Exxon Mobil Corporation (NYSE:XOM) Q1 2019 Earnings Conference Call Transcript

Apr 26, 2019 • 09:30 am ET


Exxon Mobil Corporation (NYSE:XOM) Q1 2019 Earnings Conference Call Transcript


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Good day, everyone. Welcome to the ExxonMobil Corporation First Quarter 2019 Earnings Call. Today's call is being recorded.

At this time, I would like to turn the call over to the Vice President of Investor Relations and Secretary, Mr. Neil Hansen. Please go ahead, sir.

Neil Hansen

Right. Thank you; and good morning, everyone. Welcome to our first quarter earnings call. We appreciate your participation and continued interest in ExxonMobil. This is Neil Hansen, Vice President of Investor Relations. Joining me on the call today is Jack Williams. Jack is a Senior Vice President and Member of the Management Committee with responsibilities for the projects, organization and the Downstream and Chemical business lines.

After I review the quarterly financial and operating performance, Jack will provide his perspectives on the quarter and give updates on the significant progress made in a number of key areas across the business that will generate accretive value for our shareholders. Following Jack's remarks, we'll be happy to take your questions.

Our comments this morning will reference the slides available on the Investors section of our website. I'd also like to draw your attention to the cautionary statement on Slide 2 and the supplemental information at the end of the presentation.

Moving to Slide 3. I'll now highlight our first quarter financial performance. Over the past few months, we made excellent progress on our growth projects, with several key final investment decisions and continued exploration success. We also remain on track with plans to increase production in the Permian Basin to 1 million oil equivalent barrels per day by 2024. In fact, growth in the Permian during the quarter supported a 5% year-over-year increase in liquids volumes.

The first quarter was also characterized by solid operating performance including the successful execution of scheduled maintenance across a number of our Downstream facilities. Impressive progress in the first quarter was achieved in a margin environment that for both the Downstream and Chemical business lines was extremely challenging.

In addition, North American crude differentials narrowed significantly, eliminating the large arbitrage opportunities that our logistics allowed us to capture in the fourth quarter. So while the fundamentals and demand growth that underpin our investments remain strong, near-term supply and demand imbalances pressured margins; in fact, in the Downstream to the lowest levels we've seen in the last decade.

Earnings per share for the quarter were $0.55, including a negative $0.04 per share impact from asset impairments. All-in-all, the results were in line with our expectations, given the margin environment we experienced during the quarter.

I'll now go through a more detailed view of developments since the fourth quarter, starting first with the Upstream. Average crude oil prices were lower than the fourth quarter with Brent down $4.56 and WTI down $4.22. However, despite the decline in crude markers, ExxonMobil's liquids realizations increased by $2.32, driven by improved Western Canadian differentials. Gas realizations, on the other hand, were down in the first quarter, consistent with crude-linked LNG pricing lag and a $0.50 decline in