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Exxon overcomes hefty charge and falling crude prices in fourth quarter to top profit expectations

Shares of the Houston-based company rose 2% before the market opened Friday. Photo via exxonmobil.com

ExxonMobil's fourth-quarter revenue and profits declined along with the price of oil, and the energy giant was weighed down by a hefty impairment charge tied to regulatory issues in California. Still, it posted a healthy adjusted profit and the company raised its quarterly dividend.

Shares of the Houston-based company rose 2% before the market opened Friday.

Revenue for the three months ended Dec. 31 declined to $84.34 billion from $95.43 billion. That fell short of the $91.81 billion that analysts polled by Zacks Investment Research expected.

Exxon earned $7.63 billion, or $1.91 per share, for the quarter. A year earlier, it earned $12.75 billion, or $2.25 per share.

The current quarter included a $2.3 billion impairment charge of which $2 billion related to regulatory obstacles in California that have prevented production and distribution assets from coming back online.

Excluding the charge and other items, earnings were $2.48 per share.

Analysts were calling for earnings of $2.21 per share. Exxon does not adjust its reported results based on one-time events such as asset sales.

The Spring, Texas-based company boosted its quarterly dividend 4% to 95 cents per share.

Exxon went on a bit of a shopping spree last year with oil prices surging.

In July, the company said it would pay $4.9 billion for Denbury Resources, an oil and gas producer that has entered the business of capturing and storing carbon and stands to benefit from changes in U.S. climate policy.

In October Exxon topped that deal by announcing that it would buy shale operator Pioneer Natural Resources for $60 billion. Two months later, the Federal Trade Commission, which enforces federal antitrust law, asked for additional information from the companies about the proposed deal. The request is a step the agency takes when reviewing whether a merger could be anticompetitive under U.S. law. Pioneer disclosed the request in a filing Tuesday.

Elevated levels of cash for all big producers drove a massive consolidation in the energy sector. In October Chevron said it would buy Hess Corp. for $53 billion.

Chevron also reported its financial results Friday, posting a fourth-quarter adjusted profit of $3.45 per share on revenue of $47.18 billion. Wall Street was calling for a profit of $3.29 per share on revenue of $52.59 billion. Its stock climbed slightly in premarket.

The San Ramon, California-based company said both U.S. and worldwide annual production hit a record. Chevron's board approved an increase in the quarterly dividend to $1.63 per share, up 8%.

On Thursday, Shell plc reported an adjusted profit of $2.22 for the fourth quarter, with revenue totaling $80.13 billion. Analysts predicted a profit of $1.94 per share. Shell's stock edged slightly higher before the market open.

Oil markets are being stretched by cutbacks in oil production from Saudi Arabia and Russia, and the war between Israel and Hamas still potentially runs the risk of igniting a broader conflict in the Middle East. While attacks on Israel do not disrupt global oil supply, according to an analysis by the U.S Energy Information Administration, “they raise the potential for oil supply disruptions and higher oil prices.”

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A View From HETI

Shell has entered a 15-year agreement to be the first offtaker to receive electrons from Fervo Energy's flagship geothermal development in Beaver County, Utah, known as Cape Station. Photo via fervoenergy.com

Beginning in 2026, Shell will be able to apply 31 megawatts of 24/7 carbon-free geothermal power to its customers thanks to a new 15-year power purchase agreement with Houston next-gen geothermal development company Fervo Energy.

“This agreement demonstrates that Fervo is stepping up to meet the moment,” Dawn Owens, VP, Head of Development & Commercial Markets at Fervo, said in a news release.

Shell will become the first offtaker to receive electrons from Fervo's flagship geothermal development in Beaver County, Utah’s Phase I of Cape Station. Cape Station is currently one of the world’s largest enhanced geothermal systems (EGS) developments, and the station will begin to deliver electricity to the grid in 2026.

Cape Station will increase from 400 MW to 500 MW, which is considered by the company a major accomplishment due to recent breakthroughs in Fervo’s field development strategy and well design. Fervo is now able to generate more megawatts per well by optimizing well spacing using fiber optic sensing, increasing casing diameter and implementing staggered bench development. This can allow for a 100 MW capacity increase without the need for additional drilling, according to the company.

With the addition of the new Shell deal, all 500 MW of capacity from Fervo’s Cape Station are now fully contracted. The deal also includes existing agreements, like Fervo’s PPAs with Southern California Edison and an expanded deal with Clean Power Alliance that adds 18 MW of carbon-free geothermal energy to the company’s existing PPA with Fervo.

“As customers seek out 24/7 carbon-free energy, geothermal is clearly an essential part of the solution,” Owens said in the release.

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