ExxonMobil Corporation on Friday announced an estimated first-quarter 2022 earnings of US$5.5 billion compared with US$8.9 billion in the fourth quarter of 2021. The company also reported a US$3.4 billion impairment which it said is associated with its planned exit from Russia Sakhalin-1.
Following Russia’s invasion of Ukraine, ExxonMobil had announced that it could no longer be part of Sakhalin-1 which it operates on behalf of an international consortium of Japanese, Indian and Russian companies.
The American conglomerate had said, “As operator of Sakhalin-1, we have an obligation to ensure the safety of people, protection of the environment and integrity of operations. Our role as operator goes beyond an equity investment. The process to discontinue operations will need to be carefully managed and closely coordinated with the co-venturers in order to ensure it is executed safely.”
Given the current situation, ExxonMobil said too that it will not invest in new developments in Russia.
Interestingly, Exxon said earnings excluding the impact of its exit from Russia were US$8.8 billion, representing an increase of more than US$6 billion versus the first quarter of 2021.
Exxon said earnings of US$8.8 billion were slightly higher than the prior quarter, as higher industry prices and margins and reduced expenses were largely offset by a temporary reduction in volumes, unfavorable mark-to-market derivative effects, and price timing impacts.
It said too that first-quarter cash increased by US$4.3 billion compared to the fourth quarter of 2021, as strong cash flow from operations more than funded capital investment, additional debt reduction, and shareholder distributions in the quarter.
It was keen to note that its free cash flow in the quarter was approximately US$11 billion.
With the balance sheet well within the targeted debt-to-capital range of 20-25%, the company was also able to initiate its previously announced US$10 billion buyback programme, repurchasing shares totaling US$2.1 billion during the quarter. The company also increased this programme and now expects to repurchase up to a total of U$30 billion through 2023.
With respect to its Guyana operations, a key component of its global asset profile, the company noted that it started production at its second major development offshore Guyana in February.
Exxon said the successful start-up of the Liza Phase 2 development brought total production capacity to more than 340,000 barrels per day.
It also informed shareholders that in early April, a final investment decision for the Yellowtail development was made. Yellowtail will be the company’s fourth and largest development to date in Guyana with production capacity of 250,000 barrels of oil per day. It is expected to begin production in 2025.
Additionally, the company shared that Payara is ahead of schedule with start-up likely before year-end 2023.
Exxon also announced five new discoveries, increasing the estimated recoverable resource base for the Stabroek block to nearly 11 billion oil-equivalent barrels.
Chief Executive Officer (CEO) and Chair of Exxon, Darren Woods said the quarter illustrated the strength of the company’s underlying business and significant progress in further developing a competitively advantaged production portfolio.
He believes the company’s performance in March provides “strong, positive momentum for the second quarter.”
