Exxon Mobil Corp. (XOM) shares fell on Friday, Feb. 2, after missing top- and bottom-line estimates, despite a $5.9 billion tax benefit.
The Irving, Texas-based energy giant posted net income of $8.4 billion, or $1.27 per share, for the quarter. The company said the U.S. federal tax overhaul resulted in a non-cash earnings gain of $5.9 billion, mainly due to the revaluation of deferred income tax balances. Excluding the tax reform benefit and impairments, earnings of 88 cents per share missed estimates of $1.03 per share. Revenue of $66.5 billion came in below forecasts calling for $71.94 billion.
Shares of Exxon dropped 5.2% to $84.47 at 10:15 a.m. EST. The stock had fallen by as much as 4% during premarket trading on Friday.
"The impact of tax reform on our earnings reflects the magnitude of our historic investment in the U.S. and strengthens our commitment to further grow our business here," Chairman and Chief Executive Darren Woods said in a statement. "We're planning to invest over $50 billion in the U.S. over the next five years to increase production of profitable volumes and enhance our integrated portfolio, which is supported by the improved business climate created by tax reform."
The supermajor oil company with a market capitalization of $356 billion announced on Tuesday, Jan. 30, plans to triple its oil and gas production in West Texas' Permian Basis by 2025 and will spend $2 billion to expand a crude storage terminal there.
Over the course of 2018, Exxon will be ramping up drilling in the Permian and Bakken basins, adding at least 10 rigs for a total of 36 by year-end. The company will also be assessing the potential for "additional Permian stacked pay zones."
Cash flow from operations came in at $7.4 billion, the same as a year ago.
Fourth-quarter oil-equivalent production was 4 million barrels per day, a 3% decline from the prior year. Production fell short of J.P. Morgan estimates of 4.19 million barrels of oil equivalent.
The upstream business unit earned $8.4 billion, including $7.1 billion from the U.S. tax overhaul. Earnings, adjusted for one-time items, increased $1 billion to $2.5 billion, "driven by higher prices as liquids realizations increased more than $10 per barrel," Exxon said.
The company's downstream earnings were $1.6 billion, an increase of $323 million from the same period a year ago.
Chemical earnings were $1.3 billion in the fourth quarter, up $398 million from the previous year.
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