Exxon reduced structural costs by $1.0 billion year to date, bringing the cumulative to $10.7 billion compared with 2019

Allen Good, CFA
Aug 2, 2024

Key Morningstar Metrics for Exxon Mobil

(1) Fair Value Estimate: $138.00

(2) Morningstar Rating: 4 stars

(3) Morningstar Economic Moat Rating: Narrow

(4) Morningstar Uncertainty Rating: High

What We Thought of Exxon Mobil’s Earnings

Exxon’s second-quarter adjusted earnings increased to $9.2 billion from $7.9 billion the year before, surpassing market expectations. The increase was largely attributable to the inclusion of two months of Pioneer results and structural cost savings that offset lower energy product results from weaker refining margins.

Exxon reduced structural costs by another $0.6 billion during the quarter and $1.0 billion in the year to date, bringing the cumulative amount to $10.7 billion compared with 2019 while keeping it on track to achieve its $5 billion target by 2027 from 2023. Year-over-year production increased to 4,358 thousand barrels of oil equivalent per day from 3,608 mboe/d, thanks to the inclusion of Pioneer and strong Permian and Guyana growth. The addition of these high-margin volumes should continue for the next few years, as should the cost reductions, improving upstream profitability.

Exxon paid dividends of $4.3 billion and repurchased $5.2 billion in shares in the quarter, in line with guidance. Given the closing of the Pioneer deal, the firm can increase repurchases and plans to repurchase a total of $19 billion this year, implying about $11 billion in the second half, with a rate of $20 billion annually through 2025.

We plan to update our model but do not anticipate any material changes to our narrow moat rating or $138 fair value estimate, leaving shares undervalued. Exxon remains one of the most undervalued integrated oils in our coverage and our preferred play, given its potential for earnings growth.

https://www.morningstar.com/stocks/exxon-earnings-strong-quarter-demonstrates-progress-long-term-objectives

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9 replies (most recent on top)

@2uqg+1tP3DFHd Pretty sad if we are accepting a 6% interest rate as our best investment. There was a time when we actually built things that made a whole lot better ROCE than 6%

Pumping oil, reducing OPEX, and stock buybacks are the key to long term healthy growth in the Energy Industry.

The increase was largely attributable to the inclusion of two months of Pioneer results and structural cost savings that offset lower energy product results from weaker refining margins.

You can only squeeze so much blood out of a rock.

Nothing new with this. Companies squeeze out profits to show short term gains but sell out the future.

Lack of investment in people “our greatest asset” will have a cost.

Interest rates are at 6% due to global inflation. The interest we gain on an additional $5 billion (i.e. principal) in structural cost savings equals $300 million a year that we can use to buy back stock.

It is a no-brainer moving forward with additional staff reduction and asset sales.

OP, you're right. Darren and Kathy have fired almost everybody at Exxon so they've reduced structural costs by 10 billion. JUST GET IT IN YOUR HEADS, THESE SAVINGS ARE PEOPLE'S JOBS THAT WERE ELIMINATED. NOT SAVINGS IN SUPPLY CHAIN, OR EFFICIENCIES AT THE PLANTS. THERE'RE PEOPLE'S JOBS. There aren't any scientists or engineers left. Exxon doesn't have any knowhow left in house. They are forced to buy third party technologies now until the third parties don't want to sell it anymore. Then bye bye Exxon. But by then Kathy and Darren will be gone. This is another GE or Boeing.

Exxon paid dividends of $4.3 billion and repurchased $5.2 billion in shares in the quarter

reminds me of the john oliver video on Boeing.

There are special therapist that see exxon employees. Just for the fact you work at exxon.

And just think… they haven’t even touched management positions yet!

They should take creds for the number of families they stressed out and employees sent to shrinks as well! Trendsetters

Thread regarding ExxonMobil Corp. layoffs

Exxon reduced structural costs by $1.0 billion year to date, bringing the cumulative to $10.7 billion compared with 2019

9 replies (most recent on top)

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