Commodities

Stocksak: Exxon shares rise to record highs on strong earnings outlook


© Stocksak. FILE PHOTO – Cars seen at Exxon station in Brooklyn, New York City on November 23, 2021. REUTERS/Andrew Kelly

By Sabrina Valle

HOUSTON (Stocksak). Exxon Mobil Corp (NYSE) shares surpassed their all-time peak Friday as oil prices rebounded and analysts raised long-term views about top U.S. oil producer’s cash flows and earnings outlook.

Exxon is leading the parade of record profits for oil majors this yea after doubling down oil consumption during the pandemic. This was when energy prices dropped to a two decade low and European oil companies cut spending and moved to renewable projects.

The stock closed at $105.86 on Friday, hitting $106.40 before closing at $105.86 on Friday. This is higher than the previous record close of $104.59 in June 8.

Chief Executive Darren Woods is a victor in the rally. He decided to “lean into” oil investments after oil prices dropped in 2020. Exxon, he stated, would not engage with its peers in the pursuit of solar and wind.

Brian Mulberry, a portfolio manager at Zacks Investment Management, said that managing cash flow and focusing their attention on what they are good in is a strategy that has worked.

Exxon’s rising profits are a flashpoint to U.S. President Joe Biden. He this week accused Exxon, and other oil company, of using the “windfall of profits” to buy back stock rather than invest in new production that would be beneficial for consumers.

Exxon was able to weather a number of setbacks and reported a $22.4 billion loss for 2020. This year, an international oil supply shortage accelerated by Russian sanctions resulted in oil prices reaching 14-highs.

Exxon shares have risen more than 70% so far this year, beating gains by Shell (LON) PLC, BP(NYSE:) PLC and U.S. oil majors. Chevron Corp. (NYSE:)

Oil profits enabled the company to pay off $21 billion in 2020 debt to pay its bills and maintain dividend distributions. Wall Street projects that it will add $26 trillion in cash this year.

Exxon could post another strong quarterly quarter on high prices next week, putting it on track to record an annual profit of $54.80 billion this year, according IBES Refinitiv. That’s more than its cumulative earnings since 2018.

The company’s share price rose gave it a market value in excess of $438 billion, which made it the 10th most valuable public company in the world.

Exxon’s market capital reached more than $500 billion in 2007, when it peaked at over $500 billion. In 2013, Exxon was the largest publicly traded U.S. corporation by market value.

Its fall from grace in 2020 was marked by huge losses and job reductions. NextEra Energy (NYSE) took over Exxon as the U.S.’s largest energy company.

High energy prices have been a major factor in the year’s profits. The price of global oil reached a 14-year high in March at $139/barrel. It has remained near $100/barrel for most of the year. European demand is driving gas prices to multi-year highs.

The company’s production is less robust than its earnings.

Exxon’s midyear output was 3.7 million barrels per day of oil and natural gas (boed), which is in line with last, but down nearly 9 percent from the average 4.1million boed in 2016.

GRAPHIC: Exxon record results in the most recent quarter https://graphics.reuters.com/EXXONMOBIL-RESULTS/zgvomxgdwvd/chart.png

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