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Exxon Mobil (XOM) Q2 Earnings Miss on Lower Volumes

Energy giant Exxon Mobil Corporation XOM posted an earnings miss in second-quarter 2017 owing to a decline in liquid volumes and lower margin from chemical businesses. This was partially offset by increased price realizations from liquids and gas and improved refinery volumes.

The company reported earnings of 78 cents per share, which missed the Zacks Consensus Estimate of 83 cents. However, the bottom line improved from the year-ago quarter level of 41 cents.

Total revenue in the quarter increased to $62,876 million from $57,694 million in the year-ago quarter. Moreover, the top line surpassed the Zacks Consensus Estimate of $61,157 million.      

Operational Performance

Upstream: Quarterly earnings at the segment were $1.2 billion, up $890 million from the April-to-June quarter of 2016. Increased price realizations from liquids and gas led to the outperformance, partly negated by the decline in liquid volumes.

Production averaged 3.922 million barrels of oil equivalent per day (MMBOE/d), almost in line with the year-ago quarter.

Liquid production fell 3% year over year to 2.269 million barrels per day owing to field decline.

However, natural gas production rose 2% from the year-ago quarter to 9.920 MMCF/d (millions of cubic feet per day). Ramp ups of projects particularly in Australia drove the upside.

Downstream: The segment recorded profits of $1.4 billion. The reported figure is $560 million higher than the April–June quarter of 2016. This improvement was backed by improved refinery volumes and margins from its refining business.

ExxonMobil's refinery throughput averaged 4.4 million barrels per day (MMB/D), up 5% from the year-earlier level.

Chemical: This unit contributed $985 million. This is $232 million lower than the second quarter of 2016. Lower margins along with an increase in turnaround activities from the business unit led to the decline.  

Financials

During the quarter, ExxonMobil generated cash flow of $7.1 billion from operations and asset sales. The company returned $3.3 billion to shareholders through dividends. Capital and exploration spending decreased 24% year over year to $3.9 billion.

Q2 Price Performance

During second-quarter 2017, Exxon Mobil fell 1.5% as compared with a 3.1% decline of the industry.

Zacks Rank & Key Picks

ExxonMobil currently has a Zacks Rank #4 (Sell). A few better-ranked players in the energy sector are TransCanada Corp. TRP, Petrobras PBR and Pembina Pipeline Corp. PBA. All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

TransCanada delivered an average positive earnings surprise of 1.06% over the last four quarters.

Petrobras also reported an average positive earnings surprise of 59.58% for the last four quarters.

Pembina Pipeline’s 2017 earnings are projected to grow more than 90%.

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Petroleo Brasileiro S.A.- Petrobras (PBR): Free Stock Analysis Report
 
Exxon Mobil Corporation (XOM): Free Stock Analysis Report
 
Pembina Pipeline Corp. (PBA): Free Stock Analysis Report
 
TransCanada Corporation (TRP): Free Stock Analysis Report
 
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