Earnings Q1 2024: Exxon Mobil (XOM), Chevron (CVX), and Imperial (IMO)

Chevron (release)
First quarter liquids production for CVX was 1.1 million barrels per day of liquids in the U.S., with another 800k barrels per day in the international upstream. Their U.S. upstream liquids production was down 3% from the prior quarter and up 29% year-over-year. Capex for the U.S. upstream was up 27% y/y. That gives a "production shortfall" (remember Shale Treadmill) of negative 2%.

Unfortunately, they don't break out the "liquids" production between crude and NGLs, but the price realization for liquids was $57/bbl (vs $73 for intl upstream), indicating that it must have a substantial, low-value NGL component.

International liquids production was down 1.2% from the prior quarter and down 2.2% from the prior year. International upstream capex was up 56% y/y. The international natural gas realized price is much higher than the U.S.: $7.25 per mcf instead of $1.24.

Overall, upstream earnings were $5.2 billion (up 1.5% y/y) and downstream earnings were $783 million (down 57% y/y).

Chevron's free cash flow for the quarter was $2.7 billion, which was down 36% y/y. With a market capitalization of $305 billion (at $165 per share) and net debt of $15.6 billion, Chevron's enterprise value is $320 billion, which puts the annualized FCF/EV yield at only 3.4%.

Exxon (release)
First quarter liquids production for XOM was 816k barrels per day of liquids in the U.S., with another 1.7 million barrels per day in the international upstream. Their U.S. upstream liquids production was down 4% from the prior quarter and flat year-over-year. Capex for the U.S. upstream was flat versus the prior quarter and up 8% y/y. That gives a "production shortfall" of 8%.

International liquids production, which is much more important for Exxon than it is for Chevron, was flat from the prior quarter and up 1.4% from the prior year. International upstream capex was down 6.5% y/y.

Overall, upstream earnings were $5.7 billion (down 12% y/y), downstream earnings were $1.4 billion (down 67% y/y), chemical earnings were $785 million (up 112% y/y), and specialty products earnings were $761 million (down 2% y/y).

Exxon's free cash flow for the quarter was $10 billion, which was down 12% y/y. With a market capitalization of $469 billion (at $118 per share) and net debt of $5 billion, Exxon's enterprise value is $475 billion, which puts the annualized FCF/EV yield at 8.4%, heaps better than Chevron.

Imperial (release)
First quarter liquids production for IMO (net to them) was 357k barrels per day, down 2% year over year, with upstream capex down 10% y/y for a production shortfall of negative 8%. Once again, Imperial has the best results on the production shortfall metric, and this is understated because XOM/CVX likely have a rising share of lower value NGLs in their U.S. upstream liquids production.

Imperial's upstream earnings were (USD) $407 million (up 69% y/y), downstream earnings were $460 million (down 28% y/y), and chemical earnings were $42 million (flat y/y).

Imperial's $1.1 billion of cash from operations, less $363 million of capital expenditure, gives $737 million of free cash flow for the quarter. That is a yield of 7.2% on the enterprise value of $41 billion.

Imperial share count is down 8.2% y/y, although they did not repurchase any shares during Q1.

CBS Thoughts
Imperial and Exxon seem superior to Chevron at present valuations. Note that Exxon's business will shift more towards shale if (or when) the merger with Pioneer Natural Resources (PXD) closes. Pioneer gives detail of its oil, NGL, and natural gas production volumes. In the fourth quarter of 2023 (release), oil volumes were 381k barrels per day, up 8.5% y/y. Capital expenditures in Q4 2023 were $1.18 billion versus $1.06 billion the year prior; up 11%. So, not too bad of a production shortfall, which is what we found when we were doing the Shale Treadmill research last year.