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Exxon Earnings: Carnage

Tyler Durden's picture




 

Moments ago energy titan Exxon Mobile, which not too long ago was bigger than AAPL by market cap, and is now roughly half the size of the phone maker, reported earnings which were, in a word, carnage.

Starting at the bottom, EPS of $1.00 was not only a big miss to already reduced expectations of $1.11, but also the worst quarter since 2009.

This was down a whopping 51% from a year ago, when the company made $2.05, and unlike other companies which mask the divergence between profits and EPS through countless gimmicks, XOM's Earnings also plunged by a comparable number, or about 52%.

Revenues of $74 billion, while modestly better than expected, were also a debacle, plunging 33% from a year ago, and yet US upstream ops lost $47 million, down a massive $1.2 billion from a year ago, while non-US upstream ops, generated only $2.1 billion vs $4.6 billion a year ago.

So revenues higher, but margins and profits lower, how come? Simple: boosting volumes to offset declining prices, and as has been the case with so many other companies, Exxon's oil-equivalent production increased 3% from 2014, with liquids up 8.9 percent and natural gas down 3.6 percent.

The problem, again, was margins.

A bigger problem is that while EPS and revenues crashed by 51% and 33%, CapEx was down just 16% from $9.8 billion to $8.3 billion. Expect Q3 capex to be slashed across the board. As a reminder, the main revision in GDP had to do with fixed investment. Well, as more companies tighten the belt on capital spending, GDP is poised to go in one direction only -  down.

But the biggest problem for the company, and the reason the stock is tumbling, is this part from the press release:

During the second quarter of 2015, ExxonMobil purchased 12 million shares of its common stock for the treasury to reduce the number of shares outstanding at a cost of $1 billion. Share purchases to reduce shares outstanding are currently anticipated to equal $500 million in the third quarter of 2015. Purchases may be made in both the open market and through negotiated transactions, and may be increased, decreased, or discontinued at any time without prior notice.

In other words, here is yet another company that is slashing its buyback (just like Cheveron did in January), precisely at the time when it should be boosting its buyback, when its stock is within spitting distance of the 52 week low hit earlier this week.

And since "investors" don't like a non-sure thing, they are doing the only thing they know when they can no longer frontrun the Fed or the corner office's buying intentions: they sell.

 

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Fri, 07/31/2015 - 08:25 | 6374814 ZippyBananaPants
ZippyBananaPants's picture

Free gas for everybody

Fri, 07/31/2015 - 08:28 | 6374828 Creepy A. Cracker
Creepy A. Cracker's picture

I pass free gas regularly.  Especially when I eat a lot of fiber.

Fri, 07/31/2015 - 08:31 | 6374843 ZippyBananaPants
ZippyBananaPants's picture

Fiber and Bacon makes a great fart combination, loud and a hint of hickory

Fri, 07/31/2015 - 08:35 | 6374853 Monetas
Monetas's picture

When you change your colostomy bag .... you can wear the old one like a gas mask .... to capture all the colors of you ?

Fri, 07/31/2015 - 08:38 | 6374865 VinceFostersGhost
VinceFostersGhost's picture

 

 

The price of energy is up.....doesn't mean anyone has to buy it.

Fri, 07/31/2015 - 08:41 | 6374878 Headbanger
Headbanger's picture

I keep sayin I see very few cars on the road and in town these days.

It's getting like Zombieland..

Fri, 07/31/2015 - 09:45 | 6375119 Blano
Blano's picture

Just curious, where do you live? 

I see nothing slowing down in the Dallas area right now, including cars.

Fri, 07/31/2015 - 10:49 | 6375378 PrayingMantis
PrayingMantis's picture

 

 

... Exxoff ...

Fri, 07/31/2015 - 10:34 | 6375311 PleasedToMeatYou
PleasedToMeatYou's picture

Traffic diminishes a bit when school's out, and some of your traffic and mine is at the beach or mountain resorts, etc. 

Fri, 07/31/2015 - 08:39 | 6374873 ZippyBananaPants
ZippyBananaPants's picture

you comment is not even make sense?  

Fri, 07/31/2015 - 08:48 | 6374905 Bush Baby
Bush Baby's picture

Now that 99% of financial data is as bad as 2009, aren't we technically in 2009?

Fri, 07/31/2015 - 08:38 | 6374869 Creepy A. Cracker
Creepy A. Cracker's picture

Down votes? Grumpy old farts on ZH.

Fri, 07/31/2015 - 08:41 | 6374880 ZippyBananaPants
ZippyBananaPants's picture

Agreed, where is the fun?  

Stay young Creepy! 

Fri, 07/31/2015 - 14:14 | 6376241 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

Professor Emeritus Sigmund Freud posited that money was the psychological equivalent to feces and asserted that individuals stuck in the Anal stage of Psychosexual Development would become fixated on odor, smells, and explosions, that are experienced when one defecates. It is of no surprise to myself that anal retentive money hoarders on Z/H have upvoted you on your tactless low class display of toilet humour, but did you ever think that readers would be able to discern what psychosexual stage of development you became fixed on in that developmental evolution?

 

I can predict with accuracy that you are the type of person that likes stink. Moreover, you likely watch, and enjoy,  action films that have explosions in them, and you plan your meals around getting the biggest loud fart BANG for your buck. You pinch pennies and are stingy about lending. You enjoy seeing people blown to bits on war films, and you love fart jokes even at a formal gathering where tact and manners are required. I could go on, but I think you get the point, ZippyBananaFART.

Fri, 07/31/2015 - 17:05 | 6376571 Creepy A. Cracker
Creepy A. Cracker's picture

"but I think you get the point"

Yes, got it.  Your point is that you ramble on incoherently about things that you know nothing about. As if you are talking out of your ass.  (I had to throw that in since it bothers you so much.)

Fri, 07/31/2015 - 08:47 | 6374907 negative rates
negative rates's picture

Better call the Dr. and tell him you have cancer, he'll know what to do.

Fri, 07/31/2015 - 10:20 | 6375251 Winston Churchill
Winston Churchill's picture

Why fart and waste it, when you can burp and taste it.

Fri, 07/31/2015 - 09:39 | 6375106 RockRiver
RockRiver's picture

I am betting that the bonus structure for senior managemant doeswn't change....

Fri, 07/31/2015 - 08:26 | 6374819 actionjacksonbrownie
actionjacksonbrownie's picture

It's not "Exxon Mobile" - it's ExxonMobil

Fri, 07/31/2015 - 09:09 | 6374861 Headbanger
Headbanger's picture

Exxon Mobile is how y'all say it in these parts.

Fri, 07/31/2015 - 10:23 | 6375265 Antifaschistische
Antifaschistische's picture

This article should have included an aerial picture of the new Exxon campus in "The Woodlands" (just North of Houston).   In case, investors are wondering where their potential dividends are really being spent.

Fri, 07/31/2015 - 10:58 | 6375413 MachoMan
MachoMan's picture

I went to the woodlands for a concert about a decade ago...  maybe a few years longer...  and I've never seen more italian sports cars per capita.

Fri, 07/31/2015 - 08:41 | 6374885 Vendetta
Vendetta's picture

You haven't gotten one of their cell phones yet?

Fri, 07/31/2015 - 08:28 | 6374824 I woke up
I woke up's picture

earnings graph giving you the finger

Fri, 07/31/2015 - 09:20 | 6375032 Panafrican Funk...
Panafrican Funktron Robot's picture

Yet, the price to earnings ratio of XOM is still way lower than most mega-caps (Apple included).  Setting aside the more obvious absurdities inherent in the share prices of stocks like Facebook and Amazon, I am genuinely confused as to why XOM (even at it's signifcantly reduced EPS) has the valuation that it does, compared to GE.  Full disclosure, I own neither stock nor any other stock.

Fri, 07/31/2015 - 08:29 | 6374829 dimwitted economist
dimwitted economist's picture

i would LOVE to see $2 gas again..

Fri, 07/31/2015 - 08:31 | 6374844 Dr. Engali
Dr. Engali's picture

$2.00? I'd love to see $.25 gas again

Fri, 07/31/2015 - 08:52 | 6374928 PleasedToMeatYou
PleasedToMeatYou's picture

"$.25 gas again "  Wow, you old! 

gas war!  gas war!  gas war! ...

Although, now that I think about it, most recent wars have been focused around exactly that. 

Fri, 07/31/2015 - 09:06 | 6374985 Dr. Engali
Dr. Engali's picture

I'm 52. When I was young I'd ride my dirt bike down to the gas sation and fill up for .25c a gallon.

Fri, 07/31/2015 - 10:31 | 6375300 PleasedToMeatYou
PleasedToMeatYou's picture

I'm a just a little older, and remember going down to Myrtle Beach, etc. for vacations and catching the occasional gas war where we'd fill up at 10 cents/Gal, while around our home it was more like 35 cents. 

Too bad it was just the small business owners hurting each other and themselves in such a fracas. 

Fri, 07/31/2015 - 11:00 | 6375422 MachoMan
MachoMan's picture

I filled up at $2.19 last week (arkansas)...  we're close.

Fri, 07/31/2015 - 11:09 | 6375475 Bankster Kibble
Bankster Kibble's picture

I'd be happy with $3 gas.  (almost there in California $$$$)

Fri, 07/31/2015 - 08:29 | 6374831 Spitzer
Spitzer's picture

nothing more buybacks wont solve

Fri, 07/31/2015 - 08:41 | 6374883 agstacks
agstacks's picture

Did you miss the part about them slashing their buybacks?

"In other words, here is yet another company that is slashing its buyback (just like Cheveron did in January), precisely at the time when it should be boosting its buyback, when its stock is within spitting distance of the 52 week low hit earlier this week."

Sun, 08/02/2015 - 08:15 | 6374990 IRC162
IRC162's picture

.

Fri, 07/31/2015 - 09:13 | 6374991 IRC162
IRC162's picture

Well yeah, of course.  If you want to enhance the going concern of your firm and out-compete your rivals, you need to blow 10 or 11 figures in treasury/debt on your own stock.  The whole revenue-productivity-logistics-efficiency-cost cutting meme is dead.  Just go buy back what you can, finance the rest, and wait for the magic show.  This dumbass CEO needs to reread the Keynesian chapter on Bernankenomics/Yellenomics again before he misses another boat, the poor sap.  

DJIA to the Moon! 30k by 2018 on the back of this killer economy and sound money, baby

Really though, the best game in town right now is the firm supplying check stock and ink to the Social Security Administration...I want a piece of that action

Fri, 07/31/2015 - 08:30 | 6374836 Son of Loki
Son of Loki's picture

It's no wonder the past two weeks Cramer and CNBC have been hyping this O&G as the safest, bestest, no riskest company.

 

They were talking their book to dump the c-r-a-p while telling you to Buy! Buy! Buy!

 

Nothing new here...shearing the Kardashian-watching, Caitlyn cheering, tweeting, obese Sheeples one at a time.

Fri, 07/31/2015 - 08:29 | 6374837 XAU XAG
XAU XAG's picture

earnings-carnage

Just the begining of the Eddy all the way to Mad Max

Fri, 07/31/2015 - 08:33 | 6374840 Dr. Engali
Dr. Engali's picture

Better call on congress to demand a subsidy for these poor people.

Fri, 07/31/2015 - 08:40 | 6374877 PhiBetaZappa
Fri, 07/31/2015 - 08:59 | 6374965 barroter
barroter's picture

Crony free market capitalism DEMANDS that public tax monies be used for private entities...

Fri, 07/31/2015 - 08:35 | 6374857 TexasDan40
TexasDan40's picture

So does everybody still believe that big oil and gas companies somehow control the price of oil and gas....

The same thing would happen to AAPL if phone prices were cut in 1/2.

This is economic cycle people.

.

.

.

Now let me have it !

Fri, 07/31/2015 - 08:39 | 6374870 ejmoosa
ejmoosa's picture

Only during the anti-Capitalist election cycle...

Fri, 07/31/2015 - 08:41 | 6374884 TexasDan40
TexasDan40's picture

This is gonna turn out to be a great buying opportunity!

Fri, 07/31/2015 - 08:52 | 6374931 dontgoforit
dontgoforit's picture

As someone who worked for a big oil company for a decade, TexasDan40 is correct, at least partially.  Everything is about timing of course.  Oil is being fracked into submission, but oil is a finite resource.  I would take preferred XOM stock anyday.  Or Texaco, or Chevron - any of them.  Takes a pile to buy them, but those dividends are as regular as clockwork.

Fri, 07/31/2015 - 08:37 | 6374860 chistletoe
chistletoe's picture

Exxon and Chevron are practically printing money with their refinery operations ... current margins are as high or higher than they have ever been before ... higher even than the original price of crude ... Valero is also doing very well, thankyouverymuch.  Meanwhile, their competition is being decimated and, in a little while, is going to start showing up at the auctioneer's block ....

Fri, 07/31/2015 - 08:41 | 6374882 ejmoosa
ejmoosa's picture

Exxon and Chevron make more money for the goverment than they do for themselves.

If you do not like what they have left over after paying everyone else, don't use their products.

Printing money is different.  Push a button and there it is.  Have you ever been to a refinery?  It's not the same.

 

Fri, 07/31/2015 - 09:16 | 6375016 shovelhead
shovelhead's picture

I'll assume printing ink smells better than a refinery.

Fri, 07/31/2015 - 09:48 | 6375112 KansasCrude
KansasCrude's picture

Pretty easy to see they are coining $$$ on the refinery output as gas prices are much higher than they should be given the WTI.   Biggest surprise is the dive in diesel prices.  Saw it was nearly $.25/gallon LESS than gas.....  Demand sucks and once again another indicator of how bad things are with the economy.  Chart in this article worth the  visit.   Diesel demand is now 11% below 2007 given the population growth and the SUPPOSED increase in GDP of ~$4 trillion thats incredible..... most with a brain would concur no way in hell GDP has grown much if any since then..... Steve addresses Liquid Natty Gas as an impact on diesel demand in the comments. Impact not so much so far and predicted with current prices

First Chart In

 

http://srsroccoreport.com/what-silver-chart-has-the-bankers-worried/what-silver-chart-has-the-bankers-worried/

 

 

Fri, 07/31/2015 - 08:37 | 6374862 The Bell Rang
The Bell Rang's picture

Now this farce gets exposure. Buying back company shares at the top, reducing buy backs when it's cheaper.....Smart Hey ? Now going forward with earnings plunging and a reduced share count, that should be interesting....

Fri, 07/31/2015 - 08:55 | 6374942 dontgoforit
dontgoforit's picture

Due to the constructs of tax law, their buybacks are not out of sync with their long-term goals as corporations.  If you were running one of these companies you'd be foreced to look at things from a different perspective.  It's the nature of that particular beast.

Fri, 07/31/2015 - 08:38 | 6374866 Atomizer
Atomizer's picture

Can a get my free matchbox toy car? Nevermind, that was Shell when grandpa took me to his favorite station in Chagrin Falls, OH. 

Fri, 07/31/2015 - 08:57 | 6374953 Monetas
Monetas's picture

The Shell Answer Man .... and the Man from Glad .... met in a gay bar in Laguna Beach .... they were wed in a private ceremony !

Fri, 07/31/2015 - 10:04 | 6375185 Deathrips
Deathrips's picture

Man Fucking yourself again i see...

 

RIPS

Fri, 07/31/2015 - 12:07 | 6375738 Baa baa
Baa baa's picture

I got a truck! Still have it...

Fri, 07/31/2015 - 08:43 | 6374894 katchum
katchum's picture

No wonder, look how much debt they have compared to cash.

Fri, 07/31/2015 - 08:51 | 6374926 Farqued Up
Farqued Up's picture

I own a bunch of Exxon and they will be OK even though they are an inbred org as they all are. They have to have govt help to compete with the little guys, as do the others.

What puzzles me is the Oil and Gas Journal announced that they just got in bed with Rosneft on a joint venture in Africa (?). I thought we have sanctions against Russia? No? I'm confused.

Burning question #1? Is The Rockefeller clan still the largest Exxon stockholder? Is the Rockefeller clan a major stockholder of JP MorganChase? Serious ??, I'm asking, I do remember Sir David being blow buddies with the Shah, and the Assatolah grabbed the Embassy because David and his Dark Dwarf, Henry Kunt confiscated $8 billion of Iran's money in the Clan's Chase Manhattan Bank. Damn, "asset forfeiture" has been around for awhile. I remember the Peanut Prez refusing to allow the Shah treatment for his cancer in FSA and the only one that would take him was Omar Trujillos in Panama. Iran is still pissed about their 1970's vintage 8 billion which has a PV of probably 100 billion today. We all remember the Volcker 20% interest rates era. Nothing like FREE money.

And the turd keeps basting in its taxpayer tanning salon.

Fri, 07/31/2015 - 09:14 | 6375013 Atomizer
Atomizer's picture

Waiting a tad bit more before buying shares.

Fri, 07/31/2015 - 11:07 | 6375462 Bankster Kibble
Bankster Kibble's picture

'What puzzles me is the Oil and Gas Journal announced that they just got in bed with Rosneft on a joint venture in Africa (?). I thought we have sanctions against Russia? No? I'm confused."

Exxon's lawyers are bigger than State Department's lawyers.

(us proles don't even have lawyers, all we can do is watch and snicker)

Fri, 07/31/2015 - 08:52 | 6374932 Monetas
Monetas's picture

People bitch about stock dilution .... and concentration (buy back) ?

Fri, 07/31/2015 - 09:06 | 6374947 falak pema
falak pema's picture

Exxon is not the only one; Shell is laying off and selling its assets. So is Total in North Sea. 

Everybody in that business now makes a beeline for Iran, new Mecca and hope that it will stabilise Irak and get rid of ISIS, that the US/Saud/Turkey alliance of past, to "circumcise" Assad's regime--secular despot and Putin's "friend" in region-- has openly or indirectly supported. It is now the new western target; come what may.

Iran thus comes forefront both in terms of ME arms race geo-political equilibrium and now also seen as Fossil's new regional rising sun! 

What a Gordian knot! 

How can they hope Ayatollah Iran will bow to US meddling and hegemonial policy?? Erdogan might, but not Iran ! 

They will try and cleave EU from USA using the Oil weapon; knowing that Saud will forever be their ideological foe like Zion. 

In that respect Putin has an objective ally in the fossil patch! 

Latch on as this game is gonna get very complicated before it gets clarified down the road; when the petrodollar hegemony comes openly into question; aka when the Sunni petromonarchies tell the US their Shale oil plays were just STEP #1 in a global reset....AND DAT...is something that FED's interest rate hike --to avoid runaway inflation at home-- could incite, as the CBs of world lose control of West's money line.

Fri, 07/31/2015 - 11:05 | 6375445 Bankster Kibble
Bankster Kibble's picture

Iran may try to "cleave EU from USA using the Oil weapon" but USA is trying to cleave EU from Russia using the same thing.

Found this article which basically says USA is trying to make friends with Iran so it will sell gas to EU and lower EU's reliance on Russian gas so that USA can place even MORE sanctions on Russia without serious objections from EU.  O what a tangled web we weave . . .

http://journal-neo.org/2015/07/24/drive-to-replace-russian-gas-supplies-to-eu-intensifies/ 

 

Fri, 07/31/2015 - 09:13 | 6375011 ArtOfLife
ArtOfLife's picture

"In other words, here is yet another company that is slashing its buyback (just like Cheveron did in January), precisely at the time when it should be boosting its buyback, when its stock is within spitting distance of the 52 week low hit earlier this week" 

Buy the dip! 

Fri, 07/31/2015 - 09:43 | 6375111 Handful of Dust
Handful of Dust's picture

The Oil and Gass sector has been decimated; I'm expecting retial to report disastrous earnnigs next Q with thousands more layoffs.

It's all part of the "Summa 'o Rekovry."

Fri, 07/31/2015 - 10:14 | 6375231 Shropshire Lad
Shropshire Lad's picture

Exxonmobil has lost its jointventure with Rosneft due to the idiotic sactions imposed on Russia by the US government terror.  I wonder how much of their investment in the Arctic has been lost and heavily written down?  

Fri, 07/31/2015 - 10:14 | 6375232 Shropshire Lad
Shropshire Lad's picture

Exxonmobil has lost its jointventure with Rosneft due to the idiotic sactions imposed on Russia by the US government terror.  I wonder how much of their investment in the Arctic has been lost and heavily written down?  

Fri, 07/31/2015 - 10:16 | 6375241 withglee
withglee's picture

If they did their buyback now, instead of when they did, they could have probably gotten their new campus in Houston for free.

Fri, 07/31/2015 - 10:21 | 6375255 I Write Code
I Write Code's picture

Black oil counts too.

Fri, 07/31/2015 - 10:28 | 6375288 Chuck Knoblauch
Chuck Knoblauch's picture

Tell corporate executives to stop going to titty bars in Houston.

Fri, 07/31/2015 - 11:19 | 6375525 KingOfMilwaukee
KingOfMilwaukee's picture

When the big oil companies start annoucning tens of thousands of layoffs, it will be the start of the crunch for the economy. WalMart too. 

Although I am sure Obama and The Fed will still find a way to claim there is full-employment even as this occurs.

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