Exxon Mobil Corporation(NYSE: XOM) expects to post an annual profit in 2021 on the back of operating gains of up to $1.9 billion, per the company’s regulatory filing.

Notably, the expected gain exceeds the one-time charges driven by strong oil and gas prices.

Expectations 

Per the filing, the largest U.S. oil producer expects sequentially higher profit from oil and gas production in the fourth quarter of 2021. Additionally, refining and chemicals operating profits are likely to be flat to lower on a sequential basis. 

The regulatory filing indicated that one-time charges associated with asset impairments and contractual costs are anticipated to reduce oil and gas earnings by up to $1.2 billion. No details regarding the production assets were provided. 

According to ExxonMobil, expected lower margins in chemicals might decrease profits by $600 million to $800 million, compared to $2.14 billion recorded in the prior quarter. Additionally, Refining margins are anticipated to be flat or drop by $200 million on a sequential basis. 

On a positive note, ExxonMobil indicated mark-to-market gains of up to $1.1 billion for oil and gas and refined products. Proceeds from asset sales, including the company’s U.K. North Sea assets are likely to be $500 million. 

Based on current expectations, the company plans to spend $20 billion to $25 billion per year on new projects through 2027, including $2.5 billion per year on carbon reductions. Markedly, the company expects to double its pre-pandemic annual profit by 2025. 

Wall Street’s Take 

On December 15, RBC Capital analyst Biraj Borkhataria maintained a Sell rating and a price target of $70 (14.5% upside potential) on the stock. 

Overall, the stock has a Hold consensus rating based on six Buys, six Holds, and three Sells. The average ExxonMobil price target of $72.33 implies 18.3% upside potential from current levels.

ExxonMobil’s upcoming earnings report for the fourth quarter of 2021 is likely to be released on February 1, 2022.  

Smart Score 

According to TipRanks’ Smart Score system, ExxonMobil gets a 6 out of 10, which indicates that the stock is likely to perform in line with market averages.

By Nasdaq, January 4, 2022