ExxonMobil’s 4Q15 Earnings Beat Estimates
Exxon Mobil’s 4Q15 earnings: Falling Upstream segment earnings
Changing oil prices have changed segment dynamics within Exxon Mobil Corporation (XOM). Earnings from the company’s Upstream segment have fallen steeply. The Upstream segment that contributed 83% of the total earnings in 4Q14 now contributes 31% in 4Q15.
Earnings from the Upstream segment have fallen by 84% to $857 million in 4Q15. This is on the back of falling crude oil prices. Brent prices that averaged $76 per barrel in 4Q14 slipped to $44 per barrel in 4Q15.
Downstream and Chemical segment earnings
On the other hand, Exxon Mobil’s earnings for the Downstream segment surged due to better margins coupled with favorable volume and mix effects. From 4Q14, downstream earnings rose threefold to $1.4 billion in 4Q15. The Downstream segment contributed the main portion of its 4Q15 earnings. From 8% in 4Q14, the Downstream segment contributed 49% of earnings in 4Q15.
While the Chemical segment’s earnings fell by 22% over 4Q14 to $963 million in 4Q15, the segment’s contribution to total earnings rose from 19% in 4Q14 to 35% in 4Q15. Earnings fell in the segment due to lower chemical margins, which were partly offset by better volume and mix effects.
While, the overall earnings have slumped from $6.6 billion in 4Q14 to $2.8 billion in 4Q15, the Downstream and Chemical segments have notably resisted the fall.
XOM’s peers’ segmental trends
Exxon Mobil’s (XOM) peers have also seen their segment dynamics change. The Upstream segment of Chevron Corporation (CVX) as well as BP Plc (BP), which contributed 77% and 55% of earnings in 4Q14, respectively, have posted losses in 4Q15. The situation was similar for Royal Dutch Shell (RDS.A) in 3Q15. Shell’s Upstream segment reported a loss in 3Q15.
The iShares Core High Dividend ETF (HDV) has ~20% exposure to energy sector stocks, including XOM and CVX.
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