Why ExxonMobil Stock Rallied Today

What happened 

Shares of ExxonMobil (XOM 2.16%) rose 2.2% on Tuesday after the oil and gas titan capped off a blockbuster performance in 2022. 

So what 

Conflict in Ukraine, and the sanctions many governments placed on Russia to help bring about the war’s end, have disrupted energy markets. They’ve also made clear the necessity of reliable and cost-effective oil and natural gas supplies.

ExxonMobil has worked to meet the world’s critical need for dependable energy sources. The company increased its production to 3.74 million barrels of oil equivalent per day, despite divestitures and the loss of its Sakhalin-1 project in Russia. 

These production gains, combined with higher realized oil and gas prices, drove a sharp increase in profits. The energy giant generated a staggering $55.7 billion in earnings in 2022, representing year-over-year growth of 142%. Its earnings per share, which were boosted by stock buybacks, soared 146% to $13.26.

ExxonMobil’s cash generation was even more impressive. The company produced operating and free cash flows of $76.8 billion and $62.1 billion, respectively.

“Overall earnings and cashflow were up pretty significantly year on year,” chief financial officer Kathryn Mikells told Reuters. “So that came really from a combination of strong markets, strong throughput, strong production, and really good cost control.” 

Now what

With so much cash coming in, ExxonMobil is taking a balanced approach to creating value for its customers and shareholders. Management plans to repurchase $50 billion worth of shares by 2024. The company also pays a hefty dividend, with $14.9 billion in payments in 2022 alone. 

ExxonMobil is also investing tens of billions of dollars to boost its production of oil, gas, and various chemicals. At the same time, clean-energy projects, such as carbon capture solutions and low-emission fuels, are becoming a larger part of its growth strategy.