Exxon Mobil, one of the world's largest energy companies, recently reported a decline in its fourth-quarter revenue and profits. This downturn can be attributed to the falling price of oil, which has negatively impacted the company's financial performance. Additionally, Exxon faced a significant impairment charge related to regulatory issues in California. Despite these challenges, the company managed to post a healthy adjusted profit and even raised its quarterly dividend.
In the three months ending on December 31, Exxon's revenue dropped to $84.34 billion, compared to $95.43 billion during the same period the previous year. This figure fell short of the $91.81 billion that analysts had predicted. The company's earnings for the quarter were $7.63 billion, or $1.91 per share, a decrease from the $12.75 billion, or $2.25 per share, earned in the previous year.
The decline in revenue and profits can mainly be attributed to the $2.3 billion impairment charge incurred during the quarter. Of this charge, $2 billion was related to regulatory obstacles in California, which affected Exxon's production and distribution assets in the state. However, excluding this charge and other items, the company's earnings amounted to $2.48 per share, surpassing analysts' expectations of $2.21 per share. It is worth noting that Exxon does not adjust its reported results based on one-time events like asset sales.
Despite the challenges faced by the company, Exxon announced a 4% increase in its quarterly dividend, raising it to 95 cents per share. This decision demonstrates the company's confidence in its ability to weather the current market conditions and maintain its commitment to shareholders.
Last year, Exxon made notable acquisitions, capitalizing on surging oil prices. In July, the company acquired Denbury Resources, an oil and gas producer that specializes in carbon capture and storage, for $4.9 billion. Then in October, Exxon announced its plan to purchase shale operator Pioneer Natural Resources for $60 billion. However, this deal faced scrutiny from the Federal Trade Commission, which requested additional information to evaluate its potential impact on competition.
The energy sector has experienced significant consolidation due to elevated cash levels among major producers. In October, Chevron announced its acquisition of Hess Corp. for $53 billion, further exemplifying this trend.
Amidst the challenges faced by Exxon and other energy companies, global oil markets are also facing other uncertainties. Cutbacks in oil production from Saudi Arabia and Russia are straining the oil market, while the ongoing conflict between Israel and Hamas in the Middle East has the potential to ignite a broader conflict that could disrupt oil supply and lead to higher oil prices.
While the future of the oil market remains uncertain, Exxon remains resilient and committed to navigating these challenges. The company's ability to post a solid adjusted profit and raise its dividend demonstrates its determination to deliver value to its shareholders in these challenging times.
