revenue $85.1B, net income $4.18B. Exxon Q1 earnings fall 45.8% to on mark-to-market losses, Middle East disruptions

First quarter 2026 earnings of $4.2 billion represent a 45% decline from the $7.7 billion reported in first quarter 2025. The company attributes the decrease to unfavorable mark-to-market effects, higher depreciation expenses, and Middle East volume impacts, partially offset by higher prices and margins, increased volumes from Guyana and Permian, and structural cost savings.

The current filing introduces new disclosure about Middle East geopolitical events causing supply disruptions in Q1 2026, including the largest-ever monthly oil price gain in March and significant LNG supply declines. These disruptions affected refinery runs and feedstock availability in the Middle East and Asia. This represents a material new operational and market context not present in the prior year's filing.

The baseline filing described the tariff environment as "highly uncertain" with "significant uncertainty" about effects on the Corporation, suppliers, and customers. The current filing replaces this cautious language with a definitive assessment that tariffs are "not expect[ed] to have a material impact" on financial position, results, or cash flows. This represents a material shift from uncertainty to confidence about tariff impacts.

Cumulative structural cost savings increased from $12.7 billion (as of Q1 2025) to $15.6 billion (as of Q1 2026), representing $2.9 billion in additional savings realized over the twelve-month period. The company continues to add $0.6 billion per quarter in new structural savings, demonstrating sustained cost discipline.

The current filing adds the word "Estimated" to the "Timing Effects" earnings driver definition and expands the description to clarify that impacts are "expected to unwind in subsequent periods." The baseline used "Timing Effects" without the "Estimated" qualifier. This change provides additional transparency about the temporary nature of these mark-to-market impacts, which were a significant negative driver in Q1 2026.

Cash capex increased from $5.9 billion in Q1 2025 to $6.2 billion in Q1 2026, a $0.3 billion or 5% increase. The company maintains its full-year 2026 guidance range of $27-29 billion, unchanged from the 2025 guidance range. The increase reflects continued investment in advantaged projects, particularly in Upstream.

Upstream segment earnings declined from $6.8 billion in Q1 2025 to $5.7 billion in Q1 2026, a decrease of $1.0 billion or 15%. The company attributes this to unfavorable timing effects ($690 million negative), higher depreciation ($650 million negative), and base volume declines ($380 million negative), partially offset by advantaged volume growth from Guyana and Permian ($610 million positive) and structural cost savings ($170 million positive).

Upstream oil-equivalent production increased from 4.551 million barrels per day in Q1 2025 to 4.594 million barrels per day in Q1 2026, a modest increase of 43 thousand barrels per day or 1%. The current filing attributes growth to Permian and Guyana, offset by Middle East disruptions and Kazakhstan downtime. The baseline period benefited from the Pioneer acquisition, which added 889 thousand barrels per day year-over-year in that comparison.

Energy Products segment swung from earnings of $827 million in Q1 2025 to a loss of $1.3 billion in Q1 2026, a negative swing of $2.1 billion. The company attributes this primarily to unfavorable estimated timing effects of $3.3 billion (mark-to-market derivative impacts) and a $706 million identified item loss due to Middle East supply disruptions preventing physical shipments associated with hedges. These negatives were partially offset by strong margin performance ($2.4 billion positive) including trading and optimization gains.

The current filing discloses a $706 million identified item loss in Energy Products related to Middle East supply disruptions that prevented physical shipments associated with hedges. This is the first identified item reported in either period (baseline had zero identified items). The loss reflects a mismatch between derivative positions and the inability to complete physical transactions due to geopolitical disruptions.

Worldwide refinery throughput declined from 3.810 million barrels per day in Q1 2025 to 3.494 million barrels per day in Q1 2026, a decrease of 316 thousand barrels per day or 8%. The current filing attributes base volume declines to "Middle East supply disruptions," with particularly large decreases in Europe (down 253 kbd) and Asia Pacific (down 61 kbd).

Chemical Products earnings declined from $273 million in Q1 2025 to $110 million in Q1 2026, a decrease of $163 million or 60%. The company attributes this to compressed margins ($340 million negative) driven by lower realizations and increased feed costs, partially offset by structural cost savings ($70 million positive) and volume growth ($140 million positive combined from advantaged and base volumes).

Corporate and Financing expenses increased from $798 million in Q1 2025 to $1,053 million in Q1 2026, an increase of $255 million or 32%. The current filing attributes this to lower interest income and the absence of favorable tax items that benefited the prior year. This represents a continuation of the upward trend in corporate expenses.

Operating cash flow declined from $13.0 billion in Q1 2025 to $8.7 billion in Q1 2026, a decrease of $4.2 billion or 33%. The company attributes this to lower net income ($3.6 billion decrease), partially offset by higher depreciation ($1.1 billion increase). Working capital was a $1.8 billion use of cash in Q1 2026 versus a $0.9 billion use in Q1 2025.

Asset sale proceeds declined sharply from $1.8 billion in Q1 2025 to $0.2 billion in Q1 2026, a decrease of $1.6 billion. This represents a significant reduction in divestment activity compared to the prior year period, which benefited from larger asset sales.

Share repurchases remained essentially flat at $4.9B in Q1 2026 versus $4.9B in Q1 2025, though the company repurchased fewer shares (33.6 million vs 43.4 million), implying a higher average price per share. Total financing cash outflows declined from $13.6 billion to $4.9B, with the baseline period including significantly higher debt repayment activity.

Total debt increased from $37.6 billion at Q1 2025 to $47.7 billion at Q1 2026, an increase of $10.1 billion or 27%. The debt-to-capital ratio increased from 12.2% to 15.4%, and the net debt-to-capital ratio increased from 7.1% to 13.1%. This represents a material increase in leverage over the twelve-month period, driven by higher debt levels and lower cash balances.

Cash and cash equivalents declined from $18.5 billion at the end of Q1 2025 to $8.4 billion at the end of Q1 2026, a decrease of $10.1 billion or 54%. This significant reduction in cash, combined with higher debt levels, drove the increase in net debt-to-capital ratio from 7.1% to 13.1%.

The company significantly increased its undrawn short-term committed credit lines from $0.2 billion to $7.3 billion, while reducing undrawn long-term lines from $1.0 billion to $0.3 billion. This shift toward short-term liquidity facilities may reflect a change in the company's liquidity management strategy or credit facility structure.

The effective tax rate increased from 34% in Q1 2025 to 40% in Q1 2026, a 6 percentage point increase. The company attributes this to "portfolio mix effects impacted by derivative mark-to-market losses," suggesting that the large unfavorable timing effects in Energy Products (which generated losses in higher-tax jurisdictions) drove the rate increase.

The current filing consolidates the Permian net-zero targets into a single 2035 goal for "integrated Upstream Permian Basin unconventional operated assets," removing the separate 2030 target for "heritage Permian" assets and the distinct 2035 target for "Pioneer Permian assets." This represents a structural change in how the company frames its Permian emissions reduction timeline, combining previously separate asset categories under one integrated target date.