ExxonMobil NZ division turns to $91m profit in 2016 on global oil price recovery

The New Zealand division of ExxonMobil, the world's largest publicly traded oil and gas company, turned from a loss to a $91 million profit in 2016, bolstered by the impact of increasing oil prices on inventories in the year.

The local company's net profit for calendar 2016 was a turnaround from 2015's $2.7 million loss and 2014's $33.5 million loss. Last year, revenue dipped to $2.2 billion from $2.4 billion in 2015, financial statements lodged with the Companies Office show.

ExxonMobil NZ's spending on raw materials and consumables dropped 6 percent to $1.3 billion, while it paid $607 million in sales tax and duties, a 3 percent lift on the year earlier, meaning its costs represented about 87 percent of its revenue. However, a $107.3 million increase in inventory value, which it said came from "factors such as higher inventory levels on hand and higher oil prices at year end", turned it to a profit. In 2015, ExxonMobil downgraded its inventory valuation by $43.9 million.

Global oil prices collapsed in late 2014, driven by a glut, falling from between US$90 and US$100 per barrel for Brent crude, an international benchmark, to below US$50. Weakness continued in 2015 and 2016, with prices as low as US$30 per barrel, but recovered somewhat over the course of 2016, rising above US$50 again. Price volatility persists, with output cuts by the Organisation of the Petroleum Exporting Countries (OPEC) and other oil producers failing to drain oversupply.

The company has 170 Mobil branded sites in New Zealand and supplies fuel to over 150 unbranded sites. It spent $27 million on infrastructure in 2016, and said it has "several assets under construction."

"The group is investing further in its retail site network to further grow its business with the acquisition of leasehold and supply rights for several former Z Energy/Caltex sites," ExxonMobil NZ's directors said in their report.

The ExxonMobil group owns 17.2 percent of New Zealand Refining, the operator of the country's only oil refinery. In 2016, it spent $63.9 million on refinery processing fees, down from $91 million a year earlier. NZ Refining saw profit fall to $47.2 million in calendar 2016, from a record $150.8 million a year earlier, with processing fees down 27 percent to $276.6 million.

The company's New Zealand assets were worth $1.3 billion in 2016, up 18 percent from 2015. The value of its available-for-sale financial assets, which are its shares in NZ Refining, dropped to $139.8 million from $201.6 million a year earlier.

ExxonMobil's New York-listed shares recently traded at US$81.01 and have dropped 10 percent this year.

(BusinessDesk)