March 25, 2021 [Investopedia] Downstream business comprises the biggest share of revenue.

ExxonMobil Corp. (XOM) is one of the biggest oil companies in the world. Its primary business is the exploration for, and production of, crude oil and natural gas, as well as the manufacture, trade, and transportation of crude oil, natural gas, petroleum products, and petrochemicals. It operates both upstream and downstream oil and gas segments, and a chemicals segment.1

ExxonMobil operates within the highly competitive energy and petrochemicals industries. It faces competition from both private and state-owned companies around the world. Some of ExxonMobil’s main competitors include Netherlands-based Royal Dutch Shell PLC (RDS.A), Britain-based BP PLC (BP), France-based Total SE (TOT), Chevron Corp. (CVX), and Saudi Arabia-based Saudi Arabian Oil Co. (TADAWUL:2222), better known as Saudi Aramco.

Key Takeaways

· ExxonMobil explores for, and produces, crude oil and natural gas, as well as petrochemicals and other related products.
· The Downstream segment generates the most revenue, but the Chemical segment was the only one that made a profit in 2020.
· The company says it aims to be an industry leader in greenhouse gas performance by 2030 by drastically reducing emissions.
· ExxonMobil recently created a new business that will focus on carbon capture and storage.

ExxonMobil’s Financials

ExxonMobil’s operations were severely impacted by the COVID-19 pandemic in 2020 as the resulting global economic contraction led to a collapse in energy consumption.2 The company posted an annual net loss of $23.3 billion compared to net income of $14.8 billion in the previous year. Those figures include results for the company’s non-controlling interests.3

Revenue for the year fell 31.5% to $181.5 billion. This figure includes sales and other operating revenue ( 98%), income from equity affiliates (1%), and other income (1%).3 The U.S. generated 35% of total sales and other operating revenue, while countries in the rest of the world generated 65% of the total, led by Canada, the U.K., and Singapore.4

ExxonMobil’s Business Segments

ExxonMobil operates through three principal business segments: Upstream; Downstream; and Chemical. It provides a breakdown of sales and other operating revenue, and of earnings for each of these segments. The company also provides results for a corporate and financing segment, which includes interest revenue on cash and marketable securities as well as various expenses.5 This segment generated an immaterial amount of revenue and a loss of $3.3 billion.6 The corporate and financing segment and any negative amounts in the segment breakdowns below are not included in the pie charts above.

Upstream

ExxonMobil operates in 40 countries, producing approximately 4 million oil-equivalent barrels of net oil and natural gas per day. The company’s upstream business includes exploration, development, production, and marketing. It is organized into five separate value-chains: deepwater, unconventional, LNG, heavy oil, and conventional.7

The Upstream segment posted a loss of $20.0 billion in 2020 compared to earnings of $14.4 billion in 2019.8 Sales and other operating revenue for the segment fell 37.1% to $14.5 billion, comprising about 8% of the total for the year.6

Downstream

ExxonMobil is a leading manufacturer of fuels and lubricants, and sells approximately 5 million barrels per day of petroleum products. Its Downstream segment is comprised of a portfolio of well-known brands and high-quality products, such as its Mobil 1 synthetic lubricant.9

The Downstream segment posted a loss of $1.1 billion in 2020 compared to earnings of $2.3 billion in the previous year.8 The segment generates the majority of the company’s sales and other operating revenue at nearly 79% of the total. Sales and other operating revenue fell 31.2% to $140.9 billion in 2020.6

Chemical

ExxonMobil is one of the world’s largest chemical producers, selling more than 25 million tonnes each year. The Chemical segment is comprised of a broad product portfolio that includes olefins, polyolefins, aromatics, and a variety of other petrochemicals.10 The segment is closely integrated with the company’s Upstream and Downstream businesses.11

The Chemical segment was ExxonMobil’s only business that generated a profit in 2020. Earnings rose 231.6% to $2.0 billion.8 However, sales and other operating revenue for the segment fell 15.8% during the year to $23.1 billion, comprising about 13% of the total.6

ExxonMobil’s Recent Developments

On February 1, 2021, ExxonMobil announced that it had created a new business, named ExxonMobil Low Carbon Solutions, to commercialize its extensive low-carbon technology portfolio. ExxonMobil plans to invest $3 billion through 2025 on lower emission energy solutions. The new business will initially focus on carbon capture and storage (CCS), a critical technology needed to achieve net-zero emissions, one of the major goals of the Paris Agreement on climate change. CCS technology captures CO2 from industrial activity and injects it into deep geological formations for permanent storage.12

On February 24, 2021, ExxonMobil announced that it had signed an agreement to sell most of its U.K. and North Sea non-operated upstream assets to Norway-based private-equity fund HitecVision AS for more than $1 billion. ExxonMobil said it plans to focus on its advantaged projects. The deal is expected to close by the middle of 2021.13

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