Must-know: An Overview of ExxonMobil’s 2Q14 earnings (Part 3 of 8)
ExxonMobil’s 2Q14 results
In 2Q14, Exxon’s earnings from its upstream U.S. operations increased 9% to ~$1.2 billion from $1.1 billion recorded in 2Q13. Non-U.S. upstream operations earnings improved significantly by 28% to ~6.7 billion in 2Q14 from $5.2 billion in 2Q13. Overall, the upstream business produced 25% higher earnings in the 2Q14 over the same quarter last year. Upstream refers to crude oil and natural gas exploration and production activities.
In 2Q14, XOM’s average price realization of crude oil and natural gas was higher than 2Q13 by 3% and 13%, respectively, in the U.S.
The upstream segment is XOM’s biggest, accounting for ~83% of XOM’s 2Q14 earnings.
Why earnings increased in Exxon’s downstream business
In 2Q14, Exxon’s earnings from its downstream U.S. operations more than doubled to ~$536 million from $248 million recorded in 2Q13. Earnings from the non-U.S. operations improved at a relatively lower rate by 18% to ~175 million in 2Q14 from $148 million in 2Q13.
Downstream refers to crude oil refining and natural gas processing or purifying activities.
Downstream earnings in 2Q14 were positively impacted by higher price realizations and lower operating costs.
Earnings in 2Q14 were positively impacted by an asset sale in Hong Kong, which increased the bottom-line by $1.2 billion. Weaker margin in the refinery operations of XOM negatively affected 2Q14 earnings, partially offsetting the overall gains.
Exxon’s chemical business grows, but at a moderate rate
In 2Q14, Exxon’s earnings from its chemical business in the U.S. increased a marginal 3% to ~$528 million from $515 million recorded in 2Q13. Earnings from the non-U.S. operations improved at a substantially higher rate of 30% to $313 million in 2Q14 from $241 million in 2Q13. Overall, the chemical business produced 11% higher earnings in the 2Q14 over the same quarter last year.
Chemical earnings in 2Q14 were positively impacted by higher volume and mix effect. Weaker margin in the specialty products negatively affected 2Q14 earnings, while higher margin in commodities helped improve margin.
Key exchange-traded funds (or ETFs)
ExxonMobil (XOM) is a component of the Energy Select Sector SPDR (XLE) and the SPDR S&P 500 (SPY). Royal Dutch Shell (RDS.A) and Chevron Corporation (CVX) operate in the same industry as XOM. Chevron Corporation (CVX) is a component of XLE and SPY.
Browse this series on Market Realist:
- Part 1 - ExxonMobil’s 2Q14 earnings beat estimates—production falls short
- Part 2 - Overview: Diving deeper into ExxonMobil’s 2Q14 earnings
- Part 4 - Must-know: Why Exxon’s production has been shaky
- Oil, Gas, & Consumable Fuels
- Basic Materials Industry