Q3 2024 Earnings Summary
- Exxon Mobil is achieving more synergies than initially anticipated from the Pioneer acquisition, particularly in the Permian Basin, resulting in increased efficiencies and value generation.
- The company sees significant growth potential in innovative technologies like Proxxima and Carbon Materials Venture, which could contribute multiple billions of dollars in revenue over the next 5 to 10 years.
- Exxon Mobil continues to maximize production capacity and value in key projects like Guyana, with expectations of ongoing strong performance and value creation.
- Exxon Mobil is withdrawing from exploration opportunities like the farm-down process in Namibia, potentially limiting future growth in upstream reserves.
- Uncertainties exist in the commercialization timelines for new ventures such as Proxxima thermoset resin and Carbon Materials Venture, as they require proving success before ramping up production, which may delay potential earnings contributions.
- Entering the challenging Asia chemicals market with the China One project amid bottom-of-cycle conditions and overcapacity, which may impact the project's returns despite being low-cost and high-performance.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | -1% | The slight YoY decrease reflects marginally lower average commodity prices and weaker refining margins, partially offset by steadily increasing Upstream volumes. This closely aligns with the trends seen in previous quarters, where price realization declines were compensated by volume growth from key assets. |
Net Income | -5% | The decrease in net income was mainly driven by lower overall commodity prices versus the prior year and slightly weaker refining margins, consistent with Q2 patterns of price-driven earnings fluctuation. Although Upstream production growth added support, it did not fully offset the downward pressure on realizations. |
EPS (Diluted) | -15% | EPS declined more sharply than total earnings partly due to changes in the effective tax rate and identified items that weighed on per-share metrics. While share repurchases typically can bolster EPS, the pullback in realizations and margins compared to the prior year period reduced bottom-line profitability on a per-share basis. |
U.S. Revenue | +9% | The jump in U.S. revenue reflects increased Permian production volumes and contributions from the Pioneer acquisition, continuing the volume-driven gains seen in Q2 2024. Higher crude oil realizations in North America also supported the top line, outweighing weaker refining margins. |
Non-U.S. Revenue | -7% | Regions outside the U.S. were more exposed to softer commodity prices and refining margin contraction, resulting in a YoY decrease. Though production remained solid in areas like Guyana, overall reduced realizations and lower product margins held back revenue, aligning with broader Q2–Q3 trends. |
• Canada | -6% | Lower realizations remained a headwind, echoing the Q2 2023 trend of price sensitivity in Canadian operations, although volume growth provided partial support. |
• UK | -9% | The ongoing effect of weaker crude prices and refining conditions led to reduced revenues, consistent with the European market softness observed in prior quarters. |
• Singapore | +7% | An improvement in downstream product demand and favorable trading compared to 2023 aided revenue gains, reversing part of the previous year’s volume and price declines. |
• France | -11% | Continues to reflect lower refining margins and reduced natural gas realizations, mirroring the Q2 2023 drop in European operations. |
Share Repurchases | From $72M to $5.51B | The massive YoY increase stems from ExxonMobil’s expanded buyback program and stronger cash flows. Building on Q2 2024’s higher repurchase pace, the company continued to prioritize returning capital to shareholders, illustrating management confidence in long-term cash generation. |
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Guyana Production Capacity
Q: How do you reconcile production vs capacity in Guyana?
A: Darren Woods explains that there are many variables affecting production versus capacity in Guyana, including the timing of project startups and scheduling of infill drilling to maintain capacity utilization. The focus is on fully utilizing capital and pushing production safely, finding ways to fill capacity. They plan to provide more details in December during the corporate plan review. -
LNG Projects Update
Q: What's the status of the Golden Pass and Qatar LNG projects?
A: Darren Woods states that the Golden Pass project is expected to be delayed by about 6 months, with first LNG anticipated at the end of 2025 or early 2026, due to a contractor bankruptcy. Each train is expected to follow approximately 6 months apart. Regarding Qatar's North Field expansion, they feel good about the collaboration with Qatar Energy but defer detailed updates to them. Overall, they have a strong LNG portfolio with positive market response and strong customer interest. -
Downstream Earnings Beat
Q: Can you discuss the drivers behind the downstream earnings beat?
A: Darren Woods attributes the strong downstream results to a new approach optimizing the full value chain, cost reductions, centralizing activities, and improving maintenance efficiency. Eliminating barriers between chemical and refining businesses and optimizing molecules across both have had a significant impact. Kathryn Mikells adds they saw a $0.5 billion uplift year-to-date from advantaged project growth and cost savings, including the Beaumont expansion and Permian Crude Ventures. A faster-than-expected restart at Joliet also contributed positively.
Research analysts covering EXXON MOBIL.