Exxon Mobil Corp. (XOM) - Get Exxon Mobil Corporation Report posted weaker-than-expected fourth quarter earnings Friday, as oil major around the world see profits declining alongside global crude prices, sending shares to a fresh five-year low in early Friday trading.
Exxon said adjusted earnings for the three months ending in December came in at 41 cents per share, down more than 70% from last year and 2 cents shy of the Street consensus forecast. Net income was pegged at $5.69 billion, the weakest in three years.
Downstream earnings fell 67% to $898 million as U.S. crude prices fell from a peak of $77 per barrel in September 2018 to around $63 by the end of last year. But upstream earnings rose 65% to $6.14 billion.
Group revenues, Exxon said, fell 6.6% to $67.17 billion, but topped analysts' estimates of a $64.1 billion tally.
“Our operations performed well, while short-term supply length in the downstream and chemicals businesses impacted margins and financial results,” said CEO Darren Woods. “Growth in demand for the products that underpin our businesses remains strong. We remain focused on improving our base businesses, driving efficiencies, and optimizing the value of our investment portfolio.”
Exxon shares were marked 3.9% lower by mid-morning Friday following the earnings release to change hands at $62.28 each the lowest in more than nine years and a move that extends the stock's six-month decline to around 16.3%.
Earlier this week, Royal Dutch Shell (RDS.A) - Get Royal Dutch Shell Plc Sponsored ADR Class A Report, Europe's biggest oil company, said fourth quarter profits nearly halved from last year, to $2.9 billion, and cautioned the global demand weakness linked to the spreading coronavirus would cloud energy markets for at least the first half of the year.
"Exxon signaled there will be no change to its planned 2020 capex budget of ~$33 billion and $35 billion (+10% YoY) as it progresses major development projects," said Credit Suisse analyst William Featherston, who sees the company generating around $13 billion in free cash flow based on $51 for WTI prices and $56 for Brent crude.
"We expect Exxon to provide 2020 volume guidance at its March 5th Analyst Day, though it should give some initial color on today’s call: our current volume forecast of ~4.14 million (barrels of oil equivalent per day) is modestly above consensus ~4.0 million Boed but just below Exxon's ’s somewhat stale 4.2 MMBoed guidance," he added.