Exxon Mobil has reported positive results in its first-quarter earnings, surpassing market expectations, despite lower prices negatively impacting revenue. The company’s net income more than doubled to $11.43 billion, equivalent to $2.79 per share, as it continues to ramp up production in the Permian Basin, despite the environmental cost.
Although Exxon Mobil’s stock slipped 0.2% in pre-market trading, revenue came in above predictions, and total revenue for the first quarter fell 4.3% to $86.56 billion, almost a billion dollars more than the FactSet consensus of $85.65 billion.
Revenue from the company’s oil and gas divisions was boosted by redirected capital to new oil drilling operations in key locations such as the Permian Basin, Guyana, and the Stabroek Block. However, weak global demand for natural gas and political conflicts led to a 4% reduction in crude and natural gas realizations. Exxon Mobil’s chemical division experienced a greater slowdown of 14%, with non-US operations suffering the most.
Domestically, the company has managed to increase production due to liquid growth in the Permian Basin, which reached its highest level in its operating history. The company also achieved its third offshore project in Guyana, producing from additional wells in its Stabroek project at a peak rate of 120,000 barrels per day (bpd).
Similarly, Exxon Mobil continues to carry out exploration and drilling in the Cyprus acreage. As the company prepares to commence well-drilling activities in the region, recent developments have indicated potential conflict with Turkey as exploration campaigns in the Eastern Mediterranean overlap with the country’s claimed exclusive economic zone (EEZ). Turkey’s disputes with Cyprus and Greece significantly increases resource scarcity risk and curtails market confidence, setting the stage for an oil-backed geopolitical conflict in the not-so-distant future.
Meanwhile, Exxon Mobil is set to face increasing pressure from investors to shift resources to renewable energy as environmental concerns escalate. In light of this, the company has collaborated with Synthetic Genomics to intensify research and development efforts in algae biofuels. The firm aims to produce 10,000 barrels per day of algae biofuel by 2025.
The senior vice president of Exxon Mobil, Neil Hansen, believes that the success of the company’s US production reflects its focus on profitable growth. He added that the “strong performance” of its upstream business is due to “significant increases in liquids production from the Permian Basin.” The company’s exploration initiatives aim to increase global inventory and foster growth by targeting areas with the most significant potential production rates.
Despite Exxon Mobil’s recent success and its efforts to invest in greener technologies, the company’s actions may exacerbate the already significant environmental damage. A recent report published by the Center for International Environmental Law (CIEL) concluded that Exxon Mobil’s history of plastic production has led to significant environmental pollution, with microplastics discovered in remote locations such as Antarctica.
Furthermore, following another court decision to uphold the city’s ban on the transport of fossil fuels in Oregon, the future of oil trading in the region is largely uncertain. ExxonMobil, as one of the leading oil companies in the US, will now look to more unconventional methods and locations to expand operations and maintain profit levels, displacing operations to high-risk or remote locations.
As the negative impact of Exxon Mobil’s oil operations becomes increasingly prevalent, the financial outcomes for the company might shift for the worse. Fourth-quarter losses from the company’s downstream operations amounted to $2.73 billion, which directly subverted profits from its other divisions. Any further expeditious acceleration of the company’s production could exacerbate this trend in the long term.
