Profits from oil majors have been down in 2023 by about a third from record levels in 2022, pressured as oil and gas prices retreated after spiking when Russia invaded Ukraine.
Exxon Chief Executive Darren Woods said the industry "saw energy prices and refining margins start to normalize in 2023."
Exxon's earnings in the latest quarter still beat estimates and Woods signaled optimism about the coming year. He raised Exxon's spending target after boosting capital spending in the most recent quarter by 4% from a year ago.
Full-year capital expenditures in 2023 were $26.32 billion.
Exxon, he said, "opportunistically accelerated drilling activity" in its two core oil production areas, the U.S. Permian Basin and Guyana, and kick-started lithium production to supply electric vehicle batteries.
Exxon "closed 2023 on a strong note" and enters 2024 in a strong financial position, said Peter McNally, Global Sector Lead for Industrials Materials and Energy at Third Bridge.
"But the big focus for investors will be the closing of the acquisition of Pioneer Natural Resources," which will dramatically increase investments in the U.S. Exxon expects to close the deal in the second quarter.
Shares were up by less than 1% in morning trading.
Exxon results included a $2.5 billion impairment charge for California properties that it has been trying to sell for more than a year. Excluding that charge, annual income fell 35% to $38.57 billion.
Top oil producers are writing off unwanted assets and cleaning up their balance sheets ahead of pending deals. Chevron (CVX.N) has said it would take an about $4 billion impairment in the fourth quarter, while Shell (SHEL.L) on Thursday took a $5.5 billion writedown.
Exxon agreed in October to buy rival Pioneer (PXD.N) to bolster its U.S. shale oil production in the Permian Basin, and Chevron proposed to purchase Hess Corp (HES.N) to get a foothold in Guyana. Both deals are now expected to close mid-year.
TRADING BLOOMS
Brent crude futures in the fourth quarter averaged $82.85 a barrel, a 7% decrease compared to the same period last year and a 4% decline from the third quarter.
For the fourth quarter, Exxon reported a profit that beat analysts estimates by 27 cents at $2.48 per share, or $9.96 billion, compared to $14.04 billion, or $3.40 per share, from a year earlier.
The results were driven by higher trading profits in its fuels business and increased oil and gas production in the U.S. and Guyana, Chief Financial Officer Kathryn Mikells told Reuters.
Fourth-quarter results were helped by Exxon's trading division, which delivered a $1.1 billion boost to operating profit from its fuels business. The company's decision to combine global trading in a single division is paying off, she said.
"That is definitely something that we would expect to see on an ongoing basis embedded in our results," Mikells said. Gains came from revising how its specifies and moves fuels, she added.
The company also exceeded its $9 billion cost cut target from 2019 by $700 million.
Exxon distributed $32 billion to shareholders via buybacks and dividends last year, up from $29.8 billion a year earlier.
The largest U.S. producer also said it planned $23 billion to $25 billion in capital spending this year to prepares for 2025 projects.
