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Exxon Smashes Western Oil Majors’ Profits With $56 Billion In 2022

Exxon Mobil Corp (XOM.N) announced a $56 billion net profit for 2022, earning roughly $6.3 million per hour last year, breaking not only a business record but also a historic high for the Western oil industry. Oil majors are set to break their own annual records as a result of high prices and increasing demand, bringing their total take to close to $200 billion.

The scale has reignited criticism of the oil business, prompting calls for more countries to apply windfall profit taxes on the companies. Exxon’s earnings were considerably above the then-record $45.2 billion net profit it reported in 2008 when oil hit $142 per barrel, 30% higher than the previous year’s average price. During the epidemic, deep cost cuts boosted earnings last year.

“Overall profitability and cash flow were up very dramatically year on year,” Exxon CFO Kathryn Mikells told Reuters. “So that was really the result of a mix of strong markets, high throughput, excellent production, and extremely effective cost control,” says the CEO.

US refiners anticipate that Russian fuel restrictions will keep margins high. Western tankers will increase Russian oil exports under the price cap. Oil prices climb as the global economy slows. Inflation in the United States alleviates recession fears.

Pertamina’s geothermal unit in Indonesia plans to raise up to $652 million in an IPO. Exxon said it lost $1.3 billion in fourth-quarter earnings due to a European Union windfall tax that went into effect in the fourth quarter, as well as asset impairments. The firm is challenging the EU, claiming that the fee goes beyond the EU’s legal power.

Profit for the full year, excluding charges, was $59.1 billion. Over a year ago, production increased by around 100,000 barrels of oil and gas per day to 3.8 million. According to Refinitiv statistics, an adjusted per-share profit of $3.40 surpassed the consensus of $3.29 per share.

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“It’s a headline beat,” RBC Capital’s Biraj Borkhataria said in a report, despite weaker chemical margins, smaller-than-expected downstream profits, and plans for increased refinery maintenance this quarter. The outcomes set up another clash with the White House.

Companies could raise output but instead chose to “plow those revenues into padding the pockets of executives and shareholders,” according to a White House statement. The illustration depicts the Exxon Mobil logo and a stock graph.

The Exxon Mobil logo and stock graph are magnified in this image taken on September 4, 2022. Exxon paid out $30 billion in cash to stockholders last year, the most of any Western competitor, and invested $22.7 billion in the firm.

Windfall earnings taxes, on the other hand, are an “illegal and terrible policy,” according to Mikells. Increasing taxes on oil profits “has the reverse effect of what you’re trying to achieve,” she says, adding that it would discourage new oil and gas production.

Exxon claimed that its cash flow from operations increased to $76.8 billion in 2018, up from $48.1 billion in 2021. It also opted to keep $30 billion in cash on hand. The corporation said it learned from the epidemic when it was left with nothing and had to raise loans to pay dividends to stockholders.

“Having a tremendously solid balance sheet is a competitive advantage for us,” Mikells said, adding that it allows the company to wait for prospective acquisition possibilities while continuing to fund its dividend program even if energy prices fall.

Exxon earned a $12.8 billion net profit excluding charges in the fourth quarter, up 44% from the same period last year but down 35% from the preceding year as oil prices fell and several operations suffered from cold-weather outages.

Exxon spent $22.7 billion on new oil and gas projects last year, up 37% from the previous year. The corporation increased its investments in Guyana, the top U.S. shale resource, fuel refining, and chemicals.

“The counter-cyclical investments we made before and during the epidemic supplied people with the energy and products they needed when economies began to recover,” Exxon CEO Darren Woods said in a statement.

According to Woods, investments could reach $25 billion this year. Part of it is explained by soaring Permian costs, with double-digit inflation and “very, really high” demand for equipment and services, he added.

Exxon forecasts Permian output of 600,000 this year, up 50,000  from last year but somewhat below market projections. Woods, on the other side, predicted that excellent refining margins would remain in 2023.

Exxon’s results came ahead of projected good earnings from Shell plc on Thursday and BP plc and TotalEnergies the following week. Sabrina Valle in Houston contributed reporting, as did Mrinalika Roy in Bengaluru, while Christian Schmollinger, Mark Porter, and Anna Driver edited the piece.

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