Exxon Vaults reports annual revenue of $55.7 billion

Exxon

xom 1.98%

Mobil Corp. jumped to its highest annual profit on record last year, spurring oil prices to revive its status as one of America’s most booming companies and erasing billions of dollars in losses incurred during the pandemic.

The largest US oil company posted a record annual profit of $55.7 billion for 2022 in its quarterly earnings on Tuesday, overtaking major banks, tech giants and vaccine makers. Among the companies that only reported fourth-quarter earnings

an Apple company

AAPL -0.04%

And

Microsoft corp.

MSFT 0.80%

Exxon’s earnings in fiscal 2022 have so far surpassed that of Google’s parent company

the alphabet company

The Google 0.78%

It is expected to yield a higher return, according to a Wall Street Journal analysis.

Exxon’s bonus marks a turnaround after that He lost a historic proxy battle in 2021 to investment firm Engine No. 1, which has decried Exxon’s finances and said it has no long-term strategy. The oil market crash of 2020 resulted in Exxon’s first annual loss in at least four decades, of more than $22 billion. He was booted from the Dow Jones Industrial Average that year, after nearly a century in the index, with its shares down as much as 55%.

Last year oil and gas Prices have gone up all over the world With Russian forces storming into Ukraine and increasing demand as global economies recover. Gasoline prices in the United States jumped to a record national average of about $5 a gallon as the markets also suffered losses from several oil refineries as the pandemic began in 2020.

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Exxon shares are up about 80% for the year, the fourth-highest increase in stock prices in the S&P 500, behind only oil companies.

Occidental Petroleum corp.

And

Hess corp.

And

Petroleum Marathon corp.

According to Dow Jones data. Exxon has also raised $76.8 billion in cash from its operations, behind only Apple and Microsoft so far, according to S&P Global Market Intelligence.

Exxon CEO Darren Woods said the world will still need oil and natural gas as long as it still lacks competitive low-emission alternatives. He added that the moves of some of its competitors to back down from fossil fuel investments gave Exxon an opportunity to invest and develop advantages in its oil and gas extraction and fuel sales business.

“We’re underinvesting as an industry in this space, and in a depleted business, we’re not keeping up with the depletion,” Mr. Woods said during the company’s quarterly conference call. “You find yourself in tight markets.”

Mr Woods said Exxon’s net profit margin rose to 14% last year from 10% in 2012 as it focused on its most profitable projects and worked to control production costs.

US gas prices have risen and fallen over the course of the year and there is now more uncertainty looming as the EU ban on Russian oil imports begins along with a cap on crude oil prices from Russia. The Wall Street Journal explains how these moves could affect prices at the pump for Americans. Illustration: WSJ

Mr. Woods cited the company’s investments in Guyana and the Permian Basin, the largest U.S. oil field that stretches across West Texas and New Mexico, as the company’s growth drivers for oil production, as well as its recent production capacity expansion of 250,000 barrels per day. refinery in Beaumont, Texas. Exxon said it boosted production in the Permian and Guyana regions by more than 30% last year.

The company said its return on capital employed reached 25% for this year, its highest annual rate since 2012, and total shareholder return reached 87% last year. Its total revenue for the full year rose to $413.7 billion, compared to $285.6 billion a year earlier.

In the fourth quarter, Exxon earned about $12.8 billion in profits, up from $8.9 billion in the same period a year earlier. The company’s fourth-quarter earnings fell short of Wall Street’s expectations, at $3.09 a share, compared with $3.28 a share, according to FactSet.

Exxon shares fell about 1% after the earnings announcement on Tuesday.

Exxon said it recorded so-called specific unfavorable items worth $1.3 billion related to higher European oil industry taxes and asset declines. Offsetting this effect were one-time adjustments related to Russia’s expropriation of Exxon’s stake in the Sakhalin-1 oil and gas project in Russia’s Far East, which it had been working on since the 1990s.

In terms of profit, Exxon has jumped in Irving, Texas, in 2022

c. B. Morgan Chase

and associates,

Johnson & Johnson

And

Verizon connections company

Among other things. Its earnings that year were also greater than the expected earnings of companies incl

Pfizer company ,

Facebook

Parent Meta Platforms Inc. And

Amazon.com company

Amazon made a record $33.4 billion in 2021, but is expected to post an annual loss.

Higher oil prices have boosted full-crop earnings for US shale oil companies, pipeline operators and oilfield service companies active in drilling and fracking, with several public oil producers reporting record quarterly output of free cash flow. The S&P 500 energy sector is up about 37% over the past year, outperforming every other sector of the broader index over the same period. The broader S&P 500 is down about 9% since this time last year.

US gasoline prices hit a record national average of about $5 a gallon last year as oil and gas prices soared around the world.


picture:

Matthew Bush/Bloomberg News

Exxon’s annual profit of $55.7 billion last year was more than $10 billion higher than the previous record of $45.2 billion, set in 2008.

Last week, Exxon’s closest competitor

chevron

Historic gain reported From $ 35.5 billion last year, its profits are not far from Exxon and JPMorgan on the list of the most profitable American companies last year, according to the magazine’s analysis.

It’s a remarkable turnaround for an industry that has been dead for two years. The historic slump in energy demand at the start of the pandemic in 2020 prompted companies to idle hundreds of drilling rigs, cut billions in spending and shut down wells producing millions of barrels of oil a day — last after crude prices fell briefly in April. 2020. Oil shale companies such as

Chesapeake Energy corp.

And

Whiting Petroleum corp.

He filed for bankruptcy along with dozens of others.

Institutional investors have made money avoiding the energy sector for years, investors said. Last year’s curtailment of global energy supplies has led some to acknowledge the role of the US oil industry in keeping global commodity prices stable, said Thomas Ackermann, co-founder and partner at investment firm Carnelian Energy Capital. However, investors still feel overwhelmed by the poor performance of US oil and gas companies over the years, and remain reluctant to invest, he said.

“We haven’t seen the year jump to energy dramatically,” Mr. Ackerman said. “The performance of Exxon and Chevron reflects what’s happening to commodity prices, and the fact that oil prices are high because we don’t have enough global supply.”

But Mr. Ackerman said the companies have shifted their priorities, focusing on shareholder returns and generating free cash flow, which has helped publicly traded energy companies become more attractive to institutional investors.

At the same time, Exxon and Chevron’s historic earnings opened them up to sharp criticism from the Biden administration. In June, President Biden said Exxon had “made more profits than God this year,” and US officials criticized the oil companies for focusing on returning profits to shareholders rather than pumping more oil and gas while Americans were feeling pain at the pump.

In response, oil companies have highlighted their investments. In 2022, Exxon’s oil and gas production will rise by 25,000 barrels of oil equivalent per day despite the sale of billions in investments and the Kremlin’s move to eliminate Exxon’s stake in Sakhalin-1, said Catherine Michaels, Exxon’s chief financial officer. Without these changes, it said, the company’s production would have risen by 140,000 barrels of oil equivalent per day.

“Business investment is more important than ever,” said Ms. Michaels. “The world needs more supplies.”

Write to Collin Eaton at [email protected]

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