ExxonMobil earns US$16.2 billion in 2015

Exxon Mobil Corporation announced estimated 2015 earnings of US$16.2 billion compared with US$32.5 billion a year earlier. Higher Downstream and Chemical earnings were offset by sharply lower commodity prices in the Upstream.

“While our financial results reflect the challenging environment, we remain focused on the business fundamentals, including project execution and effective cost management,” said Rex W. Tillerson, Chairman and CEO. “The scale and diversity of our cash flows, along with our financial strength, provide us with the confidence to invest through the cycle to create long term shareholder value.”

ExxonMobil completed six major Upstream projects during the year and achieved its full year plan to produce 4.1 million boe/d. These new developments in Canada, Indonesia, Norway, the United States and West Africa added 300 000 boe/d of working interest production capacity.

Fourth quarter earnings were US$2.8 billion, or US$0.67 per diluted share, down from US$6.6 billion in 4Q14. Lower commodity prices in the Upstream were partly offset by higher Downstream earnings.

During 2015, the corporation distributed US$15.1 billion to shareholders in the form of dividends and share purchases to reduce shares outstanding.

4Q15 highlights

• Earnings of US$2.8 billion decreased US$3.8 billion, or 58%, from 4Q14.
• Earnings per share, assuming dilution, were US$0.67, a decrease of 57%.
• Capital and exploration expenditures were US$7.4 billion, down 29% from 4Q14.
• Oil equivalent production increased 4.8% from 4Q14, with liquids up 14% and natural gas down 5.6%.
• Cash flow from operations and asset sales was US$5.1 billion, including proceeds associated with asset sales of US$785 million.
• The corporation distributed US$3.6 billion to shareholders in 4Q15, including US$500 million in share purchases to reduce shares outstanding.
• Dividends per share of US$0.73 increased 5.8% compared with 4Q14.
• ExxonMobil successfully started the onshore central processing facility at the Banyu Urip field in Indonesia, which helped production reach more than 130 000 bpd of oil in the fourth quarter. The field is currently ramping up to full capacity and is expected to produce 450 million gross barrels of oil over its lifetime.
• The company is beginning a production pilot programme on the La Invernada and Bajo del Choique blocks in the Neuquén province of Argentina. This programme includes drilling five wells, as well as constructing a production facility and gas pipeline.

4Q15 versus 4Q14

Upstream earnings were US$857 million in 4Q15, down US$4.6 billion from 4Q14. Lower liquids and gas realisations decreased earnings by US$3.7 billion, while volume and mix effects increased earnings by US$100 million, benefiting from new developments. All other items, including the absence of both the prior year US deferred income tax effects and recognition of a favourable arbitration ruling for expropriated Venezuela assets, decreased earnings by US$960 million.

On an oil equivalent basis, production increased 4.8% from 4Q14. Liquids production totalled 2.5 million bpd, up 299 000 bpd. Project ramp up, work programmes and entitlement effects were partly offset by field decline. Natural gas production was 10.6 billion ft³/d, down 631 million ft³/d from 2014 due to regulatory restrictions in the Netherlands and field decline, partly offset by entitlement effects.

US Upstream earnings declined US$2 billion from 4Q14 to a loss of US$538 million in 4Q15. Non-US Upstream earnings were US$1.4 billion, down US$2.6 billion from the prior year.

Downstream earnings were US$1.4 billion, up US$854 million from 4Q14. Stronger margins and favourable volume and mix effects increased earnings by US$610 million and US$70 million, respectively. All other items increased earnings by US$170 million, including lower maintenance expenses and favourable foreign exchange and tax effects, partly offset by unfavourable inventory impacts. Petroleum product sales of 5.7 million bpd were 166 000 bpd lower than the prior year.

Earnings from the US Downstream were US$435 million, up US$436 million 4Q14. Non-US Downstream earnings of US$916 million were US$418 million higher than last year.

Chemical earnings of US$963 million were US$264 million lower than 4Q14. Margins decreased earnings by US$210 million driven by declining realisations. Volume and mix effects increased earnings by US$170 million. All other items decreased earnings by US$230 million, largely due to unfavourable foreign exchange, tax and inventory effects. Fourth quarter prime product sales of 6.5 million t were 765 000 t higher than the prior year's fourth quarter.Corporate and financing expenses were US$391 million for 4Q15, compared to US$622 million in 4Q14, with the decrease due mainly to net favourable tax-related impacts.

During 4Q15, ExxonMobil purchased 9.4 million shares of its common stock for the treasury at a gross cost of US$754 million. These purchases included US$500 million to reduce the number of shares outstanding, with the balance used to acquire shares to offset dilution in conjunction with the company’s benefit plans and programmes. In 1Q16, the corporation will continue to acquire shares to offset dilution in conjunction with its benefit plans and programmes, but does not plan on making purchases to reduce shares outstanding.

2015 highlights

• Earnings of US$16.2 billion decreased 50% from US$32.5 billion in 2014.
• Earnings per share, assuming dilution, decreased 49% to US$3.85.
• Capital and exploration expenditures were US$31.1 billion, down 19% from 2014. The company anticipates further reductions in 2016, with capital and exploration expenditures of US$23.2 billion, a decrease of 25% from 2015.
• Oil equivalent production increased 3.2% from 2014, with liquids up 11% and natural gas down 5.7%.
• Cash flow from operations and asset sales was US$32.7 billion, including proceeds associated with asset sales of US$2.4 billion.
• The corporation distributed US$15.1 billion to shareholders in 2015 through dividends and share purchases to reduce shares outstanding.

2015 versus 2014

Upstream earnings were US$7.1 billion, down US$20.4 billion from 2014. Lower realisations decreased earnings by US$18.8 billion. Favourable volume and mix effects increased earnings by US$810 million, including contributions from new developments. All other items decreased earnings by US$2.4 billion, primarily due to lower asset management gains and the absence of prior year deferred income tax effects.

On an oil equivalent basis, production of 4.1 million bpd was up 3.2% compared to 2014. Liquids production of 2.3 million bpd increased 234 000 bpd, with project ramp up and entitlement effects partly offset by field decline. Natural gas production of 10.5 billion ft³/d decreased 630 million ft³/d from 2014 as regulatory restrictions in the Netherlands and field decline were partly offset by project ramp up, work programmes and entitlement effects.

US Upstream earnings declined US$6.3 billion from 2014 to a loss of US$1.1 billion in 2015. Earnings outside the US were US$8.2 billion, down US$14.2 billion from the prior year.

Downstream earnings of US$6.6 billion increased US$3.5 billion from 2014. Stronger margins increased earnings by US$4.1 billion, while volume and mix effects decreased earnings by US$200 million. All other items decreased earnings by US$420 million, reflecting higher maintenance expense and unfavourable inventory impacts, partly offset by favourable foreign exchange effects. Petroleum product sales of 5.8 million bpd were 121 000 bpd lower than 2014.

US Downstream earnings were US$1.9 billion, an increase of US$283 million from 2014. Non-US Downstream earnings were US$4.7 billion, up US$3.2 billion from the prior year.

Chemical earnings of US$4.4 billion increased US$103 million from 2014. Stronger margins increased earnings by US$590 million. Favourable volume and mix effects increased earnings by US$220 million. All other items decreased earnings by US$710 million, reflecting unfavourable foreign exchange, tax and inventory effects, partly offset by asset management gains. Prime product sales of 24.7 million t were up 478 000 t from 2014.

Corporate and financing expenses were US$1.9 billion in 2015 compared to US$2.4 billion in 2014, with the decrease due mainly to net favourable tax-related items.

During 2015, ExxonMobil purchased 48 million shares of its common stock for the treasury at a gross cost of US$4 billion. These purchases included US$3 billion to reduce the number of shares outstanding, with the balance used to acquire shares to offset dilution in conjunction with the company’s benefit plans and programmes.

Adapted from press release by Rosalie Starling

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