A recovery in oil prices as well as aggressive cost-cutting measures boosted the oil giant’s results.
Exxon is still facing pressure from activist firm Engine No. 1, which is calling for the company to shake up its board.
Exxon Mobil returned to profitability during the first quarter, beating top- and bottom-line estimates for the period, as the company recovers from the havoc wreaked on the energy sector by the coronavirus pandemic.
The oil giant earned $2.7 billion during the period. The company posted earnings per share of 65 cents, excluding items on $59.15 billion in revenue.
Wall Street analysts surveyed by Refinitiv expected the company to earn 59 cents per share on $54.6 billion in revenue.
In the first quarter a year earlier, the company lost $610 million as the impact of the coronavirus began to weigh. Last quarter, the company posted a $20.1 billion loss, its fourth straight quarter of losses.
Shares of Exxon were flat during premarket trading on Friday.
“The strong first quarter results reflect the benefits of higher commodity prices and our focus on structural cost reductions, while prioritizing investments in assets with a low cost of supply,” Chairman and CEO Darren Woods said in a statement.
“Cash flow from operating activities during the quarter fully covered the dividend and capital investments.”
Exxon’s oil-equivalent production rose 3% quarter-over-quarter to 3.8 million barrels per day.
The company said the winter storm that hammered the South cost the company $600 million across its businesses.
Energy is the top-performing S&P 500 sectors this year, and shares of Exxon are up 43% for 2021 through Thursday’s close.
To combat lower oil prices over the last year, the company implemented aggressive cost-cutting measures. Throughout the downturn Exxon maintained its commitment to its dividend, which stands at 5.9%.
Chevron also said Friday it returned to profitability during the first quarter.
Board battle heats up
Exxon has faced pressure from shareholders to shake up its board. As a result, the company added three new board members, including activist investor and ESG proponent Jeffrey Ubben.
Ubben recently told CNBC he believes Exxon is integral to a low-carbon future. “If you think about Exxon’s role, it’s to do the hard stuff, and you cannot get to net zero without doing the hard stuff. To use the existing infrastructure and capture the carbon is probably the least expensive and quickest way to net zero,” he said.
But some, including activist firm Engine No. 1, believe Exxon hasn’t gone far enough to ensure its place in a low-carbon world. The group has been targeting the oil giant since December and has proposed its own slate of four new directors.
Earlier this week, the firm said it won support from large pension funds, including CalPERS, CalSTRS and the New York state pension fund. Among other things, Engine No. 1 cites: failure to position ExxonMobil for long-term value creation, lack of capital allocation discipline and misaligned incentives.
D.E. Shaw was also targeting the energy company at one point, but Exxon’s Woods said conversations with the firm have been productive.
“I think they’ve been fairly aligned with the discussions that we’ve had, and the direction that we’ve taken, and today I’m not aware of any really air between ourselves or gap in terms of how we think we should move forward and what they think we should be doing,” he said Friday on CNBC’s “Squawk Box.”
Conversations have been less productive with Engine No. 1. Woods said the firm “wasn’t particularly interested in engaging and understanding” how Exxon can grow shareholder value while transitioning to a low-carbon future.
“Frankly they’re pushing us to wind down our investments, wind down the business, move into solar and wind where we don’t really have a competitive advantage,” Woods said.
The board vote will take place at the company’s 2021 annual shareholder meeting on May 26.