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Unit 4: ExxonMobil Corporation’s Financial Performance Madison Mason GM506 Strategic Financial Analysis January 26, 2024 Dr. Dale Prondzinski

Company Summary Exxon Mobil Corporation is a well-established oil and gas company, but it also has departments and segments of the company that are focused on chemicals and solvents. Separating into different divisions of control and responsibility, Exxon operates through Upstream, Energy Products, Chemical Products, and Specialty Products segments (XOM Profile, 2024). These departments explore for and produce many essential chemicals such as natural gas, crude oil, lubricants, waxes, and resins. Exxon is involved in many of the operational stages such as production, transportation, sales and storage. In operation for over 150 years, Exxon is starting to transition into greener fuel sources and has been exploring possibilities behind lower-emission opportunities. Total Revenue & Operating Income Changes The income statement is an important document that can identify a company’s profitability and expenditures. Reviewing Exxon’s income statement, it is clear that the total revenue took a dramatic hit in 2020. Exxon reported 178.5 billion dollars made in total revenue for the year of 2020 (ExxonMobil, 2023a). As the economy began to recover from problems caused by a global pandemic, the next three years of reported total revenue are significantly higher than the dip in 2020. In 2022, Exxon reported 398.6 billion dollars in revenue, with a slight decrease for 2023, arriving at 346.1 billion dollars. In terms of percentage of change, Exxon saw a 55% increase in revenue after recovering from the pandemic. More recently, Exxon reported a 13% decrease in total revenue from 2022 to 2023. Operating income represents the return a company receives after expenses are paid but before interest and taxes are calculated (Block et al., 2022). Again, the pandemic hit Exxon hard as noted by the 2020 operating income of -30.6 billion dollars (ExxonMobil, 2023a). From that

low point, the operating income has since increased, experiencing another decrease for 2023. Exxon saw a 123% increase in operating income while recovering from the pandemic in 2021. More recently, however, Exxon’s operating income has decreased 18% from 2022 to 2023. This decrease could indicate issues with efficiency or increased operating costs. Valle (2023) suggests the drop in income could have been caused by decreasing oil, gas, and chemical prices. Equity Pattern of Change Stockholders equity is a part of a balance sheet and can provide information on the company’s operating patterns and assets leftover for the business after liabilities have been paid (Block et al., 2022). Overall, the pattern of change for the stockholders equity has increased over the past three years. From 2020 to 2021, Exxon reported a 7.3% increase in shareholder equity and a 16.2% increase from 2021 to 2022. Finally, Exxon reports that shareholder equity increased to 207.5 billion dollars which resulted in a 7.5% increase overall. It appears that these increasing values are not concerning. It could have increased due to stock investments or additional net income, indicating Exxon’s ability to remain stable during future economic hardships. According to the corporation, Exxon is experiencing an increase in cash flow and operating income allowing the shareholder equity to continue to grow (Exxon Corporate Plan, 2023). This remains part of the company’s plan to repurchase 17.5 billion dollars of its own stock in order to provide a higher share price. Analysis of Future The earnings estimate calculates the earnings per share that analysts expect to see in upcoming periods. Reviewing Exxon’s expected earnings, analysts are predicting a decrease in share performance for the next quarter and next year overall. Analysists predict next quarter’s earnings per share (EPS) to drop to $1.97 from a declining $2.25 from the quarter ending on

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September 30 th , 2023(XOM Profile, 2024). They also expect a decrease in full 2023 EPS, from the actual $10.07 to $8.20. In terms of revenue, the analysts predict a decrease in quarterly revenue, but an increase in yearly revenue for 2024 overall. In such a volatile market, the price of chemicals is significantly affecting Exxon’s revenue and shareholder equity, in turn. Looking forward, it does not appear to be a beneficial time to buy Exxon stocks. Analysts note that decreased profits and the Russia-Ukraine conflict could continue to negatively impact the EPS and overall performance (XOM Profile, 2024). Summary ExxonMobil is a large oil and gas corporation that is experiencing negative impacts from a decrease in oil prices. It is also attempting to work through the process of acquiring natural gas company, Pioneer (Valle, 2023). According to the majority of the Yahoo! Finance analysts covering Exxon’s performance, shareholders should continue to hold this stock, avoiding purchasing or selling. The trends of declining revenue and operating income do not predict a promising future for the company in the near-term. Still, this perspective could change with the Pioneer Natural Gas merger and shareholders seeing actual increases due to increased efficiency or increased environmentally-friendly fuel solutions.

References Block, S., Hirt, G., & Danielsen, B. (2022). Foundations of Financial Management (18th ed.). McGraw-Hill ExxonMobil Corporation (XOM) Profile. (2024, January 26). Yahoo!. Retrieved January 26, 20204, from www.finance.yahoo.com/quote/XOM/profile?p=XOM ExxonMobil. (2023a, October 31). Income statement . Exxon Mobil Corporation. https://investor.exxonmobil.com/earnings/income-statement ExxonMobil. (2023b, October 31). Balance Sheet . Exxon Mobil Corporation. https://investor.exxonmobil.com/earnings/income-statement ExxonMobil Corporate Plan More Than Doubles Earnings Potential From 2019 to 2027; 18% Compound Annual Earnings Growth Significantly Outpaces Peers. (2023, December 3). ExxonMobil. Retrieved January 27, 2024, from www.investor.exxonmobil.com/news- events/press-releases/detail/1154/exxonmobil-corporate-plan-more-than-doubles- earnings#:~:text=Increased%20cash%20flow%20and%20earnings,announced%20for %202023%20and%202024 Valle, S. (2023, April 2). Exxon signals 1Q operating profit fell 25% on softer energy prices. Reuters. www.reuters.com/markets/commodities/exxon-signals-weaker-1q-operating- profits-softer-energy-prices-2023-04-04/

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