Exxon Previews Potential Q1 Windfall, Russia Write-Down

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Exxon Mobil on Monday previewed a potential first-quarter earnings bonanza due to soaring oil and natural gas prices, but that windfall could be softened by a costly write-down related to its exit from Russia.

The company said in an 8-K filing with the US Securities and Exchange Commission that higher liquids prices could boost its first-quarter results by as much as $2.3 billion from the fourth quarter of 2021, when it posted an adjusted net income of nearly $8.8 billion.

Higher natural gas prices and improved downstream margins could improve as much as $400 million and $300 million, respectively, from the previous quarter, potentially pushing Exxon’s operational earnings for the first three months of 2022 above $9 billion.

Exxon’s probable first-quarter windfall comes as criticism intensifies from Washington regarding alleged price gouging by the oil industry as rising fuel prices pinch consumers’ pocketbooks. Exxon CEO Darren Woods and executives from five other large US oil and gas producers will testify in a hearing this week in the US House of Representatives on high energy prices.

However, Exxon’s ultimate take for the period could be substantially softened by its decision to exit the Sakhalin-1 project in Russia in the wake of Moscow’s invasion of Ukraine.

The company said in its 8-K that “depending on the terms of its exit,” it may be required to take an impairment of up to the “full book value” of the project of $4 billion.

Exxon’s exit from Sakhalin will take about 63,000 barrels per day of oil and 57 million cubic feet per day of gas from its books — roughly 2% of its total global output.

Exxon will report its full first-quarter results on Apr. 29.

Earnings, Majors, Corporate Strategy , Oil Prices, Gas Prices
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