Exxon Mobil Corp (XOM.N) reported a $56 billion net profit for 2022, the company said on Tuesday, earning about $6.3 million per hour in 2022, and hitting not only a company record but also a historic high for the Western oil industry.
Oil majors are predicted to beat their own annual records on surging prices and rising demand, pushing their combined take to roughly $200 billion. The scale has sparked criticism of the oil industry and triggered calls for more countries to charge windfall profit taxes on the firms.
Exxon’s results far outperformed the then-record $45.2 billion net profit it announced in 2008, when oil reached $142 per barrel, 30% above 2022’s average price. Sharp cost cuts during the pandemic helped boost 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 suffered a $1.3 billion hit to its fourth-quarter earnings from a European Union windfall tax that took effect in the last quarter and from asset impairments. The company is suing the EU, claiming that the levy surpassed its legal authority.
Excluding charges, profit for the whole year was $59.1 billion. Output increased by about 100,000 barrels of oil and gas per day higher than a year ago to 3.8 million bpd. Adjusted per-share profit of $3.40 exceeded a consensus of $3.29 per share, Refinitiv data showed.
Shares surged nearly 2 percent at $115.63.
“It’s a headline beat,” Biraj Borkhataria from RBC Capital said in a note, despite smaller chemical margins, lower-than-anticipated downstream gains, and plans for higher maintenance works in refineries this quarter.
WINDFALL TAXES
The results started another confrontation with the White House. Companies could ramp up production but decided instead to “plow those profits into padding the pockets of executives and shareholders,” the White House said in a statement.
Exxon allocated $30 billion in cash to shareholders in 2022, more than any of its Western rivals, and ploughed back $22.7 billion in the business.
Windfall profit taxes are “unlawful and bad policy,” said Mikells. Throwing new taxes on oil earnings “has the opposite effect of what you are trying to achieve,” she said, adding that it would hamper new oil and gas production.
Exxon boasted that its cash flow from operations increased to $76.8 billion in 2022, up from $48.1 billion in the year before. And it decided to hold $30 billion in cash balance. The firm said it learned from the pandemic, when it found itself penniless and acquired debt to pay dividends to shareholders.
“Having a really strong balance sheet is a competitive advantage for us,” Mikells said, adding that it enables the company to wait for potential acquisition opportunities and keep its dividend program intact even if energy prices eventually decline.
Exxon recorded $12.8 billion in December-quarter net profit excluding charges, 44% more than the same period a year earlier but down 35% from the prior quarter as oil prices fell and some operations suffered from cold-weather-related outages.
PROJECT SPENDING
Exxon’s spending on new oil and gas projects picked up in 2022 to $22.7 billion, up 37% from the previous year. The company ramped up 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 climb to $25 billion in 2023, Woods said. Part of it is explained by surging costs in the Permian, with inflation in the double digits, amid “really, really hot” demand for services and equipment, he said.
Exxon directed Permian production this year to 600,000 bpd, up 50,000 bpd from 2022 but slightly lower than market expectations. On the other hand, Woods forecasted that strong refining margins will continue this year.
Exxon’s results come ahead of what are expected to be robust earnings from Shell plc on Thursday and from TotalEnergies and BP plc next week.
