HOUSTON (Reuters) – Exxon Mobil Corp has offered a glimpse of the scale of its nascent energy trading operation, disclosing operating profit and losses of about $230 million during each quarter last year, the first time it has revealed the figures.
The world’s largest publicly traded oil producer last year launched a major push into energy trading, hiring veterans from Glencore, Noble Group, BP Plc and elsewhere in the United States, Europe and Asia. It also recruited market analysts and specialists with experience in crude, natural gas, gas-liquids and gasoline.
The trading unit’s pre-tax gains and losses averaged $230 million in each quarter of 2018, according to a presentation delivered to analysts last week at the Scotia Howard Weil investor conference. For the full year, trading provided an operating profit of $10 million, up from a $99 million loss in the prior year, according to a regulatory filing.
The profit was a fraction of Exxon’s $20.8 billion in earnings last year. But the disclosure of even an range of operating profit was a milestone in shedding light on its fledging business.
Rivals Royal Dutch Shell and BP, which have larger commodities trading businesses, traditionally also have not provided detailed results for that activity. Shell for instance wraps its trading results in with its oil refining business. BP also includes its trading as part of its downstream operations.
Comparing the majors’ operations are difficult because of the lack of consistent and specific financial disclosures, said Lysle Brinker, executive director of upstream equity research and analysis at energy consultancy IHSMarkit.
“Exxon Mobil has not historically been into that business, but they’re getting into it now,” Brinker said. “They realize now they probably can be just as successful as the other guys.”
An Exxon spokesman declined comment, pointing to the quarterly range figures in the presentation and full-year results in its annual report to the Securities and Exchange Commission.
Under Chief Executive Darren Woods, Exxon has sought to use trading to boost earnings, applying its knowledge of regional oil and gas prices, and its extensive array of pipelines, storage terminals, ships and railcars to profit from price differentials around the globe. It also has bulked up its risk management systems.
Reporting by Gary McWilliams, Jessica Resnick-Ault in New York and Ernest Scheyder in Houston; Editing by Marguerita Choy