Have you already taken a look at the new figures of the major oil companies? Just a few days ago, it was the turn of the US giant Exxon Mobil. In short, the mega-corporation has once again delivered lucratively despite all crises and challenges.

According to its own statements, Exxon Mobil achieved a profit of a whopping 36 billion US dollars in 2023. This put the oil giant above its own and the average expectations of the capital market. Of course, Exxon also saw declines in 2023 compared to the highly profitable year 2022, as you can see in the graph:

Source: www.stockscreen.com

Exxon Mobil: Profit remained at a high level In 2022, the soaring oil and gas prices due to the Ukraine conflict massively boosted the revenues and profits of the industry. With energy and fuel prices now falling again, the market had expected a downward trend. However, Exxon Mobil’s business apparently performed better than expected in 2023. The company’s profit was still significantly higher than in 2021.

One of the strong points was the trading division. In the fourth quarter, operating profit in fuel trading increased by 1.1 billion US dollars. Management attributes the increase to an efficiency program that standardized and transported fuels more uniformly. Exxon also reported progress in reducing general costs.

More oil and gas: Exxon pushes ahead And last but not least, production increases proved advantageous. Like other oil companies, Exxon has increased its output in response to the continued strong demand for fossil raw and fuel materials. In the South American country of Guyana, where Exxon is already the largest oil producer, and in the Permian Basin in the United States, the company increased its combined production by +18% in 2023 compared to 2022.

In November, Exxon began production on another oil platform off the coast of Guyana. The US company sees long-term potential in the country and is investing heavily in the exploration and development of new projects. In October, Exxon also announced the acquisition of smaller US competitor Pioneer Natural Resources to expand its presence in the Permian Basin (southwestern United States). The oil company aims to achieve significant synergies and generate double-digit returns through the multi-billion dollar acquisition. The transaction is expected to be completed in the second quarter of 2024.

Shareholders continue to be handsomely rewarded Overall, the profit from oil and gas production (upstream) fell by -41% to 21.3 billion US dollars in 2023 due to lower market prices. Exxon also reported cuts in refinery margins and its chemical business.

Nevertheless, as cash flow also declined but remained very high at around $55 billion, rewards for shareholders continued to be generous. According to its own statements, in the last year, Exxon paid out a total of $32 billion to investors through share buybacks and dividends, more than in 2022 (just under $30 billion). At the same time, management announced investments of $23 to $25 billion in operational growth for 2024. This is intended to strengthen Exxon’s future prospects.

Exxon’s contributions to climate protection: CO2 capture and lithium The focus is not only on expanding oil and gas production but also on CO2 capture. In November, Exxon completed the acquisition of Denbury. Since then, the oil giant has had the largest CO2 pipeline network in the United States. This is supplemented by more than 15 onshore CO2 storage sites. Exxon boss Darren Woods sees CO2 capture and storage as a lucrative billion-dollar market – especially in the United States.

CO2 capture can potentially make industrial processes more climate-friendly without having to give up oil and gas entirely. Of course, there is a lot of criticism of the process, but large players like Exxon Mobil are getting backing from the government in the United States. President Joe Biden sees CO2 capture as an important addition to expanding renewable energies.

Meanwhile, another significant investment field for Exxon is lithium. The oil company wants to establish a new foothold with lithium and contribute to electromobility in the future. Although Woods has sharply criticized the shift to electric cars for years, the CEO now wants to focus on them. In the fourth quarter, Exxon presented new plans for its lithium business. According to this, the oil company aims to become a leading producer in the United States and equip the batteries of around one million electric cars per year by 2030. To this end, the company is currently building production in the southwest of the state of Arkansas, where significant lithium deposits can be found.

My conclusion for you In my opinion, Exxon Mobil ended 2023 with strong numbers. Especially considering the market weakness last year, the oil giant has held its own. This puts Exxon in a solid position for the new year, which will offer one of the most important and promising milestones of recent years for the company with the Pioneer acquisition.

Another interesting investment opportunity is offered by CO2 capture, which is often criticized but could ultimately be necessary to make some industrial sectors more environmentally friendly that cannot easily switch to eco-electricity or hydrogen.

The bet on the lithium market is probably the riskiest move for the oil company at the moment. Lithium prices have been under pressure for many months, also due to the increasing oversupply. On the other hand, the White House has a geostrategic interest in supporting domestic lithium production, especially with a view to China. However, whether this business will pay off for Exxon in the long term remains to be seen.