ExxonMobil Corp. (XOM, Financial) released its third-quarter report Friday morning, reporting declines in earnings.
The Irving, Texas-based oil and gas company announced third quarter earnings of $2.7 billion, or 63 cents per diluted share. This compares to $4.2 billion a year ago and reflects lower refining margins and commodity prices.
The company reported Upstream earnings were $620 million, down $738 million from the third quarter of 2015. Chemical earnings were $1.2 billion, down $56 million from a year ago. Downstream earnings declined by $804 million to $1.2 billion.
Volumes for the third quarter declined 3% to 3.8 million oil-equivalent barrels per day. The company reported the production of liquids was down 5.1%, and natural gas was up 0.8%. The production of liquids totaled 2.2 million barrels per day, a decrease of 120,000 barrels per day compared to last year. This decrease was due to higher downtime in Nigeria and field decline.
In regard to natural gas, production was 9.6 billion cubic feet per day, up 77 million cubic feet per day from 2015 due to project startups offsetting the impact of field decline and divestments.
ExxonMobil did report a 2.7% increase of dividends per share to 75 cents compared to the same quarter a year ago. The company has distributed $3.1 billion in dividends to shareholders.
Due to the current conditions of the oil and gas industry, ExxonMobil and other oil and gas companies are being deeply affected by the low price of oil. Despite the challenging environment, management remains positive.
“ExxonMobil’s integrated business continues to deliver solid results,” said Rex W. Tillerson, chairman and CEO. “While the operating environment remains challenging, the company continues to focus on capturing efficiencies, advancing strategic investments and creating long-term shareholder value.”
ExxonMobil highlighted some of its future ventures and acquisitions. The company and InterOil Corp. (IOC, Financial) entered a $2.5 billion agreement where ExxonMobil will acquire all of InterOil’s outstanding shares. The acquisition would allow the company access to InterOil’s resource base, which includes interests in Papua New Guinea. The transaction is pending shareholder approval.
ExxonMobil gave updates on its projects in Kazakhstan, Guyana and Nigeria. They also announced new plans for projects in Texas, Wales and the U.S. Gulf Coast. During the quarter, the company revealed new details in its relationships with the Georgia Institute of Technology, Princeton University and the University of Texas at Austin, who are working to develop new technologies in order to achieve the goal of reducing environmental impacts and risks of climate change while meeting growing energy demands.
Among the gurus, T Rowe Price Equity Income Fund (Trades, Portfolio) is the largest shareholder of ExxonMobil with 0.15% of outstanding shares, which is 2.7% of its total assets managed. Richard Pzena (Trades, Portfolio), Ken Fisher (Trades, Portfolio), the Yacktman Fund (Trades, Portfolio) and Tom Gayner (Trades, Portfolio) are some other gurus with a position in the company. In total, 38 gurus have positions in ExxonMobil.
The DCF Calculator gives the stock a fair value of $26.97; it was trading at $86.11 on Friday.
Disclosure: I do not own stock in any companies mentioned in the article.
Start a free 7-day trial of Premium Membership to GuruFocus.
