How did XOM's Q1 2024 earnings surprise the market?

Exxon Mobil's (XOM) Q1 2024 earnings report reflected a company grappling with declining profitability amid softer commodity prices and refinery margins. Despite these headwinds, the report held some positive surprises and insights into the company's strategic responses: 1. **EPS Surprise**: Exxon Mobil's adjusted earnings per share (EPS) for Q1 2024 were $0, which notably missed the market's expectations. Analysts had forecasted an EPS of $2.04 for the quarter, based on the company's historical performance and the prevailing market conditions. This significant shortfall likely contributed to the market's reaction upon the earnings release. |code|Ticker|Name|Date|Revenue Surprise|market_code| |---|---|---|---|---|---| |XOM|XOM.N|Exxon Mobil|2023 Q2|2.724E9|169| |XOM|XOM.N|Exxon Mobil|2023 Q3|7.0E9|169| |XOM|XOM.N|Exxon Mobil|2023 Q4|-8.86E8|169| |XOM|XOM.N|Exxon Mobil|2024 Q1|9.883E9|169| 2. **Revenue and Profitability**: The company's total revenues for the quarter amounted to $84.34 billion, slightly below the anticipated $85.23 billion. This minor miss in revenue, coupled with lower natural gas and crude oil realizations, and weaker refining margins, contributed to the overall decline in profitability. 3. **Production and Operational Challenges**: Exxon Mobil faced specific operational hurdles, including regulatory obstacles in California that led to a $2.0 billion impairment. These challenges, coupled with lower crude realizations and unfavorable tax impacts, significantly impacted the company's upstream segment earnings, which halved to $4.15 billion compared to the previous year's $8.20 billion. 4. **Cash Flow and Shareholder Returns**: Despite the earnings dip, Exxon Mobil maintained a strong cash flow from operating activities, generating $55.4 billion in 2023, with a robust free cash flow of $36.1 billion. The company continued its commitment to shareholder returns, distributing $32.4 billion in 2023, including $14.9 billion in dividends and $17.4 billion in share repurchases. In conclusion, Exxon Mobil's Q1 2024 earnings fell short of market expectations due to lower commodity prices, refinery margins, and operational challenges. However, the company's strong cash flow and commitment to shareholder returns provide some resilience and suggest potential for long-term stability.