As Q1 reports keep coming in, there have been some surprising gains and losses. Among them is oil company Exxon, which had experienced a surge in profit as a result of high gas prices.
For Exxon Mobil, this $5.48 billion increase in revenue is double that from the fuel company’s records from last year. Exxon does attribute this profit to higher gas prices.
However, things are not so black and white. Here is the breakdown of why these Q1 earnings are not all they seem.
Exxon’s profit still below expectations
At a glance, the surge in profit looks promising. There are still a lot of things to take into account before this can be labeled as a success.
First, the entire oil industry took a hit at the beginning of the year when the invasion of Ukraine began. Exxon themselves had to write down $3.9 billion after ceasing operations with Russia.
In addition, the profit per share was $1.28 as of last Friday. This was far below the expected $2.23 per share.
Ceasing oil trade with Russia has affected fuel costs across the board. U.S. crude oil has risen from $76 a barrel before the war to $130 per barrel now.
Nevertheless, Exxon’s current profit has the Texas-based corporation hopeful.
What is Exxon’s strategy moving forward?
After all Q1 numbers were in, Exxon representatives gave a little insight into their plans for making use of the revenue.
The oil giant intends to strengthen carbon-reducing initiatives and finance ventures into renewable fuel. Equally notable are Exxon’s plans to repurchase their own stocks.
This repurchasing program forecasts they could buy back up to $30 billion worth of shares by 2023.
In summary, the higher prices at the pump have led to Exxon doubling Q1 profits. However, it is uncertain how it all will ultimately affect the public and Exxon themselves as the war in Ukraine progresses.
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