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Earnings Rise, Oil Production Declines for ExxonMobil

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Earnings Rise, Oil Production Declines for ExxonMobil

ExxonMobil recorded higher fourth quarter and full year 2012 earnings, but saw its upstream earnings and oil production decline as it ramped up 2012 capital and exploration expenditures to a record level.

The Irving, Texas-based oil major recorded fourth quarter 2012 earnings of more than $9.9 billion, up 6 percent from the fourth quarter of 2011, and full year 2012 earnings of $44.9 billion, up 9 percent from 2011, and record earnings per share of $9.70.

The company spent a record $39.8 billion on expenditures as it pursues opportunities to find and produce new supplies of oil and natural gas to meet global energy demand.

"Energy is fundamental to economic growth and improved living standards," said Chairman Rex W. Tillerson in a statement Friday. "ExxonMobil's strong financial performance enables continued investment in new energy supplies, which creates jobs and supports economic expansion."

While ExxonMobil's fourth quarter earnings were up, the company's upstream earnings for fourth quarter 2012 were approximately $7.7 billion, down approximately $1.1 billion from fourth quarter 2011. Fourth quarter earnings were impacted by lower liquids realizations partially offset by improved natural gas realizations, production volume and mix and lower gains from asset sales.

U.S. upstream earnings for fourth quarter 2012 rose $420 million from fourth quarter 2011 to $1.6 billion, while non-upstream earnings declined approximately $1.5 billion from the previous year to $6.1 billion.

Fourth quarter downstream earnings were approximately $1.8 billion, up $1.3 billion from the same quarter a year ago, on stronger refining margins. U.S. downstream earnings rose $667 million to $697 million, while non-U.S. downstream earnings rose $676 million to approximately $1.1 billion.

ExxonMobil's full year 2012 earnings included $9.9 billion of divestment and restructuring gains, mainly from restricting of its Japan-based operations, with $6.5 billion. But the company's upstream earnings for 2012 of $29.8 billion were down $4.5 billion from 2011 due to a number of factors, including lower liquids realizations, production volume and mix effects, higher operating expenses, lower asset sale gains, unfavorable tax items and negative foreign exchange effects.

ExxonMobil saw its full year 2012 upstream earnings decline by $4.5 billion from 2011 to approximately $29.9 billion. The company recorded U.S. upstream operation earnings of $3.9 billion, down approximately $1.2 billion from 2011, and earnings outside the U.S. of $25.9 billion, down $3.3 billion.

The company's U.S. and international downstream businesses recorded higher earnings due to stronger refining-driven margins and the $5.3 billion gain associated with ExxonMobil's restructuring in Japan and other divestment gains. Downstream earnings grew approximately $8.7 billion from 2011 to $13.2 billion in 2012, with U.S. downstream earnings of approximately $3.5 billion, up $1.3 billion from 2011, and non-U.S. downstream earnings of $9.6 billion, up $7.4 billion from 2011.

Excluding entitlement volumes, OPEC quota effects and divestments, ExxonMobil's fourth quarter 2012 production declined by 2.1 percent from fourth quarter 2011. Fourth quarter gas production was down 2.8 percent, excluding entitlement volumes and divestments, as field decline was partially offset by higher demand and lower downtime.

The company's 2012 full year oil and gas production was also down by 1.7 percent and 1.9 percent respectively.

Despite lower oil production, ExxonMobil noted that its participated in three major liquids project start-ups in West Africa last year with capacity of 350,000 gross barrels of oil per day.

The company also announced early January that it would move forward with the Hebron oil field development projects offshore eastern Canada. ExxonMobil will spend as estimated $14 billion on the project, which will involve constructing a gravity-based structure to recover more than 700 million barrels of oil.

ExxonMobil also started operations at one of the world's largest ethylene steam crackers, the centerpiece of the company's multi-billion dollar expansion at its Singapore petrochemical complex. The expansion will add 2.6 million tonnes per year of new finished product capacity.



Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

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