ExxonMobil Announces Second-Quarter 2024 Results

Business Wire 2-Aug-2024 6:30 AM

• Delivered industry-leading second-quarter earnings of $9.2 billion¹, showcasing the differentiated strengths of ExxonMobil's portfolio and its improved earnings power

• The Pioneer merger, which closed five months faster than similar transactions and fundamentally transforms the Upstream portfolio, contributed $0.5 billion to earnings in the first two months post-closing² with record production, and integration and synergy benefits are exceeding expectations

• Also achieved record production in Guyana and heritage Permian; Upstream total net production grew 15%, or 574,000 oil-equivalent barrels per day, from the first quarter

• Expanded the company's value proposition by progressing new businesses including furthering carbon capture and storage (CCS) leadership with a new agreement that increased total contracted CO₂ offtake with industrial customers to 5.5 million metric tons per year³, more committed volume than any other company has announced

Exxon Mobil Corporation (NYSE:XOM):

Exxon Mobil Corporation today announced second-quarter 2024 earnings of $9.2 billion, or $2.14 per share assuming dilution. Cash flow from operating activities was $10.6 billion and cash flow from operations excluding working capital movements was $15.2 billion. Shareholder distributions of $9.5 billion included $4.3 billion of dividends and $5.2 billion of share repurchases, consistent with the company's announced plans.

"We delivered our second-highest 2Q earnings of the past decade as we continue to improve the fundamental earnings power of the company," said Darren Woods, chairman and chief executive officer.

"We achieved record quarterly production from our low-cost-of-supply Permian and Guyana assets, with the highest oil production since the Exxon and Mobil merger. We also achieved a record in high-value product sales, growing by 10% versus the first half of last year. We closed on our transformative merger with Pioneer in about half the time of similar deals. And we're continuing to build businesses such as Proxxima^TM, carbon materials and virtually carbon-free hydrogen, with approximately 98% of CO₂ removed, that will create value long into the future."

Financial Highlights

• Year-to-date earnings were $17.5 billion versus $19.3 billion in the first half of 2023. Earnings excluding identified items were $17.5 billion compared to $19.5 billion in the same period last year. Earnings decreased as industry refining margins and natural gas prices declined from last year's historically high levels to trade within the ten-year historical range², while crude prices rose modestly. Strong advantaged volume growth from record Guyana, Pioneer, and heritage Permian assets, high-value products and the Beaumont refinery expansion more than offset lower base volumes from divestments of non-strategic assets and government-mandated curtailments. Structural cost savings partially offset higher expenses from scheduled maintenance, depreciation and support of new businesses and 2025 project start-ups.
• Achieved $10.7 billion of cumulative Structural Cost Savings versus 2019, including an additional $1.0 billion of savings during the year and $0.6 billion during the quarter. The company is on track to deliver cumulative savings totaling $5 billion through the end of 2027 versus 2023.
• Generated strong cash flow from operations of $25.2 billion and free cash flow of $15.0 billion in the first half of the year, including working capital outflows of $2.6 billion driven by higher seasonal cash tax payments. Excluding working capital, cash flow from operations and free cash flow were $27.8 billion and $17.6 billion, respectively. Year-to-date shareholder distributions of $16.3 billion included $8.1 billion of dividends and $8.3 billion of share repurchases. Following the close of the Pioneer transaction, the Corporation increased the annual pace of share repurchases to $20 billion through 2025, assuming reasonable market conditions. The company plans to repurchase over $19 billion of shares in 2024.
• The Corporation declared a third-quarter dividend of $0.95 per share, payable on September 10, 2024, to shareholders of record of Common Stock at the close of business on August 15, 2024.
• The company's debt-to-capital ratio was 14% and the net-debt-to-capital ratio was 6%³, reflecting a year-to-date debt repayment of $3.9 billion and a period-end cash balance of $26.5 billion.
• Capital and exploration expenditures were $7.0 billion in the second quarter including $0.7 billion from Pioneer, bringing year-to-date expenditures to $12.9 billion. The Corporation anticipates full-year capital and exploration expenditures to be approximately $28 billion, which includes the top end of the previously announced guidance for ExxonMobil of $25 billion, and about $3 billion for 8 months of Pioneer, consistent with their prior guidance.

ADVANCING CLIMATE SOLUTIONS

Virtually Carbon-Free Hydrogen

• ExxonMobil and Air Liquide reached an agreement to support the production of virtually carbon-free hydrogen, with approximately 98% of CO₂ removed, and ammonia at ExxonMobil's planned Baytown, Texas hydrogen facility. The agreement will enable transportation of hydrogen through Air Liquide's existing pipeline network. Additionally, Air Liquide will build and operate four Large Modular Air separation units (LMAs) to supply 9,000 metric tons of oxygen and up to 6,500 metric tons of nitrogen daily to the facility. The LMAs are expected to primarily use low-carbon electricity to reduce the project's carbon footprint. The production facility would be the world's largest planned virtually carbon-free hydrogen project and is expected to produce 1 billion cubic feet of hydrogen daily, and more than 1 million metric tons of ammonia per year while capturing approximately 98% of the associated CO₂ emissions. ExxonMobil aims to help enable the growth of a low-carbon hydrogen market along the U.S. Gulf Coast to assist industrial customers achieve their decarbonization goals.

Lithium

• ExxonMobil has signed a non-binding memorandum of understanding (MOU) with SK On, a global leading electric vehicle (EV) battery developer, that enables a multiyear offtake agreement of up to 100,000 metric tons of Mobil^TM Lithium from the company's first planned project in Arkansas. SK On plans to use the lithium in its EV battery manufacturing operations in the United States.

Carbon Capture and Storage

• ExxonMobil signed its fourth carbon capture and storage (CCS) agreement with a major industrial customer, bringing the total contracted CO₂ to store for industrial customers up to 5.5 million metric tons per year. The new agreement is the second project with CF Industries, a major fertilizer and ammonia producer. Under the contract, ExxonMobil will transport and store up to 500,000 metric tons of CO₂ per year from CF's operations in Yazoo City, Mississippi, reducing CO₂ emissions from the site by up to 50%.

Products Supporting a Lower-Emissions Future

• The Proxxima^TM business transforms lower-value gasoline molecules into a high-performance, high-value thermoset resin that can be used in coatings, light-weight construction materials, and advanced composites for cars and trucks – including battery boxes for electric vehicles. Materials made with Proxxima^TM are lighter, stronger, more durable, and produced with significantly fewer GHG emissions than traditional alternatives¹. In March, the company showcased the automotive uses of Proxxima^TM at the world's leading international composites exhibition in Paris. The company is progressing projects in Texas, with startups anticipated in 2025, that will significantly expand production of Proxxima^TM. The company sees the total potential addressable market for Proxxima^TM at 5 million metric tons and $30 billion dollars by 2030 with demand growing faster than GDP and returns above 15%².
• The Carbon Materials venture transforms the molecular structure of low-value, carbon-rich feeds from the company's refining processes into high-value products for a range of applications. The company is targeting market segments including carbon fiber, polymer additives, and battery materials with margins of several thousand dollars per ton and growth rates outpacing GDP³.

• Upstream year-to-date earnings were $12.7 billion, $1.7 billion higher than the first half of 2023. The prior-year period was negatively impacted by tax-related identified items. Excluding identified items, earnings increased $1.5 billion due to advantaged assets volume growth from record Guyana, heritage Permian and Pioneer production. Year-to-date net production was 4.1 million oil-equivalent barrels per day, an increase of 9%, or 352,000 oil-equivalent barrels per day. Higher crude realizations and structural cost savings offset lower natural gas realizations, higher expenses mainly from depreciation, and lower base volumes due to divestments of non-strategic assets and government-mandated curtailments.
• Second-quarter earnings were $7.1 billion, an increase of $1.4 billion from the first quarter driven by the Pioneer acquisition, record Guyana and heritage Permian production, and structural cost savings. Higher crude realizations and divestment gains more than offset lower gas realizations. Net production in the second quarter was 4.4 million oil-equivalent barrels per day, an increase of 15%, or 574,000 oil-equivalent barrels per day compared to the prior quarter due to advantaged volume growth from Pioneer, Guyana and heritage Permian.
• On May 3, 2024, ExxonMobil completed the acquisition of Pioneer Natural Resources. The company issued 545 million shares of ExxonMobil common stock having a fair value of $63 billion on the acquisition date and assumed $5 billion of debt. The merger of ExxonMobil and Pioneer created the largest, high-return unconventional resource development potential in the world.
• In the quarter, the Company submitted an application to the Guyanese Environmental Protection Agency for the Hammerhead project, the proposed seventh development. Production capacity is expected to be 120,000 to 180,000 barrels per day, with anticipated start-up in 2029, pending Guyanese government approval.

• Energy Products year-to-date earnings were $2.3 billion, a decrease of $4.2 billion versus the first half of 2023 due to significantly lower industry refining margins which normalized from historically high prior year levels as demand growth was more than met by capacity additions. Earnings improvement from structural cost savings and the advantaged Beaumont refinery expansion project partially offset higher scheduled maintenance impacts and lower volumes from non-core refinery divestments. Unfavorable timing effects, mainly from derivatives mark-to-market impacts, also contributed to the earnings decline.
• Second-quarter earnings totaled $0.9 billion compared to $1.4 billion in the first quarter driven by weaker industry refining margins as additional supply outpaced record demand in the second quarter. Stronger trading and marketing margins, as well as favorable derivatives mark-to-market timing effects provided a partial offset.

• Chemical Products year-to-date earnings were $1.6 billion, an increase of $365 million versus the first half of 2023 driven by strong performance product sales growth and higher base volumes from modest demand improvement and lower turnaround impacts. Despite weaker global industry margins, overall margins increased as a result of the company's advantaged North American footprint which benefited from lower feed and energy costs. Structural cost savings provided a partial offset to higher project and maintenance expenses.
• Second-quarter earnings were $779 million compared to $785 million in the first quarter. Stronger margins, high-value product sales growth from record performance product sales and structural cost savings offset higher maintenance impacts and project expenses.

• Specialty Products delivered consistently strong earnings from its portfolio of high-value products. Year-to-date earnings were $1.5 billion, an increase of $67 million compared with the first half of 2023. Improved finished lubes margins and structural cost savings more than offset weaker industry basestock margins and higher new business development expenses. Earnings also benefited from higher volumes across the lubricants value chain, including record first-half Mobil 1^TM sales.
• Second-quarter earnings were $751 million, compared to $761 million in the first quarter. Seasonally higher expenses were mostly offset by favorable tax impacts.

• Year-to-date net charges of $672 million decreased $189 million compared to the first half of 2023 mainly due to lower financing costs.
• Corporate and Financing second-quarter net charges of $310 million decreased $52 million versus the first quarter.

This press release also references Structural Cost Savings, which describes decreases in cash opex excluding energy and production taxes as a result of operational efficiencies, workforce reductions, divestment-related reductions, and other cost-savings measures, that are expected to be sustainable compared to 2019 levels. Relative to 2019, estimated cumulative Structural Cost Savings totaled $10.7 billion, which included an additional $1.0 billion in the first six months of 2024. The total change between periods in expenses above will reflect both Structural Cost Savings and other changes in spend, including market factors, such as inflation and foreign exchange impacts, as well as changes in activity levels and costs associated with new operations, mergers and acquisitions, new business venture development, and early-stage projects. Estimates of cumulative annual structural savings may be revised depending on whether cost reductions realized in prior periods are determined to be sustainable compared to 2019 levels. Structural Cost Savings are stewarded internally to support management's oversight of spending over time. This measure is useful for investors to understand the Corporation's efforts to optimize spending through disciplined expense management.

ExxonMobil will discuss financial and operating results and other matters during a webcast at 7:30 a.m. Central Time on August 2, 2024. To listen to the event or access an archived replay, please visit www.exxonmobil.com.

Selected Earnings Factor Definitions

Advantaged volume growth. Earnings impact from change in volume/mix from advantaged assets, strategic projects, and high-value products. See frequently used terms on page 11 for definitions of advantaged assets, strategic projects, and high-value products.

Base volume. Includes all volume/mix factors not included in Advantaged volume growth factor defined above.

Structural cost savings. After-tax earnings effect of Structural Cost Savings as defined on page 8, including cash operating expenses related to divestments that were previously included in "volume/mix" factor.

Expenses. Includes all expenses otherwise not included in other earnings factors.

Timing effects. Timing effects are primarily related to unsettled derivatives (mark-to-market) and other earnings impacts driven by timing differences between the settlement of derivatives and their offsetting physical commodity realizations (due to LIFO inventory accounting).

Cautionary Statement

Statements related to future events; projections; descriptions of strategic, operating, and financial plans and objectives; statements of future ambitions, potential addressable markets, or plans; and other statements of future events or conditions in this release, are forward-looking statements. Similarly, discussion of future carbon capture, transportation and storage, as well as biofuels, hydrogen, ammonia, direct air capture, and other plans to reduce emissions of ExxonMobil, its affiliates, and third parties, are dependent on future market factors, such as continued technological progress, policy support and timely rule-making and permitting, and represent forward-looking statements. Actual future results, including financial and operating performance; potential earnings, cash flow, or rate of return; total capital expenditures and mix, including allocations of capital to low carbon investments; realization and maintenance of structural cost reductions and efficiency gains, including the ability to offset inflationary pressure; plans to reduce future emissions and emissions intensity; ambitions to reach Scope 1 and Scope 2 net zero from operated assets by 2050, to reach Scope 1 and 2 net zero in heritage Upstream Permian Basin unconventional operated assets by 2030 and in Pioneer Permian assets by 2035, to eliminate routine flaring in-line with World Bank Zero Routine Flaring, to reach near-zero methane emissions from its operated assets and other methane initiatives, to meet ExxonMobil's emission reduction goals and plans, divestment and start-up plans, and associated project plans as well as technology advances, including the timing and outcome of projects to capture and store CO₂, produce hydrogen and ammonia, produce biofuels, produce lithium, create new advanced carbon materials, and use plastic waste as feedstock for advanced recycling; cash flow, dividends and shareholder returns, including the timing and amounts of share repurchases; future debt levels and credit ratings; business and project plans, timing, costs, capacities and returns; resource recoveries and production rates; and planned Pioneer and Denbury integrated benefits, could differ materially due to a number of factors. These include global or regional changes in the supply and demand for oil, natural gas, petrochemicals, and feedstocks and other market factors, economic conditions and seasonal fluctuations that impact prices and differentials for our products; changes in law, taxes, or regulation including environmental and tax regulations, trade sanctions, and timely granting of governmental permits and certifications; the development or changes in government policies supporting lower carbon and new market investment opportunities such as the U.S. Inflation Reduction Act or policies limiting the attractiveness of future investment such as the additional European taxes on the energy sector and unequal support for different methods of emissions reduction; variable impacts of trading activities on our margins and results each quarter; actions of competitors and commercial counterparties; the outcome of commercial negotiations, including final agreed terms and conditions; the ability to access debt markets; the ultimate impacts of public health crises, including the effects of government responses on people and economies; reservoir performance, including variability and timing factors applicable to unconventional resources and the success of new unconventional technologies; the level and outcome of exploration projects and decisions to invest in future reserves; timely completion of development and other construction projects; final management approval of future projects and any changes in the scope, terms, or costs of such projects as approved; government regulation of our growth opportunities; war, civil unrest, attacks against the company or industry and other political or security disturbances; expropriations, seizure, or capacity, insurance or shipping limitations by foreign governments or laws; opportunities for potential acquisitions, investments or divestments and satisfaction of applicable conditions to closing, including timely regulatory approvals; the capture of efficiencies within and between business lines and the ability to maintain near-term cost reductions as ongoing efficiencies; unforeseen technical or operating difficulties and unplanned maintenance; the development and competitiveness of alternative energy and emission reduction technologies; the results of research programs and the ability to bring new technologies to commercial scale on a cost-competitive basis; and other factors discussed under Item 1A. Risk Factors of ExxonMobil's 2023 Form 10-K.

Actions needed to advance ExxonMobil's 2030 greenhouse gas emission-reductions plans are incorporated into its medium-term business plans, which are updated annually. The reference case for planning beyond 2030 is based on the Company's Global Outlook research and publication. The Outlook is reflective of the existing global policy environment and an assumption of increasing policy stringency and technology improvement to 2050. Current trends for policy stringency and deployment of lower-emission solutions are not yet on a pathway to achieve net-zero by 2050. As such, the Global Outlook does not project the degree of required future policy and technology advancement and deployment for the world, or ExxonMobil, to meet net zero by 2050. As future policies and technology advancements emerge, they will be incorporated into the Outlook, and the Company's business plans will be updated accordingly. References to projects or opportunities may not reflect investment decisions made by the corporation or its affiliates. Individual projects or opportunities may advance based on a number of factors, including availability of supportive policy, permitting, technological advancement for cost-effective abatement, insights from the company planning process, and alignment with our partners and other stakeholders. Capital investment guidance in lower-emission investments is based on our corporate plan; however, actual investment levels will be subject to the availability of the opportunity set, public policy support, and focused on returns.

Forward-looking and other statements regarding environmental and other sustainability efforts and aspirations are not an indication that these statements are material to investors or requiring disclosure in our filing with the SEC. In addition, historical, current, and forward-looking environmental and other sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future, including future rule-making. The release is provided under consistent SEC disclosure requirements and should not be misinterpreted as applying to any other disclosure standards.

Frequently Used Terms and Non-GAAP Measures

This press release includes cash flow from operations and asset sales (non-GAAP). Because of the regular nature of our asset management and divestment program, the company believes it is useful for investors to consider proceeds associated with the sales of subsidiaries, property, plant and equipment, and sales and returns of investments together with cash provided by operating activities when evaluating cash available for investment in the business and financing activities. A reconciliation to net cash provided by operating activities for the 2023 and 2024 periods is shown on page 7.

This press release also includes cash flow from operations excluding working capital (non-GAAP), and cash flow from operations and asset sales excluding working capital (non-GAAP). The company believes it is useful for investors to consider these numbers in comparing the underlying performance of the company's business across periods when there are significant period-to-period differences in the amount of changes in working capital. A reconciliation to net cash provided by operating activities for the 2023 and 2024 periods is shown on page 7.

This press release also includes Earnings/(Loss) Excluding Identified Items (non-GAAP), which are earnings/(loss) excluding individually significant non-operational events with, typically, an absolute corporate total earnings impact of at least $250 million in a given quarter. The earnings/(loss) impact of an identified item for an individual segment may be less than $250 million when the item impacts several periods or several segments. Earnings/(loss) excluding Identified Items does include non-operational earnings events or impacts that are generally below the $250 million threshold utilized for identified items. When the effect of these events is significant in aggregate, it is indicated in analysis of period results as part of quarterly earnings press release and teleconference materials. Management uses these figures to improve comparability of the underlying business across multiple periods by isolating and removing significant non-operational events from business results. The Corporation believes this view provides investors increased transparency into business results and trends and provides investors with a view of the business as seen through the eyes of management. Earnings excluding Identified Items is not meant to be viewed in isolation or as a substitute for net income/(loss) attributable to ExxonMobil as prepared in accordance with U.S. GAAP. A reconciliation to each of corporate earnings and segment earnings are shown for 2024 and 2023 periods in Attachments II-a and II-b. Earnings per share amounts are shown on page 1 and in Attachment II-a, including a reconciliation to earnings/(loss) per common share – assuming dilution (U.S. GAAP).

This press release also includes total taxes including sales-based taxes. This is a broader indicator of the total tax burden on the Corporation's products and earnings, including certain sales and value-added taxes imposed on and concurrent with revenue-producing transactions with customers and collected on behalf of governmental authorities ("sales-based taxes"). It combines "Income taxes" and "Total other taxes and duties" with sales-based taxes, which are reported net in the income statement. The company believes it is useful for the Corporation and its investors to understand the total tax burden imposed on the Corporation's products and earnings. A reconciliation to total taxes is shown in Attachment I-a.

This press release also references free cash flow (non-GAAP) and free cash flow excluding working capital (non-GAAP). Free cash flow is the sum of net cash provided by operating activities and net cash flow used in investing activities excluding cash acquired from mergers and acquisitions. These measures are useful when evaluating cash available for financing activities, including shareholder distributions, after investment in the business. Free cash flow and free cash flow excluding working capital are not meant to be viewed in isolation or as a substitute for net cash provided by operating activities. A reconciliation to net cash provided by operating activities for the 2023 and 2024 periods is shown on page 7.

References to resources or resource base may include quantities of oil and natural gas classified as proved reserves, as well as quantities that are not yet classified as proved reserves, but that are expected to be ultimately recoverable. The term "resource base" or similar terms are not intended to correspond to SEC definitions such as "probable" or "possible" reserves. A reconciliation of production excluding divestments, entitlements, and government mandates to actual production is contained in the Supplement to this release included as Exhibit 99.2 to the Form 8-K filed the same day as this news release.

The term "project" as used in this news release can refer to a variety of different activities and does not necessarily have the same meaning as in any government payment transparency reports. Projects or plans may not reflect investment decisions made by the company. Individual opportunities may advance based on a number of factors, including availability of supportive policy, technology for cost-effective abatement, and alignment with our partners and other stakeholders. The company may refer to these opportunities as projects in external disclosures at various stages throughout their progression.

Advantaged assets (Advantaged growth projects) includes Permian (heritage Permian and Pioneer), Guyana, Brazil and LNG.

Base portfolio (Base) in our Upstream segment, refers to assets (or volumes) other than advantaged assets (or volumes from advantaged assets). In our Energy Products segment, refers to assets (or volumes) other than strategic projects (or volumes from strategic projects). In our Chemical Products and Specialty Products segments refers to volumes other than high value products volumes.

Debt-to-capital ratio is total debt divided by the sum of total debt and equity. Total debt is the sum of notes and loans payable and long-term debt, as reported in the consolidated balance sheet.

Government mandates (curtailments) are changes to ExxonMobil's sustainable production levels as a result of production limits or sanctions imposed by governments.

Heritage Permian: Permian basin assets excluding assets acquired as part of the acquisition of Pioneer Natural Resources that closed May 3, 2024.

High-value products includes performance products and lower-emission fuels.

Lower-emission fuels are fuels with lower life cycle emissions than conventional transportation fuels for gasoline, diesel and jet transport.

Net-debt-to-capital ratio is net debt divided by the sum of net debt and total equity, where net debt is total debt net of cash and cash equivalents, excluding restricted cash. Total debt is the sum of notes and loans payable and long-term debt, as reported in the consolidated balance sheet.

Performance products (performance chemicals, performance lubricants) refers to products that provide differentiated performance for multiple applications through enhanced properties versus commodity alternatives and bring significant additional value to customers and end-users.

Strategic projects includes (i) the following completed projects: Rotterdam Hydrocracker, Corpus Christi Chemical Complex, Baton Rouge Polypropylene, Beaumont Crude Expansion, Baytown Chemical Expansion, Permian Crude Venture, and the 2022 Baytown advanced recycling facility; and (ii) the following projects still to be completed: Fawley Hydrofiner, China Chemical Complex, Singapore Resid Upgrade, Strathcona Renewable Diesel, Proxxima^TM Venture, USGC Reconfiguration, additional advanced recycling projects under evaluation worldwide, and additional projects in plan yet to be publicly announced.

This press release also references Structural Cost Savings, for more details see page 8.

Reference to Earnings

References to corporate earnings mean net income attributable to ExxonMobil (U.S. GAAP) from the consolidated income statement. Unless otherwise indicated, references to earnings, Upstream, Energy Products, Chemical Products, Specialty Products and Corporate and Financing earnings, and earnings per share are ExxonMobil's share after excluding amounts attributable to noncontrolling interests.

Exxon Mobil Corporation has numerous affiliates, many with names that include ExxonMobil, Exxon, Mobil, Esso, and XTO. For convenience and simplicity, those terms and terms such as Corporation, company, our, we, and its are sometimes used as abbreviated references to specific affiliates or affiliate groups. Similarly, ExxonMobil has business relationships with thousands of customers, suppliers, governments, and others. For convenience and simplicity, words such as venture, joint venture, partnership, co-venturer, and partner are used to indicate business and other relationships involving common activities and interests, and those words may not indicate precise legal relationships. ExxonMobil's ambitions, plans and goals do not guarantee any action or future performance by its affiliates or Exxon Mobil Corporation's responsibility for those affiliates' actions and future performance, each affiliate of which manages its own affairs.

Throughout this press release, both Exhibit 99.1 as well as Exhibit 99.2, due to rounding, numbers presented may not add up precisely to the totals indicated.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240802738079/en/