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Here's a Closer Look at ExxonMobil and Chevron's Q4 Earnings

The quarterly cycle has picked up notable steam, with a flurry of quarterly reports scheduled to come. As far as the oil/energy space is concerned, before the bell on Friday, we heard from ExxonMobil XOM and Chevron CVX. With a massive market capitalization of $402 billion and $288 billion, respectively, these two companies dominate and define the U.S. energy industry.

Let’s take a closer look at each release to understand what was important within them.

ExxonMobil

ExxonMobil beat fourth-quarter adjusted earnings estimates. The better-than-expected numbers primarily resulted from increased liquids production. The positives were partially offset by lower realizations of crude and natural gas prices.

The upstream segment reported quarterly earnings (excluding identified items) of $6.3 billion, down from $8.8 billion reported in the year-ago quarter. Moreover, the company’s Energy Products’ segment recorded an adjusted profit of $3 billion, against $4.8 billion recorded a year ago. This was primarily due to lower industry refining margins

In the fourth quarter, ExxonMobil recorded $2.3 billion in impairment charges, primarily associated with inactive assets in California. The Zacks Rank #3 (Hold) company highlighted that these impairments were partially offset by positive tax and divestment-related factors.

You can see the complete list of today’s Zacks #1 Rank stocks here.

XOM’s net production showed marginal change year over year though it rose 3.5% from the previous quarter, reaching 3,824 thousand oil-equivalent barrels per day (MBOE/d). Notably, the combined production from the Permian and Guyana assets grew 18% from 2022.

In the fourth quarter, XOM produced $13.7 billion in cash flow from operations and $8 billion in free cash flow. Over the entire year, cash and cash equivalents rose by $1.9 billion, with free cash flow totaling $36.1 billion.

ExxonMobil intends to significantly increase production from the Permian Basin this year, aiming for nearly 7% growth, excluding the effects of its pending acquisition of Pioneer Natural Resources. The company plans to manage its Permian operations akin to a factory, establishing a substantial inventory of drilled wells.

Chevron

Chevron also delivered a robust performance in the fourth quarter, exceeding adjusted earnings expectations and announcing a dividend hike, apart from achieving a new milestone in quarterly oil and gas production.

However, net income for the period declined to $2.3 billion, or $1.22 per share, down from $6.4 billion, or $3.33 per share, in the corresponding quarter of the previous year, attributed to softer realizations in oil and natural gas, as well as a decrease in margins from U.S. refined product sales. Meanwhile, revenues dropped by 16.4% year over year to $47.2 billion, missing the Zacks Consensus Estimate.

However, net income during the period dropped to $2.3 billion, or $1.22 per share, from $6.4 billion, or $3.33 per share, in the same quarter the previous year due to weaker oil and natural gas realizations, plus a dip in U.S. refined product sales margins. Meanwhile, revenues decreased by 16.4% year over year to $47.2 billion, falling short of the Zacks Consensus Estimate.

The company saw a decline in its upstream earnings from $5.5 billion to $1.6 billion, while downstream earnings dropped from $1.8 billion to $1.1 billion compared to the same quarter last year. Cash flow from operations slightly decreased from $12.5 billion to $12.4 billion.

Although CVX experienced a nearly 40% decline in annual profit, it still decided to boost its dividend by 8%. Additionally, the company set a new record by returning $26.3 billion to shareholders through dividends and buybacks in the previous year.

Chevron announced a milestone achievement in the fourth quarter by establishing a new quarterly production peak, hitting 1,598 MBOE/d, marking a remarkable 34% surge from the previous year. Throughout the entire year, global production escalated by 4% to reach 3,120 MBOE/d, with U.S. production experiencing a substantial 14% uptick, primarily fueled by acquisitions and expansion efforts in the Permian Basin.

The company's strategic acquisitions and heightened investments in the United States resulted in a notable 32% increase in full-year capital expenditure, totaling $15.8 billion. Chevron's objective is to conclude 2024 with Permian production averaging 900 MBOE/d, setting a long-term target of reaching 1,000 MBOE/d by 2025.

Chevron reported a new quarterly production record, reaching 1.6 million barrels of oil equivalent per day (boe/d), up 34% year over year. For the full year, worldwide production rose by 4% to more than 3.1 million boe/d, with U.S. production increasing by 14%, primarily driven by acquisitions and growth in the Permian Basin.

The company's acquisitions and increased investments in the United States led to a 33% rise in full-year capital spending to $15.8 billion. Chevron aims to exit 2024 with Permian production averaging 900,000 boe/d, with a long-term goal of reaching 1 million boe/d by 2025.

Important Energy Earnings So Far

While we have discussed in detail ExxonMobil and Chevron’s fourth-quarter releases, let’s take a look at a couple more key energy reports of this season.

Oil service biggie Halliburton HAL reported fourth-quarter 2023 adjusted net income per share of 86 cents, surpassing the Zacks Consensus Estimate of 80 cents and well above the year-ago quarter profit of 72 cents (adjusted). The outperformance reflects strength in the international markets, partly offset by weak performance in the North American region.

Halliburton reported fourth-quarter capital expenditure of $399 million, higher than our projection of $358.5 million. As of Dec 31, 2023, the company had approximately $2.3 billion in cash/cash equivalents and $7.6 billion in long-term debt, representing a debt-to-capitalization ratio of 44.7. HAL also bought back $254 million worth its stock during the October-December period. The company generated $1.4 billion of cash flow from operations in the fourth quarter, leading to free cash flow of $1.1 billion.

Independent oil refiner and marketer Marathon Petroleum MPC reported fourth-quarter adjusted earnings per share of $3.98, which comfortably beat the Zacks Consensus Estimate of $2.36. The outperformance primarily reflects the stronger-than-expected performance of its key Refining & Marketing segment. Operating income of the segment totaled $1.2 billion, above the consensus mark of $812 million.

MPC’s total refined product sales volumes were 3,612 thousand barrels per day (mbpd), up from 3,532 mbpd in the year-ago quarter. Also, throughput rose from 2,895 mbpd in the year-ago quarter to 2,931 mbpd and outperformed the Zacks Consensus Estimate of 2,891 mbpd.

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Chevron Corporation (CVX) : Free Stock Analysis Report

Exxon Mobil Corporation (XOM) : Free Stock Analysis Report

Halliburton Company (HAL) : Free Stock Analysis Report

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