Exxon Mobil reported first quarter earnings Friday increasing from last year, but did not meet analysts expectations for the second straight quarter. Exxon stock fell 3.5 percent after market open on Friday. Oil-equivalent production was 3.9 million barrels per day, down 6 percent from the first quarter of 2017. Excluding entitlement effects and divestments, oil-equivalent production was down 3 percent from the first quarter of 2017.
“Increased commodity prices, coupled with a focus on operating efficiently and strengthening our portfolio, resulted in higher earnings and the highest quarterly cash flow from operations and asset sales since 2014,” said Darren W. Woods, chairman and chief executive officer. “Through new discoveries and acquired acreage, we’ve positioned our Upstream portfolio well for future growth. We also made good progress on our plans to improve the production mix and grow premium product sales in the Downstream and Chemical businesses.”
First Quarter 2018 Business Highlights
- Crude and natural gas prices strengthened in the first quarter. ExxonMobil’s crude realizations were impacted by an increased discount in Western Canada, notably for heavy crudes, as Canadian supply exceeded pipeline and rail capacity. The logistics constraints in Canada supported the decision to accelerate Syncrude turnaround activities into the first quarter.
- Natural gas prices were supported by strong seasonal demand with colder weather across Europe and the U.S. and higher crude-linked LNG prices.
- As expected, higher prices reduced entitlement volumes.
- Following a severe earthquake in Papua New Guinea on February 26, operations at the PNG LNG project were temporarily shut down while the company responded with humanitarian relief for impacted communities and worked to fully restore operations. The project safely resumed LNG production ahead of schedule in mid-April. The impact of the earthquake reduced earnings by $80 million and production by 25,000 oil-equivalent barrels per day.
- The Hebron field in Canada, which started up last year, has ramped up to produce 14,000 oil-equivalent barrels per day in the first quarter with well performance exceeding expectations.
- Development of the company’s U.S. unconventional acreage is progressing with 27 operated rigs in the Permian and four operated rigs in the Bakken. Permian and Bakken unconventional production has experienced 18 percent growth year-over-year.
- Global refining margins remained generally strong, especially in North America. Petroleum product demand was seasonally lower.
- Overall manufacturing reliability improved from one-time fourth quarter events. A significant focus during the quarter was on returning the refinery in Joliet, Ill., back to full capacity in March, capturing attractive margins on weaker Canadian crude prices.
- ExxonMobil continued to make significant progress in growing the business. The integration of Jurong Aromatics Corporation into the existing Singapore business is progressing as planned, contributing 340,000 metric tons of sales during the quarter.
- The North America Growth project is also progressing well with the new polyethylene lines in Mont Belvieu, Texas, increasing sales volumes in the quarter.
- As expected, incremental activity associated with startup and commissioning of these new facilities increased expenses during the quarter.
- Within the base business, large planned turnarounds in the Middle East and the Gulf Coast were successfully completed.
- ExxonMobil announced its seventh oil discovery offshore Guyana with the completion of the Pacora-1 exploration well. The well encountered approximately 65 feet (20 meters) of high-quality, oil-bearing sandstone reservoir.
- During the quarter, the company increased its holdings in Brazil’s pre-salt basins after winning eight additional exploration blocks, six of them to be operated by ExxonMobil, during the latest bid round. The company added more than 640,000 net acres to its existing deepwater portfolio offshore Brazil, and is now one of the largest acreage holders among international oil companies in the country.
- ExxonMobil announced that its estimate of the size of the natural gas resource at the P’nyang field in Papua New Guinea (PNG) has increased to 4.36 trillion cubic feet of gas, an 84 percent increase from the previous assessment completed in 2012. This increase, based on an independent recertification study, supports a potential three-train expansion concept of the PNG LNG plant.
- ExxonMobil sold its 50 percent ownership interest in the Scarborough gas field, offshore Western Australia, to Woodside Petroleum Ltd. In the Downstream, the company closed several divestments, including distribution and marketing assets in South America, and retail sites in Europe.
- During the quarter, ExxonMobil added to its exploration portfolio offshore West Africa by signing an agreement with the government of Ghana to acquire exploration and production rights for the Deepwater Cape Three Points block. ExxonMobil also signed an agreement with a subsidiary of Galp Energia, SGPS, S.A. for a 40 percent farm-in to a deepwater license offshore Namibia. Both agreements are subject to government approvals.
- The company began commissioning its new ethane cracker in Baytown, Texas. The cracker, expected to start up mid-year 2018, will produce 1.5 million metric tons per year of ethylene feedstock for the new polyethylene lines at the company’s plastics plant in Mont Belvieu, Texas.
- The company also continued its entry into Mexico’s fuels market with the opening of new Mobil-branded service stations operated by Grupo Orsan and Grupo Combured. The new stations will be supplied with gasoline and diesel produced by ExxonMobil’s refineries in Texas.
- During the quarter, ExxonMobil and Synthetic Genomics, Inc. announced a new phase in their joint algae biofuel research program that could lead to the technical ability to produce 10,000 barrels of algae biofuel per day by 2025.