ExxonMobil Benefits from Strong Downstream Performance in 2012, Continues to Develop Projects in Gulf, Canada

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Researched by Industrial Info Resources (Sugar Land, Texas)--Leading oil and gas company Exxon Mobil Corporation (NYSE:XOM) (Irving, Texas) reported strong overall gains in fourth-quarter and full-year 2012, boosted by stronger refining-driven margins in the Downstream segment and gains from divestments and restructuring. Net income was reported to be $9.95 billion for the quarter, a 5.85% increase from fourth-quarter 2011, and $44.88 billion for the year, a 9.3% increase from 2011.

Total revenues stood at $115.17 billion for the quarter, a 5.29% decrease from the same period in 2011, and $482.3 billion for the year, a decrease of less than 1% from 2011. Margins in the Downstream segment boosted earnings during the quarter and the full year by $1.2 billion and $2.6 billion, respectively, although petroleum product sales were narrowly lower. The Downstream segment also benefited from restructuring in Japan. However, earnings in the Upstream segment were negatively affected by weaker realizations for liquids.

Overall oil-equivalent production declined 6% from 2011, although production was down only 2% when excluding the effects of divestments, OPEC quotas and entitlement volumes. Liquids production declined during the quarter and full year, although this was mitigated by less downtime and the ramp-up of projects in West Africa. Despite higher demand and improved price realizations, natural gas production also saw a slight decline. The Chemical segment benefited from higher margins during the quarter, driven by commodities, although margins were lower for the year.

Capital and exploration expenditures were reported to be a record $39.8 billion in 2012, an 8.25% increase from 2011, and $12.44 billion for the fourth quarter, a 24.19% increase from the same period in 2011.

Industrial Info is tracking more than $132 billion in active projects involving ExxonMobil, including $450 million in activity for subsidiary XTO Energy Incorporated's (Oklahoma City, Oklahoma) Bakken Shale Oil & Gas Production Field 2013 Drilling Program. On 500,000 acres at the Williston Basin Bakken Shale Field in Sidney, Montana, XTO plans to drill 70 new wells to a vertical depth of 10,000 feet and a horizontal directional drill of 10,000 feet to produce up to 1,000 barrels per day (BBL/d) of crude oil and 10 million to 15 million standard cubic feet per day per well. XTO recently awarded Nabors Industries Limited (Billings, Montana) a drilling contract.

"Energy markets were mixed in the fourth quarter, with higher U.S. natural gas prices and relatively flat Brent crude oil prices, while West Texas Intermediate prices declined," said David Rosenthal, the vice president of Investor Relations for ExxonMobil, in a conference call. "European and Asian chemical margins showed improvement; however, global industry refining margins deteriorated significantly versus the third quarter."

The Downstream segments showed the sharpest overall growth during the fourth quarter:

• The U.S. Upstream segment reported $1.6 billion in earnings for the quarter, a 35.47% increase from fourth-quarter 2011, and $3.93 billion for the year, a 22.98% decrease from 2011.
• The Non-U.S. Upstream segment reported $6.16 billion in earnings for the quarter, a 19.45% decrease from the same period in 2011, and $25.97 billion for the year, an 11.5% decrease from 2011.
• The U.S. Downstream segment reported $697 million in earnings for the quarter, compared with $30 million in fourth-quarter 2011, and $3.58 billion for the year, a 57.63% increase from 2011.
• The Non-U.S. Downstream segment reported $1.07 billion in earnings for the quarter, compared with $395 million in the same period of 2011, and $9.62 billion for the year, compared with $2.19 billion in 2011.
• The U.S. Chemical segment reported $728 million in earnings for the quarter, compared with $383 million in fourth-quarter 2011, and $2.22 billion for the year, basically unchanged from 2011.
• The Non-U.S. Chemical segment reported $230 million in earnings for the quarter, a 43.75% increase from the same period in 2011, and $1.68 billion for the year, a 22.6% decrease from 2011.

Early in January, ExxonMobil announced that it would develop the Hebron oil field, which is offshore the Newfoundland and Labrador province of Canada and is estimated to cost a total of $14 billion. Industrial Info is tracking the structural erection of a gravity-based structure and the purchasing for production platform topside facilities. The project is scheduled to begin production in late 2017, and is being designed for about 150,000 barrels of oil per day. More than 700 million barrels of oil are expected to be recovered.

"In the Gulf of Mexico, the Phobos prospect, which is five miles south of ExxonMobil's Hadrian South discovery, spud during the quarter," Rosenthal said in the conference call. "Additionally, we have plans for an active exploration program in the Gulf of Mexico during 2013."

For more information, visit Industrial Info's North American Oil and Gas Production Project Database and North American Petroleum Refining Project Database.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.