01—Abstract
Summary
Summary of the 8-K filed April 26, 2024. Cited figures are marked; the original filing is the authoritative source.
ExxonMobil reported first-quarter 2024 earnings of $8.2 billiona, or $2.06 per diluted share, down from $11.4 billion ($2.79 per share) in 1Q23.
Because there were no identified items in 1Q24, GAAP earnings and earnings excluding identified items were identical, which makes the year-over-year comparison cleaner than in the prior year, when tax-related items reduced results. The decline was driven mainly by weaker industry refining margins and lower natural gas prices, which normalized from 2023 highs, along with unfavorable timing effects from derivative mark-to-market impacts. Partly offsetting this were volume growth from Guyana (Payara reached nameplate capacity of 220,000 bbl/d in January), the Beaumont refinery expansion, and structural cost savings.
Cash flow from operations was $14.7 billionb and free cash flow was $10.1 billion, comfortably covering $6.8 billion of shareholder distributions ($3.8 billion in dividends and $3.0 billion in buybacks). The balance sheet remains strong, with a 16% debt-to-capital ratio, a 3% net-debt-to-capital ratio, and $33.3 billion of cash. Management declared a $0.95 quarterly dividend and said buybacks would rise to $20 billion per year after the pending Pioneer Natural Resources acquisition closes, which is expected in the second quarter of 2024 subject to regulatory approval.
Capital spending of $5.8 billionc is consistent with full-year guidance of $23-25 billion. Investors should weigh the earnings decline against continued progress on structural cost savings, which reached $10.1 billion cumulative versus 2019 with a target of $15 billion by end-2027.
Upstream production held steady at about 3.8 million oil-equivalent barrels per day, and the company approved the Whiptail project in Guyana, its sixth offshore development, with start-up targeted for year-end 2027. The results are furnished under Item 2.02 and 7.01 rather than filed, and the release contains non-GAAP measures and forward-looking statements that carry the usual risks.
02—Key points
Key Highlights
- Net earnings of $8.2 billion ($2.06 per diluted share), down 28% from $11.4 billion in 1Q23; no identified items in 1Q24, so GAAP and adjusted earnings match.
- Cash flow from operations of $14.7 billion and free cash flow of $10.1 billion, versus $16.3 billion and $11.4 billion a year earlier.
- Shareholder distributions of $6.8 billion in the quarter ($3.8 billion dividends, $3.0 billion buybacks); the quarterly dividend was declared at $0.95 per share.
- Share repurchases are planned to increase to $20 billion per year after the Pioneer Natural Resources merger closes (a $59.5 billion all-stock deal expected to close in 2Q24).
- Guyana continues to drive growth: Payara reached 220,000 bbl/d nameplate capacity early, and the Whiptail FID adds roughly 250,000 boe/d gross capacity with start-up targeted for 2027.
- Energy Products earnings fell $2.8 billion year over year to $1.4 billion on weaker refining margins, though record first-quarter refinery throughput and the Beaumont expansion partly offset this.
- Balance sheet is strong, with a 16% debt-to-capital ratio, a 3% net-debt-to-capital ratio, and $33.3 billion of cash; structural cost savings reached $10.1 billion versus 2019 with a $15 billion target by 2027.
03—Questions
Frequently Asked Questions
Why did ExxonMobil's earnings decline compared with the first quarter of 2023?
Earnings fell to $8.2 billion from $11.4 billion mainly because industry refining margins and natural gas prices came down from 2023 highs, and unfavorable derivative mark-to-market timing effects weighed on results. Advantaged volume growth from Guyana and the Beaumont refinery expansion, plus structural cost savings, partly offset these headwinds. Last year's results also included tax-related identified items that are absent in the current quarter.
Is the dividend safe, and how are shareholder returns trending?
The company declared a second-quarter dividend of $0.95 per share, unchanged from the first quarter and up from $0.91 a year earlier. First-quarter free cash flow of $10.1 billion covered the $6.8 billion of total shareholder distributions. Management plans to raise buybacks to $20 billion per year after the Pioneer acquisition closes, assuming reasonable market conditions, which would meaningfully increase total shareholder returns.
What does the pending Pioneer Natural Resources acquisition mean for investors?
The $59.5 billion all-stock deal, which Pioneer shareholders have approved, is expected to close in the second quarter of 2024 pending regulatory approval. It adds Permian Basin assets, and the company expects it to support higher buybacks. The filing does not quantify the expected earnings contribution, and integration and regulatory timing remain risks to monitor.
Is ExxonMobil's balance sheet and capital spending under control?
Yes. The debt-to-capital ratio is 16% and the net-debt-to-capital ratio is 3%, with $33.3 billion of cash at quarter end. Capital and exploration spending was $5.8 billion, consistent with full-year guidance of $23 billion to $25 billion. Long-term debt fell to $32.2 billion from $37.5 billion at year-end, while notes and loans payable rose to $8.2 billion.
What are the main growth drivers and risks to watch?
Growth is concentrated in Guyana, where Payara is producing above nameplate capacity, and the Whiptail project was approved with start-up targeted for 2027. Upstream production held roughly flat at 3.8 million oil-equivalent barrels per day. Risks include volatile refining margins, natural gas price declines, derivative timing effects, government-mandated curtailments, and regulatory timing for the Pioneer deal.
04—Continue