Oil giant Exxon Mobil (NYSE: XOM) stock has rebounded with energy prices as the post-pandemic reopening continues to accelerate. The return to work and travel trend has been driven by the acceleration of COVID vaccinations, which in turn has driven up crude oil prices to multi-year highs. With renewable energy, global decarbonization, and ESG investing trends underway, one wouldn’t assume oil companies to be trading near their highs. However, Exxon Mobil is making efforts in the energy transition to be branded as a more eco-friendly and pro-environmental brand with its investments in reducing carbon. It’s pushed its marketing to build awareness as they try to meet ESG investing preferences. Prudent investors looking for exposure in the energy sector can watch for opportunistic pullbacks in shares of Exxon Mobil.
Q2 2021 Earnings Release
On July 30, 2021, Exxon Mobil released its fiscal Q2 2021 results for the quarter ending in June 2021. The Company reported an earnings per share (EPS) profit of $1.10 excluding non-recurring items, beating consensus analyst estimates for a profit of $0.98, by $0.12. Revenues grew 107.8% year-over-year (YoY) to $67.74 billion versus $63.96 billion consensus analyst estimates. Oil equivalent production fell (-2%) YoY to 3.6 million barrels per day due to increased maintenance activity. Cash flow from operating activities was $9.7 billion. Average realizations for crude oil rose 13% from Q1 sequentially. While industry fuel margins improved but remained in the low range historically due to oversupply. Exxon Mobil CEO Darren Woods commented, “Positive momentum continued during the second quarter across all of our businesses as the global economic recovery increased demand for our products. We’re realizing significant benefits from an improved cost structure, solid operating performance, and low-cost-of-supply investments that, together, are generating attractive returns and strong cash flow to fund our capital program, pay the dividend, and reduce debt. This was particularly true for our Chemical business that delivered their best quarter in company history. In our efforts to support society's energy transition goals, our Low Carbon Solutions business made progress in identifying new opportunities and in establishing new partnerships in carbon capture and storage, hydrogen and low-emission fuels.”
Conference Call Takeaways
CEO Woods set the tone, “Also of significance in the quarter was the continuing market recovery, which obviously underpins our results. As you will hear, the organization remains very focused on continuing to leverage the changes we've implemented over the last several years and on delivering the plans we've discussed with you in March. As the margin improves, we've maintained a disciplined approach, doing more with less. We remain focused on delivering industry-leading operating performance, continuing to significantly reduce costs, advancing our portfolio of high-return, advantaged projects, executing value-accretive divestments, and rebuilding the strength of our balance sheet.
In addition, as a need for climate solutions beyond wind, solar, and electric vehicles grow, we are working to expand our portfolio of strategically and financially accretive low-carbon solutions investments. While still in the early stages, I'm pleased with the progress we're making.”
CEO Woods addressed how Exxon Mobil plays a key role in energy transition, “We believe that the depth and breadth of our operating experience, history of process innovation, project execution, subsurface expertise, and ability to scale technology gives us a competitive advantage in what is expected to be a fast-growing market for Low Carbon Solutions. We also believe that the time is right, given the developing market for emission reduction credits and growing recognition of the importance of carbon capture and storage, hydrogen, and biofuels by both governments and investors, all critical for broad-scale commercialization. The new organization is making steady progress in developing a wide range of attractive opportunities weighted initially towards carbon capture and storage. We've provided a few examples here to give you a sense of the opportunities. Next year, we anticipate final investment decisions for a large CCS expansion at our LaBarge facility in Wyoming and a new carbon capture technology pilot associated with the Porthos project in Rotterdam. This quarter, we signed an MOU to explore the development of CO2 infrastructure to help decarbonize the industrial basin in the Normandy region of France, and an MOU to participate in the recently announced Acorn CCS project in Scotland. We are continuing to pursue several Gulf Coast opportunities, including our Houston hub concept, which is all gaining industry and third-party support. In addition to carbon capture and storage, we're advancing a number of options to produce low-emissions biofuels. These include new projects, repurposing existing refinery units, co-processing bio feeds, and purchase agreements. These plans would enable the production of more than 40,000 barrels per day of low-emission fuels by 2025. We also recently completed a successful trial to co-process bio feed across our existing refining circuit. Co-processing bio feeds is a key technology that can be rapidly scaled to help society quickly lower emissions, provided the right policies are in place.”
XOM Opportunistic Pullback Levels
Using the rifle charts on weekly and daily time frames provides a precision view of the landscape for XOM stock. The weekly rifle chart uptrend has a rising 5-period moving average (MA) support near the $61.04 Fibonacci (fib) level. The weekly 15-period MA is starting to turn up at the $57.59 fib. The weekly stochastic oscillation is rising toward the 80-band. The weekly market structure high (MSH) sells trigger forms under $62.42 with weekly upper Bollinger Band (BBs) at $67.80. The daily rifle chart has a pup breakout that is starting to wane with the flat 5-period MA at $63.14 and compressing daily upper BB at $65.00. The daily stochastic peaked at the 90-band but is still holding above the 80-band. The explosive daily uptrend formed on the daily market structure low (MSL) breakout above $55.06. Prudent investors shouldn’t chase entries and instead watch for opportunistic pullbacks at the $61.04 fib, $59.80 fib, $58.87 fib, $57.59 fib, $56.23 fib, and the $55.15 fib. Upside trajectories range from the $72.57 fib upwards to the $81.80 fib level.
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