ExxonMobil Offsets Oil Price Plunge with Chemical Profits in 2014, Sets Record for Upstream Kickoffs

Researched by Industrial Info Resources (Sugar Land, Texas)--Leading oil and gas company Exxon Mobil Corporation (NYSE:XOM) (Irving, Texas) sailed rough waters in 2014, as lower commodity prices and a jump in maintenance activity negatively affected profits in the Upstream and Downstream segments, respectively. Still, strong profits in the Chemicals segment offset much of the losses, and a record number of Upstream start-ups helped the company make its plan to produce 4 million barrels of oil equivalent per day. Net income was reported to be $32.52 billion for the year, basically unchanged from 2013, and $6.57 billion for the quarter, a 21.32% decrease from fourth-quarter 2013.

Industrial Info is tracking more than $80 billion in active projects involving ExxonMobil, including one of its largest projects in North America: the $2 billion construction of an offshore gravity-based structure (GBS) at the Hebron offshore crude oil production platform in Canada's Labrador Sea. The new facility is designed to store 1.3 million barrels of crude oil and to help stabilize engineered topside facilities. Kiewit-Kvaerner Contractors (Saint John's, Newfoundland) is performing engineering, procurement and construction services. The GBS is expected to be completed in the first quarter of 2016.

Total revenues stood at $411.94 billion for the year, a 6% decrease from 2013, and $87.28 billion for the fourth quarter, a 21.27% decrease from fourth-quarter 2013. Lower liquids realization decreased earnings by $2 billion for the year, including a $2.4 billion decline in the fourth quarter alone. Production was down 4.9% to 4 million barrels of oil equivalent per day, a sizable chunk of which was attributed to the expiration of the company's share in Abu Dhabi's massive oil fields, in the United Arab Emirates. The expiration also reduced liquids production volumes by 135,000 barrels per day; otherwise, liquids volumes would have been up 2%.

Weak demand from an economically struggling Europe and an anticipated decline in U.S. field activity reduced natural gas production 5.86% to 11.1 cubic feet per day. However, ExxonMobil's Chemicals segment benefited from higher commodity-driven margins throughout the year, with the fourth quarter getting a boost from lower feedstock costs.

Capital and exploratory expenditures were reported to be $38.54 billion for the year, a 9.3% decrease from 2013, and $10.46 billion for the fourth quarter, a 5.44% increase from the same period in 2013. During the year, ExxonMobil completed eight major Upstream projects, a record for the company, including the $19 billion Papua New Guinea liquefied natural gas project. Production also began in the Lucius oilfield in the deepwater Gulf of Mexico, where ExxonMobil holds a 23.3% stake.

"Realizations decreased earnings by $2.4 billion, as worldwide crude oil prices declined by almost $32 per barrel [in the fourth quarter]," said Jeff Woodbury, the vice president of Investor Relations and Security for ExxonMobil, in a conference call. "Notably, favorable sales mix effects increased earnings $400 million, driven by higher margin production growth from the U.S. and major projects in Canada, Angola and Papua New Guinea."

ExxonMobil expects to begin production this month in the Hadrian South gas field in the Gulf of Mexico, where it predicts it eventually will see 300 million standard cubic feet per day. Executives also said that steam injection is under way at the $750 million Nabiye Bitumen Production Plant in Cold Lake, Alberta. The company recently expanded its acreage captures in Canada, where it added 1.6 million acres in three licenses offshore Newfoundland and Labrador; in Ivory Coast, where it added 2.3 million acres; and in the North Sea, where it took a 50% working interest in two properties near producing fields.

"The Kearl expansion project in [the Canadian oil sands] continues to track ahead of schedule," Woodbury said. "Site construction activities are now largely complete, and commissioning activities are ramping up. The project incorporates the learnings from the initial development phase and will double Kearl's production capacity to 220,000 barrels per day in the next several decades."

Exxon plans to release its 2015 capital expenditure plan on March 4.

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