10-QPeriod: Q2 FY2016

EXXON MOBIL CORP Quarterly Report for Q2 Ended Jun 30, 2016

Filed August 3, 2016For Securities:XOM

Summary

ExxonMobil Corporation reported a significant decline in net income attributable to shareholders for the second quarter and first six months of 2016 compared to the same periods in 2015. This decline was primarily driven by sharply lower commodity prices and weaker refining margins, despite a strong performance in the Chemical segment. The company's Upstream segment experienced substantial earnings reduction, particularly in U.S. operations, due to lower liquid and gas realizations. Downstream earnings also decreased, impacted by weaker refining margins. Despite the challenging market conditions, ExxonMobil maintained its focus on business fundamentals and cost discipline. Capital and exploration expenditures were reduced by 36% year-over-year for the first six months of 2016, reflecting a strategic adjustment to market realities. The company also continued its shareholder distributions, paying out $6.2 billion in dividends during the first six months of the year, while managing its debt levels, which saw an increase in the long-term debt component.

Financial Highlights

40 data points
Beta

Net Income

$1.70B

EPS (Diluted)

$0.41

Total Assets

$342.47B

Cash & Equivalents

$4.36B

Free Cash Flow

$248.00M

Financial Statements
Beta
SG&A Expenses$2.65B
Operating Expenses$55.30B
Interest Expense$75.00M
Net Income$1.70B
EPS (Basic)$0.41
EPS (Diluted)$0.41
Shares Outstanding (Basic)4.18B

Key Highlights

  • 1Net income attributable to ExxonMobil decreased significantly to $1.7 billion in Q2 2016 and $3.5 billion in the first six months of 2016, down from $4.2 billion and $9.1 billion in the prior year periods, respectively.
  • 2Earnings per diluted share were $0.41 for Q2 2016 and $0.84 for the first six months of 2016, a substantial decrease from $1.00 and $2.17 in the respective periods of 2015.
  • 3The Upstream segment's earnings were heavily impacted by lower commodity prices, with U.S. Upstream reporting a loss of $514 million in Q2 2016 and $1.3 billion for the first six months.
  • 4Downstream earnings saw a decline due to weaker refining margins, decreasing by $681 million in Q2 2016 and $1.4 billion in the first six months compared to 2015.
  • 5The Chemical segment showed resilience, with earnings of $1.2 billion in Q2 2016 and $2.6 billion in the first six months, an increase of $344 million for the six-month period, driven by stronger margins.
  • 6Capital and exploration expenditures were reduced by 36% to $10.3 billion for the first six months of 2016, indicating a response to market conditions.
  • 7Total debt increased, with long-term debt rising to $29.5 billion from $19.9 billion at year-end 2015, leading to a debt-to-total capital ratio increase to 20.1% from 18.0%.

Frequently Asked Questions

The primary driver for the significant decrease in earnings was the sharp decline in commodity prices, particularly for crude oil and natural gas, coupled with weaker refining margins across the Downstream segment. These factors negatively impacted revenue and profitability, especially within the Upstream and Downstream business segments.

ExxonMobil significantly reduced its capital and exploration expenditures. For the first six months of 2016, these expenditures totaled $10.3 billion, a 36% decrease from the $15.9 billion spent in the same period of 2015. The company anticipates its full-year 2016 investment level to be below previous targets, reflecting a strategy of prioritizing investments and cost discipline.

Despite lower earnings, ExxonMobil continued to prioritize shareholder returns, distributing $6.2 billion in dividends during the first six months of 2016. The company highlighted its scale, integration, and financial flexibility, which enable it to invest in attractive opportunities and maintain long-term shareholder value even in a volatile industry environment.

The Upstream segment saw its earnings decline substantially due to lower commodity prices. The Downstream segment's earnings were negatively impacted by weaker refining margins. The Chemical segment demonstrated resilience, with improved margins and volume contributing to increased earnings for the first six months of 2016.