shareholders. Capital and exploration expenditures were $6.6 billion, up 69 percent from the prior year, reflecting key investments in Brazil, the U.S. PermianBasin and Indonesia.

Oil-equivalent production was 3.6 million barrels per day, down 7 percent from the second quarter of 2017. Excluding entitlement effects and divestments, liquids production increased as growth in the Permian and Bakken in the U.S. and Hebron in Canada more than offset decline and higher downtime driven by scheduled maintenance. Natural gas volumes decreased 10 percent, excluding entitlement effects and divestments, largely due to a continuing shift in U.S. unconventional development from dry gas to liquids and to downtime in Qatar, Australia, and Papua New Guinea.

“Key projects in Guyana, the U.S. Permian Basin, Brazil, Mozambique and Papua New Guinea are positioning us well to meet the objectives we outlined in our long-term earnings growth plans. The high quality of these resources, combined with our strengths in project execution and innovation, will generate strong value over time,” said Darren W. Woods, chairman and chief executive officer. “Second quarter results were primarily impacted by significant scheduled maintenance undertaken to support operational integrity. In addition, while we were pleased with the return of full production following the PNG earthquake, extended recoveries from first quarter operational incidents in the Downstream were disappointing. However, good progress was made during the second quarter in fully recovering from these incidents.”

Second Quarter 2018 Business Highlights

Upstream:

  • Crude prices strengthened in the second quarter, while natural gas prices were mixed.
  • U.S. tight oil growth in the Permian and Bakken continued, reaching over 250,000 oil-equivalent barrels per day in the second quarter, an increase of 30 percent from the same period last year. The Hebron field in Canada continued to exceed expectations, ramping up to 25,000 oil-equivalent barrels per day in the second quarter.
  • Natural gas volumes were impacted by lower seasonal demand in Europe, deliberate near-term shifting of investments in U.S. unconventionals from gas to liquids and downtime in LNG operations, notably in Qatar.
  • Production at Papua New Guinea returned to normal operations in April and reached record daily LNG production rates in June. Second quarter volume loss associated with the earthquake recovery was 17,000 oil-equivalent barrels per day.
  • Scheduled maintenance activities were undertaken to support operational integrity, largely in Canada at Syncrude, Cold Lake and Kearl, impacting volumes and expenses in second quarter.

Downstream:

  • Global refining margins strengthened during the quarter due to higher industry refinery maintenance activity and increased seasonal petroleum product demand.
  • Overall throughput and earnings were impacted by heavy turnaround and maintenance activities during the quarter. Planned turnarounds were successfully completed at the refineries in Saudi Arabia, Port-Jérȏme, France, Baytown and Beaumont, Texas, and Alberta, Canada. Unplanned maintenance, a majority of which was carried-in from the first quarter, was largely completed during the quarter.
  • Growth in higher-value sales of retail fuels in the U.S., Belgium, the Netherlands and Luxembourg, combined with record quarterly sales of Mobil 1 lubricants in the U.S. and China, resulted in improved earnings during the quarter.
  • Depreciation in the Euro and British pound relative to the U.S. dollar negatively impacted earnings.

Chemical:

  • ExxonMobil continued to make significant progress in growing the Chemical business. Second quarter sales were the highest since 2007, and new volumes in Singapore and the U.S. contributed more than 530,000 metric tons of sales during the quarter. This included an additional 145,000 metric tons of high-performance products as the company continued to strengthen its leading position in this market.
  • Chemical margins weakened during the quarter as higher feed and energy costs outpaced stronger realizations.

Strengthening the Portfolio

  • ExxonMobil announced its eighth oil discovery offshore Guyana at the Longtail-1 well, creating the potential for additional resource development in the southeast area of the Stabroek Block.  ExxonMobil encountered approximately 256 feet (78 meters) of high-quality, oil-bearing sandstone.
  • The company continued to rapidly advance the Liza Phase 1 project with the start of development drilling offshore Guyana. Development drilling began in May for the first of 17 wells planned for Phase 1, laying the foundation for production startup in 2020. The company and its co-venturers have so far discovered estimated recoverable resources of more than 4 billion oil-equivalent barrels on the Stabroek Block.
  • ExxonMobil completed the purchase of half of  Equinor ASA’s interest in the BM-S-8 block offshore Brazil, which contains part of the pre-salt Carcara oil field. Production from the field is expected to start in 2023-2024. The company also increased its holdings in Brazil’s pre-salt basins after winning the Uirapuru exploration block with co-venturers Equinor ASA and  Petrogal Brasil SA during Brazil’s fourth pre-salt bid round.  ExxonMobil now has interests in 25 blocks offshore Brazil.
  • Qatar Petroleum agreed to partner with ExxonMobil by acquiring a 30 percent interest in two  ExxonMobil affiliates,  ExxonMobil Exploration Argentina SRL and  Mobil Argentina SA, which hold interests in the Vaca Muerta unconventional shale oil and gasplays in Neuquén Province, Argentina. This agreement expands the successful partnership with Qatar Petroleum, and underscores the commitment to develop Argentina’s resources to further support domestic production.
  • ExxonMobil and  Eni SpA announced that marketing efforts are underway for the Rovuma LNG project, which will produce, liquefy and sell natural gas from the Area 4 block offshore Mozambique. The company is in active negotiations on binding sales and purchase agreements for Rovuma LNG.

Investing for Growth

  • The company started production of hydrogenated hydrocarbon resin and halobutyl rubber at its integrated manufacturing complex in Singapore. The new resins plant is the world’s largest with a capacity of 90,000 metric tons per year, and the new 140,000-metric-ton-per-year butyl plant will produce premium halobutyl rubber used by manufacturers for tires that better maintain inflation and improve fuel economy.
  • ExxonMobil acquired PT Federal Karyatama, one of Indonesia’s largest manufacturers and marketers of motorcycle lubricants, which expands the company’s position in an important international market. The acquisition includes the Federal Oil brand and a 700,000-barrel-per-year blending plant in Cilegon, Indonesia.
  • ExxonMobil and SABIC announced the creation of a new joint venture to advance development of the Gulf Coast Growth Ventures project, a 1.8-million-metric-ton-per-year ethane cracker currently planned for construction in San Patricio County, Texas. The facility will also include a monoethylene glycol unit and two polyethylene units. Construction of the project is pending completion of the environmental permitting process. The plant is expected to be operational in the 2021-2022 timeframe.
  • ExxonMobil and  Plains All American Pipeline LP have signed a letter of intent to pursue a joint venture to construct a pipeline system to transport crude oil and condensate from multiple locations in the U.S. Permian Basin to the U.S. Gulf Coast. The proposed common carrier pipeline system would be designed to ship more than 1 million barrels of crude oil and condensate per day, providing a safe, efficient and cost effective option to transport  ExxonMobil and other third-party production to market destinations in Texas.

Advancing Innovative Technologies and Products

  • ExxonMobil announced it is progressing a multi-billion dollar project at its integrated manufacturing facility in Singapore to expand lubricant basestocks production to meet growing demand. The company plans to apply proprietary technologies to convert heavy by-products to high-quality basestocks designed to help blenders achieve greater formulation flexibility and meet future lubricant performance expectations. Project startup is anticipated in 2023.
  • ExxonMobil announced greenhouse gas reduction measures that are expected to lead to significant improvements in emissions performance by 2020, including a 15 percent decrease in methane emissions and a 25 percent reduction in flaring compared with 2016. The company also announced its intention to improve its industry-leading energy efficiency in refining and chemical manufacturing facilities. Since 2000,  ExxonMobil has spent more than $9 billion on lower-emission energy solutions such as cogeneration, flare reduction, energy efficiency, biofuels, carbon capture and storage and other technologies.
 
Earnings and Volume Summary 
                 
Millions of Dollars    2Q    2Q         
(unless noted)    2018    2017    Change    Comments 
Upstream                 
U.S.    439    (183)    +622    Higher liquids prices and increased liquids volumes, partially offset by higher expenses 
Non-U.S.    2,601    1,367    +1,234    Higher prices, partially offset by lower volumes and higher expenses reflecting increased maintenance activity 
Total    3,040    1,184    +1,856    Prices +$2,380, downtime / maintenance -$230, lower volumes due to entitlements -$120, other -$170 including higher exploration and production expenses 
Production (koebd)    3,647    3,922    -275    Liquids -57 kbd: net liquids growth of 25 kbd more than offset by divestments, lower entitlements and scheduled maintenance Gas -1,307 mcfd: decline largely in U.S. aligned with value focus, higher downtime, lower entitlements and divestments 
                 
Downstream                 
U.S.    695    347    +348    Higher margins capturing crude differentials, sales growth, partially offset by downtime / maintenance 
Non-U.S.    29    1,038    -1,009    Sales growth, more than offset by lower margins, downtime / maintenance, unfavorable foreign exchange impacts and lower divestment gains 
Total    724    1,385    -661    Margins +$260, sales +$100, downtime / maintenance -$620, unfavorable foreign exchange impacts -$240, lower divestment gains -$130 
Petroleum Product Sales (kbd)    5,502    5,558    -56     
                 
Chemical                 
U.S.    453    481    -28    Volume growth, more than offset by higher expenses 
Non-U.S.    437    504    -67    Volume growth, more than offset by lower margins 
Total    890    985    -95    Volume growth +$120, margins -$210, other -$10 
Prime Product Sales (kt)    6,852    6,120    +732    Project growth and acquisitions 
                 
Corporate and financing    (704)    (204)    -500    Absence of favorable tax items, lower U.S. tax rate and higher pension-related costs; in line with expectations 
                 
 
Earnings and Volume Summary 
                 
Millions of Dollars    2Q    1Q         
(unless noted)    2018    2018    Change    Comments 
Upstream                 
U.S.    439    429    +10    Stronger liquids prices and higher liquids volumes, largely offset by higher expenses and lower gasprices 
Non-U.S.    2,601    3,068    -467    Higher liquids prices, more than offset by absence of the Scarborough sale (-$366), downtime / maintenance and lower seasonal volumes 
Total    3,040    3,497    -457    Higher prices +$540, lower divestment gains -$420, downtime / maintenance -$210, lower volumes due to seasonal demand -$180, other -$190 
Production (koebd)    3,647    3,889    -242    Liquids -4 kbd: net liquids growth of +50 kbd, more than offset by scheduled downtime and divestment impacts Gas -1,425 mcfd: lower seasonal demand 
                 
Downstream                 
U.S.    695    319    +376    Higher margins and sales growth, partially offset by downtime / maintenance 
Non-U.S.    29    621    -592    Higher margins and sales growth, more than offset by downtime / maintenance and unfavorable foreign exchange impacts 
Total    724    940    -216    Higher margins +$630, sales +$50, downtime / maintenance -$620, unfavorable foreign exchange impacts -$210, other -$70 
Petroleum Product Sales (kbd)    5,502    5,432    +70     
                 
Chemical                 
U.S.    453    503    -50    Volume growth, more than offset by higher expenses and lower margins 
Non-U.S.    437    508    -71    Lower expenses, more than offset by unfavorable foreign exchange impacts and weaker margins 
Total    890    1,011    -121    Volume growth +$50, lower margins -$90, unfavorable foreign exchange impacts -$50, other -$30 
Prime Product Sales (kt)    6,852    6,668    +184    Project growth and acquisitions 
                 
Corporate and financing    (704)    (798)    +94    Favorable tax items and lower financing costs 
                 
 
Earnings and Volume Summary 
 
Millions of Dollars    YTD    YTD         
(unless noted)    2018    2017    Change    Comments 
Upstream                 
U.S.    868    (201)    +1,069    Higher liquids prices, higher liquids volumes and favorable mix, partially offset by higher expenses 
Non-U.S.    5,669    3,637    +2,032    Higher prices and the gain on the Scarborough sale ($366), partially offset by lower volumes and higher expenses 
Total    6,537    3,436    +3,101    Prices +$3,830, downtime / maintenance -$350, lower volumes due to entitlements -$230, other -$150 
Production (koebd)    3,768    4,036    -268    Liquids -87 kbd: growth in North America, more than offset by lower volumes from divestments, entitlements, and decline Gas -1,090 mcfd: decline in U.S. aligned with value focus, higher downtime, lower entitlements and divestments 
Downstream                 
U.S.    1,014    639    +375    Higher margins and sales growth, partially offset by downtime / maintenance 
Non-U.S.    650    1,862    -1,212    Sales growth, more than offset by weaker margins, downtime / maintenance, unfavorable foreign exchange impacts and lower divestment gains 
Total    1,664    2,501    -837    Margins +$230, sales +$120, downtime / maintenance -$670, unfavorable foreign exchange impacts -$220, lower divestment gains -$220, other -$80 
Petroleum Product Sales (kbd)    5,467    5,477    -10     
Chemical                 
U.S.    956    1,010    -54    Volume growth, more than offset by higher expenses 
Non-U.S.    945    1,146    -201    Volume growth, more than offset by lower margins 
Total    1,901    2,156    -255    Volume growth +$220, margins -$460, other -$20 
Prime Product Sales (kt)    13,520    12,192    +1,328    Project growth and acquisitions 
Corporate and financing    (1,502)    (733)    -769    Absence of favorable tax items, lower U.S. tax rate, and higher pension and financing related costs 
                 
         
Cash Flow from Operations and Asset Sales 
         
Millions of Dollars    2Q     
    2018    Comments 
Net income including noncontrolling interests    3,986    Includes $36 million for noncontrolling interests 
Depreciation    4,589     
Changes in working capital    (1,333)    Mainly driven by inventory and seasonality in payables 
Other    538    Includes pension fund impacts 
Cash Flow from Operations (U.S. GAAP)    7,780     
Asset sales    307     
Cash Flow from Operations and Asset Sales    8,087     
         
Millions of Dollars    YTD     
    2018    Comments 
Net income including noncontrolling interests    8,769    Includes $169 million for noncontrolling interests 
Depreciation    9,059     
Changes in working capital    (982)    Mainly driven by inventory build 
Other    (547)    Timing of equity company dividends partly offset by pension fund impacts 
Cash Flow from Operations (U.S. GAAP)    16,299     
Asset sales    1,748     
Cash Flow from Operations and Asset Sales    18,047   

First Half 2018 Financial Updates

During the first half of 2018, Exxon Mobil Corporation purchased 5 million shares of its common stock for the treasury at a gross cost of $425 million. These shares were acquired to offset dilution in conjunction with the company’s benefit plans and programs. The corporation will continue to acquire shares to offset dilution in conjunction with its benefit plans and programs, but does not currently plan on making purchases to reduce shares outstanding.

Estimated Key Financial and Operating Data 
                         
Attachment I 
                         
Exxon Mobil Corporation 
Second Quarter 2018 
(millions of dollars, unless noted) 
                         
              First           
    Second Quarter    Quarter    First Half 
    2018    2017    2018    2018    2017 
Earnings / Earnings Per Share                         
Total revenues and other income1    73,501    58,077      68,211    141,712    116,748   
Total costs and other deductions    66,989    53,921      60,971    127,960    106,674   
Income before income taxes    6,512    4,156      7,240    13,752    10,074   
Income taxes    2,526    892      2,457    4,983    2,720   
Net income including noncontrolling interests    3,986    3,264      4,783    8,769    7,354   
Net income attributable to noncontrolling interests    36    (86    133    169    (6 
Net income attributable to ExxonMobil (U.S. GAAP)    3,950    3,350      4,650    8,600    7,360   
                         
Earnings per common share (dollars)    0.92    0.78      1.09    2.01    1.73   
                         
Earnings per common share - assuming dilution (dollars)    0.92    0.78      1.09    2.01    1.73   
                         
Exploration expenses, including dry holes    332    514      287    619    803   
                         
Other Financial Data                         
Dividends on common stock                         
Total    3,502    3,289      3,291    6,793    6,423   
Per common share (dollars)    0.82    0.77      0.77    1.59    1.52   
                         
Millions of common shares outstanding                         
At period end                  4,234    4,237   
Average - assuming dilution    4,271    4,271      4,270    4,270    4,244   
                         
ExxonMobil share of equity at period end                  187,222    179,178   
ExxonMobil share of capital employed at period end                  230,817    223,646   
                         
Income taxes    2,526    892      2,457    4,983    2,720   
Total other taxes and duties    9,003    7,960      8,815    17,818    15,589   
Total taxes    11,529    8,852      11,272    22,801    18,309   
Sales-based taxes    5,507    4,799      5,281    10,788    9,415   
Total taxes including sales-based taxes    17,036    13,651      16,553    33,589    27,724   
                         
ExxonMobil share of income taxes of equity companies    655    569      740    1,395    1,216   
                         

1 Effective December 31, 2017, the corporation revised its accounting policy election related to the reporting of sales-based taxes, which had no impact on earnings. For more information, please refer to Note 2 in the Financial Section of ExxonMobil's Form 10-K for the period ended December 31, 2017.

                               
Attachment II 
                               
Exxon Mobil Corporation 
Second Quarter 2018 
(millions of dollars) 
                               
                First             
    Second Quarter    Quarter    First Half 
    2018      2017    2018    2018    2017 
Earnings (U.S. GAAP)                               
Upstream                               
United States    439      (183    429      868      (201 
Non-U.S.    2,601      1,367      3,068      5,669      3,637   
Downstream                               
United States    695      347      319      1,014      639   
Non-U.S.    29      1,038      621      650      1,862   
Chemical                               
United States    453      481      503      956      1,010   
Non-U.S.    437      504      508      945      1,146   
Corporate and financing    (704    (204    (798    (1,502    (733 
Net income attributable to ExxonMobil    3,950      3,350      4,650      8,600      7,360   
                               
                     
Attachment III 
                     
Exxon Mobil Corporation 
Second Quarter 2018 
                     
            First         
    Second Quarter    Quarter    First Half 
    2018    2017    2018    2018    2017 
Net production of crude oil, natural gas liquids, bitumen and synthetic oil, thousand barrels per day (kbd)                     
United States    543    520    523    533    516 
Canada / Other Americas    391    374    427    409    398 
Europe    136    195    145    140    200 
Africa    410    417    376    393    425 
Asia    686    710    706    696    710 
Australia / Oceania    46    53    39    43    52 
Worldwide    2,212    2,269    2,216    2,214    2,301 
                     
Natural gas production available for sale, million cubic feet per day (mcfd)                     
United States    2,591    3,083    2,576    2,583    3,047 
Canada / Other Americas    226    203    211    219    209 
Europe    1,136    1,442    2,542    1,835    2,102 
Africa           
Asia    3,393    3,867    3,568    3,480    3,837 
Australia / Oceania    1,258    1,321    1,132    1,195    1,211 
Worldwide    8,613    9,920    10,038    9,321    10,411 
                     
Oil-equivalent production (koebd)1    3,647    3,922    3,889    3,768    4,036 
                     

1 Gas converted to oil-equivalent at 6 million cubic feet = 1 thousand barrels.

                     
Attachment IV 
                     
Exxon Mobil Corporation 
Second Quarter 2018 
                     
            First         
    Second Quarter    Quarter    First Half 
    2018    2017    2018    2018    2017 
Refinery throughput (kbd)                     
United States    1,529    1,601    1,518    1,524    1,611 
Canada    364    358    408    386    378 
Europe    1,384    1,521    1,495    1,439    1,488 
Asia Pacific    714    664    720    717    658 
Other    114    201    152    133    200 
Worldwide    4,105    4,345    4,293    4,199    4,335 
                     
Petroleum product sales (kbd)                     
United States    2,215    2,187    2,128    2,171    2,171 
Canada    514    494    484    499    494 
Europe    1,595    1,653    1,574    1,585    1,595 
Asia Pacific    814    755    795    804    731 
Other    364    469    451    408    486 
Worldwide    5,502    5,558    5,432    5,467    5,477 
                     
Gasolines, naphthas    2,216    2,265    2,215    2,216    2,214 
Heating oils, kerosene, diesel    1,781    1,850    1,828    1,804    1,842 
Aviation fuels    405    383    396    400    377 
Heavy fuels    432    367    346    389    373 
Specialty products    668    693    647    658    671 
Worldwide    5,502    5,558    5,432    5,467    5,477 
                     
Chemical prime product sales, thousand metric tons (kt)                     
United States    2,411    2,334    2,391    4,802    4,614 
Non-U.S.    4,441    3,786    4,277    8,718    7,578 
Worldwide    6,852    6,120    6,668    13,520    12,192 
                     
                     
Attachment V 
                     
Exxon Mobil Corporation 
Second Quarter 2018 
(millions of dollars) 
                     
            First         
    Second Quarter    Quarter    First Half 
    2018    2017    2018    2018    2017 
Capital and Exploration Expenditures                     
Upstream                     
United States    1,752    756    1,248    3,000    1,460 
Non-U.S.    3,103    2,030    2,511    5,614    4,445 
Total    4,855    2,786    3,759    8,614    5,905 
Downstream                     
United States    346    173    218    564    378 
Non-U.S.    884    413    396    1,280    753 
Total    1,230    586    614    1,844    1,131 
Chemical                     
United States    414    414    343    757    802 
Non-U.S.    119    121    122    241    230 
Total    533    535    465    998    1,032 
                     
Other      18    29    38    26 
                     
Worldwide    6,627    3,925    4,867    11,494    8,094 
                     
                     
Cash flow from operations and asset sales (millions of dollars)                     
Net cash provided by operating activities (U.S. GAAP)    7,780    6,947    8,519    16,299    15,120 
Proceeds associated with asset sales    307    154    1,441    1,748    841 
Cash flow from operations and asset sales    8,087    7,101    9,960    18,047    15,961 
                     
         
Attachment VI 
         
Exxon Mobil Corporation 
Earnings 
         
    $ Millions    $ Per Common Share1 
         
2014         
First Quarter    9,100    2.10 
Second Quarter    8,780    2.05 
Third Quarter    8,070    1.89 
Fourth Quarter    6,570    1.56 
Year    32,520    7.60 
         
2015         
First Quarter    4,940    1.17 
Second Quarter    4,190    1.00 
Third Quarter    4,240    1.01 
Fourth Quarter    2,780    0.67 
Year    16,150    3.85 
         
2016         
First Quarter    1,810    0.43 
Second Quarter    1,700    0.41 
Third Quarter    2,650    0.63 
Fourth Quarter    1,680    0.41 
Year    7,840    1.88 
         
2017         
First Quarter    4,010    0.95 
Second Quarter    3,350    0.78 
Third Quarter    3,970    0.93 
Fourth Quarter    8,380    1.97 
Year    19,710    4.63 
         
2018         
First Quarter    4,650    1.09 
Second Quarter    3,950    0.92 
         
Source: EvaluateEnergy® ©2021 EvaluateEnergy Ltd