Exxon smashes Western oil majors' profits with $56 billion in 2022
HOUSTON, Jan 31 (Reuters) - Exxon Mobil Corp (XOM.N) posted a $56 billion net profit for 2022, the company said on Tuesday, taking home about $6.3 million per hour last year, and setting not only a company record but a historic high for the Western oil industry.
Oil majors are expected to break their own annual records on high prices and soaring demand, pushing their combined take to near $200 billion. The scale has renewed criticism of the oil industry and sparked calls for more countries to levy windfall profit taxes on the companies.
Exxon's results far exceeded the then-record $45.2 billion net profit it reported in 2008, when oil hit $142 per barrel, 30% above last year's average price. Deep cost cuts during the pandemic helped supercharge last year's earnings.
"Overall earnings and cash flow were up pretty significantly year on year," Exxon Chief Financial Officer Kathryn Mikells told Reuters. "So that came really from a combination of strong markets, strong throughput, strong production, and really good cost control."
Exxon said it incurred a $1.3 billion hit to its fourth-quarter earnings from a European Union windfall tax that began in the final quarter and from asset impairments. The company is suing the EU, arguing that the levy exceeds its legal authority.
Excluding charges, profit for the full year was $59.1 billion. Production was up by about 100,000 barrels of oil and gas per day over a year ago to 3.8 million bpd. Adjusted per-share profit of $3.40 beat consensus of $3.29 per share, according to Refinitiv data.
Shares were up nearly 2% at $115.63.
"It’s a headline beat," Biraj Borkhataria from RBC Capital said in a note, despite lower chemical margins, lower-than- expected downstream gains and plans for higher maintenance works in refineries this quarter.
The results set up another confrontation with the White House. Companies could increase production but decided instead to "plow those profits into padding the pockets of executives and shareholders," the White House said in a statement.
Exxon distributed $30 billion in cash to shareholders last year, more than any of its Western rivals, and invested $22.7 billion in the business.
Windfall profit taxes are "unlawful and bad policy," countered Mikells. Slapping new taxes on oil earnings "has the opposite effect of what you are trying to achieve," she said, adding that it would discourage new oil and gas production.
Exxon boasted that its cash flow from operations soared to $76.8 billion last year, up from $48.1 billion in 2021. And it decided to hold $30 billion in cash balance. The company said it learned from the pandemic, when it found itself empty handed and raised debt to pay dividends to shareholders.
"Having a really strong balance sheet is a competitive advantage for us," Mikells said, adding that it allows the company to wait for potential acquisition opportunities and sustain its dividend program intact even if energy prices eventually fall.
Exxon posted $12.8 billion in fourth-quarter net profit excluding charges, 44% more than the same period last year but down 35% from the previous quarter as oil prices eased and some operations suffered from cold-weather-related outages.
Exxon's spending on new oil and gas projects bounced back last year to $22.7 billion, up 37% from the prior year. The company increased outlays on discoveries in Guyana, in the top U.S. shale field, and on fuel refining and chemicals.
"The counter-cyclical investments we made before and during the pandemic provided the energy and products people needed as economies began recovering," Exxon Chief Executive Officer Darren Woods said in a statement.
Investments can go up to $25 billion this year, Woods said. Part of it is explained by rising costs in the Permian, with inflation in the double digits, amid "really, really hot" demand for equipments and services, he said.
Exxon guided Permian production this year to 600,000 bpd, up 50,000 bpd from last year but slightly below market expectations. On the other hand, Woods projected that strong refining margins will continue in 2023.
Exxon's results come ahead of what are expected to be strong earnings from Shell plc on Thursday and from BP plc and TotalEnergies next week.
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