This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Production Hurts Exxon Mobil, but Shares Remain Solid

Stocks in this article: XOM

NEW YORK ( TheStreet) -- What can be said about Exxon Mobil (XOM) that has not already been said? Not many companies today can match Exxon's historical return on capital and strong dividends.

Exxon's market position in energy remains as solid as ever, but rising costs and soft production have affected its growth. Accordingly, profitability hasn't been as robust.

That said, compared with rivals such as Chevron (CVX) and BP (BP), Exxon's results haven't been that bad. And the shares are not expensive at current levels.

First-Quarter Results Weren't Great but Reflect Industry Challenges

First-quarter results topped the average estimates from analysts, and the company managed to grow earnings. On the other hand, bears point out it was the seventh consecutive quarter of year-over-year production declines. They also note that much of the earnings growth came from Exxon's chemical business, not from oil and gas, the primary revenue drivers.

Indeed, total revenue declined 12% in the first quarter, to $108.8 billion from $124.1 billion a year earlier. And oil and gas production declined 4% year over year. There was a 2% sequential increase in oil and gas production, but that didn't help all that much.


Natural gas production was down 6% internationally. But Exxon was able to make up for this in crude oil production, which was better than expected even though it fell 1% year over year.

It was also a surprise that Exxon's profits advanced by 0.5%, given that the company's "realization" for oil and gas (the price it receives for these commodities) declined 1% from a year earlier.

Granted, these results weren't stellar. Understandably, investors were a bit peeved. But Exxon is not alone in its energy struggles.


I've written at length about Schlumberger (SLB) and Halliburton (HAL) and the challenges they face with weak oil prices and soft rig counts, which contributed to their poor sequential performances. Exxon was no exception.

Besides, even though Exxon is the world's largest oil producer, replenishing oil and gas consumption, which again fell 6% worldwide, is no easy task.

Understandably, there is now a bearish tenor regarding Exxon's performance. But to expect better results in this poor energy environment, you might as well ask for oil to turn into wine. Miracles aren't happening. Execution should be the focus. To that end, Exxon did as well as expected.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,075.85 +45.64 0.25%
S&P 500 2,090.58 +8.70 0.42%
NASDAQ 4,799.6290 +26.1570 0.55%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs