Exxon Mobil (NYSE:XOM) beat forecasts on earnings for the fourth quarter of its fiscal year. Exxon reported a fourth-quarter adjusted profit of 90 cents a share, higher than Wall Street analysts’ estimates of 70 cents a share. In the same period a year ago, it reported earnings of $2.8 billion, or 67 cents a share. Revenues for the fourth quarter were $61.01 billion, lower than expectations of $62.28 billion.
The Irving, Texas-based oil giant took a $2 billion impairment charge in the quarter. The company said that the impairment charge was mainly due to it lowering the value of some of its U.S. gas assets. Exxon determined that some of its U.S. assets’ future cash flows no longer exceeded their carrying value. Exxon warned last quarter it would have to revise those numbers if prices remained low through the end of the year.
Including that impairment, Exxon would have missed profit forecasts. In a statement, Chairman and CEO Darren Woods said, “Financial results for the year were negatively impacted by the prolonged downturn in commodity prices and the impairment charge.” All three of the company’s major segments experienced year over year declines in earnings.
There were some bright spots for the company. Cash flow from operations was $7.4 billion in the fourth quarter, up from $4.3 billion a year ago. Cash flow from asset sales was $2.1 billion, versus about $800 million in the same quarter of last year. The company also reported that liquid petroleum products fetched a higher price than they did a year ago.
Chairman and Chief Executive Officer Darren Woods is looking to bolster reserves and improve Exxon’s production and profit outlook. The company agreed two weeks ago to double its drilling rights in the Permian Basin beneath Texas and New Mexico. Exxon also said it will increase its 2017 capital spending program by 14 percent to an estimated $22 billion.
Exxon also expects to follow through with a 4.6 billion-barrel reserves reduction. That would be about 19 percent of Exxon’s reserves and be the largest de-booking since its 1999 merger. Woodbury said some of those revisions would be offset by new additions.
The company announced a dividend of 75 cents for the fourth quarter, unchanged from the third quarter. Exxon shares have decreased 6 percent since the beginning of the year, but have climbed 10 percent in the last 12 months.