The world’s largest publicly traded oil company, Exxon Mobil (XOM, Financial), released its third quarter results on October 31 which fascinated Wall Street analysts as well as the company stockholders. Soon after the results were out, the stock jumped 1.4% to $95.75 in premarket trading. CEO, Rex Tillerson stated – “Exxon Mobil's quarterly results demonstrate the strength of our integrated business model…” Let’s quickly check out the financial playbook of Exxon Mobil and find out what were the key highlights in the quarter as far as the number game goes.
The number mix remains attractive
The refining and chemicals business pulled up the revenue and profits for the quarter. As crude oil prices have taken a downtrend in the past few weeks, analysts had estimated that the revenue of the company would be hit hard and Wall Street had forecast Exxon to report revenue of $105.51 billion in the quarter. Exxon Mobil reported revenue which was higher than the estimate at $107.49 billion falling 4.3% from $112.37 billion, reported a year ago. Also profits were up about 3%, and the earnings stood at $1.89 per share, up from $1.79 a share in the year-earlier period. The earnings outpaced the Street consensus of $1.71 a share for the quarter.
Integration across the company’s exploration and production, refining and chemicals businesses aided in providing the competitive advantage regardless of macroeconomic headwinds such as sudden downtrend noticed in oil prices or sudden market fluctuations.
Remarkable in the quarter is that even after the oil and gas production has fallen 4.7%, the Texas based company stated that it is on track for full-year output of 4 million barrels oil equivalent per day (boed). Earnings on the oil and production business line fell 4.4% to $6.4 billion impacted heavily by falling crude oil prices.
On the other hand, the refining business saw a boost in bottom line which soared to $1.024 billion from $592 million a year earlier. The chemicals line of business also posted decent profits which came in to $1.2 billion, up around 17% from the year-ago quarter.
Cash flow remains firm, investors rewarded
The corporation’s cash flow from operations through the first nine months of the year fully covered net investments and shareholder distributions. The cash flow from operations stood at $41.5 billion year to date, and free cash flow was $19.4 billion showing an increase of $12 billion year to date from that of the previous year.
The company believes in keeping its shareholders contended. Hence, during the third quarter of the fiscal year it distributed $5.9 billion to shareholders which included $3 billion in share repurchases for reducing the shares outstanding balance. Also dividend of $0.69 a share was declared that exhibited improvement of 9.5%, compared to the third quarter of 2013.
In fact, the company has distributed $17.6 billion to shareholders within the first nine months of the fiscal year through dividends and share repurchases.
New projects in place
Exxon Mobil has entered into a second nonmonetary exchange agreement with LINN Energy LLC (LINE, Financial) to add 17,800 net acres in the Permian Basin to its U.S. oil and natural gas portfolio, managed by subsidiary XTO Energy Inc. (XTO, Financial). This agreement extends XTO’s leasehold position to more than 1.5 million acres in the entire Permian Basin.
Besides this agreement, the corporation has announced the start-up of the Tapis enhanced oil recovery (EOR) project which is Malaysia’s first large-scale oil recovery project, and would utilize the immiscible water-alternating-gas process to increase overall field recovery. With this project in hand, Exxon Mobil’s leadership in technology application and global project execution is well portrayed.
Final word
Exxon Mobil is on a growth trajectory and with such new projects in hand, the company management is confident of delivering better top and bottom line numbers in the coming quarters as well. Also the company has delivered value to its stockholders in the past quarter and has expectations of providing a $3 billion share repurchase program in the fourth quarter of the fiscal year adding to the delight to the investors. So let’s stay tuned, and keep watching how the company adds to the investor’s kitty in the next quarters.
