Shares of Exxon Mobil are moderately higher by 1.40% in premarket trading Thursday, after the oil giant reported first quarter earnings. Exxon reported earnings per share of $1.17 on revenue of $67.62 billion. Analysts polled were looking for earnings per share of $0.83 on revenue of $56.39 billion. While Exxon Mobil was able to beat analysts’ estimates, results are down from the same period last year when the oil company reported earnings per share of $2.10 on revenue of $106.33 billion. With oil prices continuing to stay low since July 2014, it is easy to assume that Exxon Mobil was not going to be able to beat first quarter 2014 results, but beating analyst estimates is a good start.
Non-oil business segments helped pick up some of the slack at Exxon Mobil
Exxon Mobil and the rest of the oil industry had to think on their feet, as the traditional income from $100 barrel and more from oil came to a halt last summer. Exxon Mobil, along with others, have been cutting costs and trimming business activities that are low impact, just so the company can weather the collapse in commodity prices. As expected, Exxon Mobil’s earnings from its exploration and production business saw a collapse of -63% to $2.86 billion. However, the cheaper crude oil was beneficial to the company’s refining business, which saw earnings more than double to $1.67 billion. Lastly, Exxon’s chemical business, saw earnings fall -6.2% to $982 million during the first quarter, but the results were still inline and the company’s chemical business certainly helped get through this quarter.
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Management increases dividend and looks to get buybacks going again
Shareholders did get a surprise when Exxon Mobil’s management announced that they would be increasing their quarterly dividend by 9.5% to $0.69 per share. This is particularly surprising because of the current business environment for oil and gas companies. While Exxon is a behemoth and one of the largest companies in the world, there certainly is a little more wiggle room when it comes to dividends, due to size of balance sheet. Management also told shareholders that it would like to slowly begin its buyback program again, saying that they expect to buyback $1 billion in shares during the second quarter.
Overall, Exxon Mobil is weathering the oil downturn very well. The company has significantly slashed costs where it can and the chemical and refining businesses are certainly the top leaders for Exxon’s earnings beat and I certainly expect the company to lean on these segments as it continues to wait for an oil recovery.