Exxon Mobil (XOM) Stock: Earnings Beat Falls Flat with Wall Street – Here’s Why

TLDR

• Exxon Mobil reported adjusted earnings of $1.88 per share for Q3, beating analyst estimates of $1.82 per share, but revenue of $85.3 billion missed forecasts of $86.5 billion.
• Daily production increased to 4.77 million barrels from 4.58 million barrels year-over-year, with record production in the Permian Basin at 1.7 million barrels and Guyana surpassing 700,000 barrels per day.
• Overall profit dropped to $7.55 billion from $8.61 billion as crude oil prices weakened 16% this year, with Brent crude averaging $68.17 in Q3, down 13% from last year.
• Free cash flow fell to $6.3 billion from $11.3 billion in the same quarter last year as the company increased spending to acquire additional Permian Basin acreage.
• The company raised its quarterly dividend by 4% to $1.03 per share and remains on track to meet its $20 billion annual share buyback target.

Exxon Mobil posted a mixed quarterly report on Friday that had Wall Street scratching its head. The oil giant beat earnings expectations but still saw its stock drop over 2% in premarket trading.

Exxon Mobil Corporation, XOM

The company reported adjusted earnings of $1.88 per share for the third quarter. That came in ahead of the consensus estimate of $1.82 per share. But revenue told a different story, totaling $85.3 billion against expectations of $86.5 billion.

CEO Darren Woods tried to put a positive spin on the numbers. He said the company delivered its highest earnings per share compared to other quarters in similar oil-price environments. He was referring to periods over the last decade when oil traded between $65 and $75 per barrel.

The headline profit number dropped though. Total profit fell to $7.55 billion from $8.61 billion in the same quarter last year. The culprit was weaker crude prices and rising costs.

Oil futures have taken a beating this year. Prices are down 16% year-to-date. Brent crude averaged $68.17 during the July-to-September period, representing a 13% decline from the same quarter last year.

Production Hits New Highs

The production side of the business had some bright spots. Daily output rose to 4.77 million barrels from 4.58 million barrels a year ago. Analysts had been expecting 4.7 million barrels.

Total oil and gas production reached 4.8 million barrels of oil equivalent per day. That’s up from 4.6 million in the second quarter.

The Permian Basin set a production record at 1.7 million barrels of oil equivalent per day. Guyana also topped expectations, with output surpassing 700,000 barrels per day. The Yellowtail development in Guyana came online four months ahead of schedule and under budget.

Exxon has been playing offense while others play defense. The company invested to expand production during both good times and bad over recent years. That strategy now has production on track to reach 5.4 million barrels per day by 2030, up from 4.3 million in 2024.

Cash Flow Takes a Hit

Free cash flow tells a less rosy story. It declined to $6.3 billion from $11.3 billion in the same quarter last year. The company spent more money acquiring additional acreage in the Permian Basin.

Exxon recorded $510 million in restructuring costs during the quarter. Capital expenditure for the year is expected to come in slightly below the low end of its $27 billion to $29 billion guidance range, excluding acquisitions.

The upstream business generated $5.7 billion in earnings. Refining profits came in at $1.8 billion.

Despite the cash flow decline, Exxon kept rewarding shareholders. The company paid out $4.2 billion in dividends during the quarter. It also repurchased $5.1 billion worth of shares. The company is on track to hit its annual share buyback target of $20 billion.

The dividend got a bump too. Exxon raised its quarterly payout by 4% to $1.03 per share.

Global oil producers have faced challenges this year. OPEC+ increased oil output while tariff concerns weighed on growth expectations. Natural gas prices provided some relief though, with U.S. prices rising about 38% from last year.

Exxon shares are up 6.6% year-to-date through Thursday’s close. The company now faces questions about whether its production growth strategy can hold up if oil prices continue sliding toward the $50 range.

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