ExxonMobil registered its highest fourth-quarter profits since 2014 as rising oil and gas prices lifted the American oil supermajor’s earnings.
The Texas-based company’s $8.9bn quarterly profit easily beat Wall Street’s expectations of $8.4bn, according to estimates compiled by S&P Capital IQ. Exxon’s full-year 2021 profit was $23bn, reversing a hefty $22.4bn loss in 2020 amid the pandemic-driven market collapse.
The company said it was using the influx of cash to launch a $10bn share buyback programme, and that it had paid back much of the debt it took on during the 2020 market downturn.
“Our effective pandemic response, focused investments during the down-cycle, and structural cost savings positioned us to realise the full benefits of the market recovery in 2021,” said Darren Woods, Exxon chief executive.
Brent crude prices surged to more than $91 a barrel on Monday for the first time since 2014, although prices fell back to less than $90 by Tuesday. Fears that the global recovery in oil demand is outpacing new supplies, and that a potential clash in Ukraine could further disrupt markets, has driven prices higher.
Exxon’s shares were trading nearly 1.5 per cent higher after the earnings release. Its shares have surged about 12 per cent higher since the start of the year, making it one of the strongest performers during a weak start to 2022 for the broader market.
High commodity prices boosted the company’s production business. Exxon said output from the Permian basin in West Texas, a key source of oil production growth for the company, was up 100,000 barrels of oil equivalent a day in 2021 to 460,000 boe/d. The group also received a boost from the start of new production facilities in Guyana, off the coast of South America.
“In the upstream, earnings improved by almost $17bn [from 2020] as prices significantly strengthened,” said Kathy Mikells, Exxon’s chief financial officer.
The boom in profits comes as the company’s climate strategy remains under the microscope after it lost a bruising proxy fight last year to the tiny hedge fund Engine No 1, which installed three activist-backed board members on the oil major’s 12-person board.
Exxon announced a goal last month to reach net zero emissions from its operations by 2050. Critics, however, said the target did not go far enough because it does not include the carbon emitted from the burning of the fuel Exxon sells, which comprises the bulk of emissions associated with the company.
The supermajor also said on Monday that it planned to move its headquarters from Irving, Texas, in the Dallas area, to Houston as part of a corporate shake-up it says will make it more flexible to respond to the energy transition. Exxon’s chief executive officer and senior executives have been based in the Irving offices, known throughout the industry as the “God Pod”, since 1989.