Oil prices have dropped more than 6.5% so far this year, but the shares of energy giant ExxonMobil (XOM -0.39%) have gone in the other direction. The stock hit its all-time high of about $119 per share recently, and today it announced first-quarter earnings that powered past estimates.
The company announced record first-quarter net income with higher net oil and gas production versus the prior year period. It also continues to share its profits with shareholders giving investors good reason to consider putting the energy leader's stock in one's portfolio.
Not just oil anymore
It's not all about oil prices anymore for ExxonMobil and its bottom-line results. The record first-quarter GAAP net income of $11.4 billion was more than twice what it earned in the year-ago quarterly period. Those results came even with oil prices meaningfully lower and a drop in total revenue.
ExxonMobil reported a record first-quarter profit.
That's mainly because the company increased oil and gas net production by about 300,000 oil-equivalent barrels per day. It also continues to work on lowering costs and expects $9 billion in structural cost savings by the end of 2023 versus 2019. But the energy company is also investing in other areas that it thinks can greatly contribute to its bottom line in the future.
ExxonMobil CEO Darren Woods stated, "We are growing value by increasing production from our advantaged assets to meet global demand. At the same time, our Low Carbon Solutions team is rapidly growing this new business with an additional carbon capture, transportation, and storage agreement that underscores the company's growing momentum in providing industrial customers with large-scale emission reduction solutions."
Low carbon future
In addition to lowering its own greenhouse gas emissions, ExxonMobil announced a new partnership for carbon capture and storage with industrial gas company Linde earlier this month. The company believes its Low Carbon Solutions (LCS) segment can tap a huge new market for future profit growth.
The agreement with Linde will have ExxonMobil capture, transport, and store more than 2 million tons of carbon dioxide (CO2) per year from Linde's new clean hydrogen production plant in Texas. That facility is due to begin operations as early as 2025. But there are good reasons for investors to own the stock before meaningful contributions come from the LCS segment.
Returns to shareholders
Management expects to buy back up to $17.5 billion in shares during 2023 after $4.3 billion in share repurchases during the first quarter. That continues a share repurchase strategy that the company accelerated last year. It has also increased dividend payments to shareholders over the past several years.
XOM Dividend data by YCharts
As the company lowers its share count, its dividend payments will also take less out of its cash flow. ExxonMobil stock now yields more than 3% annually even as shares hover near a record high. The results of a record first-quarter profit even as revenue decreased from the year-ago period show the company is operating efficiently. For investors looking for income in the near term, and potential growth from its long-term investments, ExxonMobil could be a good fit for a portfolio.
