Moments ago, following our chart showing the devastation in Q1 earning forecasts, Exxon Mobil came out with its Q4 earnings, and - as tends to happen when analysts take a butcher knife to estimates - beat EPS handily, when it reported $1.56 in EPS, above the $1.34 expected, if still 18% below the $1.91 Q4 EPS print from a year earlier. A primary contributing factor to this beat was surely the $3 billion in Q4 stock buybacks, with another $2.9 billion distributed to shareholders mostly in the form of dividends. Overall, XOM distributed $23.6 billion to shareholders in 2014 through dividends and share purchases to reduce shares outstanding.
This number masks the 29% plunge in upstream non-US earnings which were smashed by the perfect storm double whammy of not only plunging oil prices but also by the strong dollar. Curiously, all this happened even as XOM actually saw its Q4 worldwide CapEx rise from $9.9 billion a year ago to $10.5 billion, even though capital and exploration expenditures were $38.5 billion in the full year, down 9% from 2013.
However, while XOM did the best with margins and accounting gimmickry it could under the circumstances, there was little it could do to halt the collapse in revenues, which printed at $87.3 billion, well below the $92.7 billion expected, and down a whopping 21% from a year ago. And this is just in Q4 - the Q1 slaughter has yet to be unveiled!
Some of the Q4 highlights from the report:
- Upstream earnings were $5.5 billion in the fourth quarter of 2014, down $1.3 billion from the fourth quarter of 2013. Lower liquids realizations decreased earnings by $2.4 billion, while favorable volume effects increased earnings by $400 million. All other items increased earnings by a net $640 million, including U.S. deferred income tax effects and the recognition of a favorable arbitration ruling for expropriated Venezuela assets.
- On an oil-equivalent basis, production decreased 3.8 percent from the fourth quarter of 2013. Excluding the impact of the expiry of the Abu Dhabi onshore concession, production decreased 0.7 percent.
- Liquids production totaled 2.2 million barrels per day, down 53,000 barrels per day from the fourth quarter of 2013. The Abu Dhabi onshore concession expiry reduced volumes by 133,000 barrels per day. Excluding this impact, liquids production was up 80,000 barrels per day as project and work program contributions more than offset field decline and divestment impacts.
- Fourth quarter natural gas production was 11.2 billion cubic feet per day, down 653 million cubic feet per day from 2013. Field decline, lower demand, and reduced entitlement volumes were partly offset by higher volumes from Papua New Guinea and work programs.
- Earnings from U.S. Upstream operations were $1.5 billion, $317 million higher than the fourth quarter of 2013. Non-U.S. Upstream earnings were $4.0 billion, down $1.6 billion from the prior year.
- Downstream earnings were $497 million, down $419 million from the fourth quarter of 2013. Stronger marketing and non-U.S. refining margins, mostly offset by weaker U.S. refining margins, increased earnings by a net $40 million. Volume and mix effects increased earnings by $20 million. All other items, primarily higher expenses and unfavorable tax effects, decreased earnings by $480 million. Petroleum product sales of 5.8 million barrels per day were 149,000 barrels per day lower than the prior year's fourth quarter.
- The U.S. Downstream recorded a loss of $1 million, down $598 million from the fourth quarter of 2013. Non-U.S. Downstream earnings of $498 million were $179 million higher than the prior year.
But the biggest surprise, and what everyone will be focused on, is the sharp slowdown in CapEx: while XOM did $3 billion in stock buybacks in Q4, this number is set to slow to a trickle in Q1, with the company announcing it would repurchase only $1 billion in stock in Q1 2015. It is not quite a stock buyback halt... yet... but one or two more quarters of $45 oil and it will be, because as XOM notes, "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."