Time travel to 2018 for an ExxonMobil earnings perspective

Jennifer Driscoll

Vice President, Investor Relations

ExxonMobil announced our 2023 second-quarter financial results Friday morning –$7.9 billion in earnings for the April quarter, a strong performance overall.

Quarter after quarter, the media and financial analysts generally evaluate these results by comparing them to the same quarter a year ago, as well as to the preceding quarter.

There’s some value to this convention, and I get why they do it. I do it too; that’s part of the job.

But in the oil and gas industry, these can be apples-to-oranges comparisons that don’t tell you enough about the underlying performance of the business. That’s because the pricing environment can change – sometimes dramatically – in a short time period. Especially this past year, when we’ve seen an uptick in volatility.

Crude oil prices were higher in the first quarter of this year than the second, after all. And they were considerably higher throughout most of last year. That makes comparing our second quarter to those periods less constructive of an insight into how ExxonMobil is performing.

By broadening our lens, we get a different perspective – one that, from our point of view, gives a better sense of the true earnings power of the company, beyond the impact of commodity prices.

Doubling earnings in a comparable price environment 2Q2018 to 2q2023

A trip back in time

Let’s go back five years to 2018. No, not to revisit the wedding of Harry and Meghan or to reminisce about those low interest rates. 

Let’s go to 2018 – and to the second quarter of 2018 in particular – because that’s the most recent quarter with a commodity-price environment comparable to the current one.*

This allows us to measure the improvements we’ve made to our businesses and how much our earnings are tied to factors within our company’s control (as opposed to commodity prices over which we have no control).

In the second quarter of 2018, ExxonMobil reported roughly $4 billion of earnings. That was a good showing, reflecting crude oil production growth in the Permian and Bakken regions, as well as strong global refining and chemicals margins.

Now jump forward to 2023 and see what a difference the intervening five years have made.

Twice as profitable

As ExxonMobil Chairman and CEO Darren Woods said Friday morning about our recent performance, “We delivered earnings of almost $8 billion – two times higher than what we earned in the second quarter of 2018, under comparable industry commodity prices.”

Doubling earnings in comparable quarters over five years is quite an achievement, and it doesn’t happen by chance. Our people deserve tremendous credit for the real improvements they’re making to the business.

As Darren mentioned, that doubling of earnings reflects five years of reshaping our portfolio of businesses, investing in projects that have economic advantages, and driving a higher level of efficiency and effectiveness in everything we do. Those are the things that are squarely within our control.

The payoff 

It’s paying off, as reflected in this most recent $8 billion quarter, along with cash flow from operations of $9.4 billion, and $8 billion in shareholder distributions.

We set another quarterly record for production in the Permian of about 620,000 barrels of oil per day. It was a similar story in Guyana, where we achieved a record quarterly production rate of 380,000 barrels per day. Worldwide, we produced about 3.7 million oil-equivalent barrels per day. Amazing.

Some will say that everyone in the industry does well when commodity prices are higher. That was certainly the case in 2022, when a rising tide lifted all boats.

To see which boats are most seaworthy, sometimes you need some chop in the water. The lower crude oil prices we experienced during the second quarter of this year reduced earnings for all participants, at least compared to last quarter and last year.

But they also helped make evident the long-term earnings power and strength of ExxonMobil’s business strategy and put some wind in our sails for the journey ahead.

Jennifer Driscoll is vice president for Investor Relations at ExxonMobil.


* Based on ExxonMobil assessment of historical industry commodity prices and margins referencing Intercontinental Exchange (ICE), S&P Global Platts, IHS Markit as well as company estimates and analysis, the second-quarter 2023 industry commodity price environment is comparable to the second-quarter of 2018. General industry commodity price environment may not be a complete match for individual segments.