Shares of Exxon were down 1% to $86.15 in premarket trading. The stock has gained 42% this year.

Net earnings in the period were $5.5 billion or $1.28 a share. Revenue in the period was $90.5 billion, higher than analysts’ forecasts of $82.8 billion, according to FactSet. Year-earlier revenue was almost $59.2 billion.

In an interview with Barron’s, Exxon Chief Financial Officer Kathy Mikells said the earnings miss was largely due to a change in the value of derivatives the company uses to hedge in its refining operations. The dramatic change in the price of oil during the quarter—with crude trading as high as $130 per barrel—had a large impact on energy derivatives markets. Marking its assets to market prices had a negative $760 million impact on Exxon’s earnings in the quarter, which Mikells said is “pretty typical on a steeply rising price environment.”

Absent those changes and some unexpected weather issues in Canada, the company’s core business performed well, Mikells said.

“It was a strong quarter when we look at the underlying business performance, leaving aside weather and timing impacts, and we’re carrying very strong momentum into the second quarter,” Mikells said.

The company produced 3.7 million barrels per day, down 4% from the fourth quarter of 2021 due to weather-related delays, planned maintenance, lower entitlements associated with higher prices, and divestments.

“Earnings increased modestly, as strong margin improvement and underlying growth was offset by weather and timing impacts,” said CEO Darren Woods in a statement. “The absence of these temporary impacts in March provides strong, positive momentum for the second quarter.”

Structural savings were more than $5 billion for the quarter compared with 2019, and the company is on track to exceed $9 billion in annual savings by 2023, Exxon said.

Going into the second quarter of 2022, Exxon anticipates corporate and financing expenses to be about $600 million.

Exxon boosted its stock repurchase program to up to $30 billion through 2023, from its prior plan to buy back $10 billion in stock. At the current stock price, that would amount to about 8% of shares. Mikells said the company has made progress in reducing its debt, and is now at the low end of its target debt-to-capital ratio. “We feel really good about our strong balance sheet and liquidity position and the sustained momentum that we’re seeing in the business,” she said.

Citi analyst Alastair Syme wrote that high oil prices and relatively low spending are giving Exxon “a lot of financial flexibility.”

The company declared a cash dividend earlier this week of 88 cents a share, the same level as the dividend paid in the first quarter. Exxon had been boosting dividends since October up to this quarter, after a pandemic pause. 

Competitor Chevron ( CVX
) also reported earnings on Friday, posting an earnings miss on an adjusted basis.

Chevron and Exxon’s worse-than-expected performance came as a surprise on Friday, as analysts were expecting a strong quarter across the board for oil companies fueled by higher prices. Oil-services providers Halliburton ( HAL
), Schlumberger ( SLB
), and Kinder Morgan ( KMI
) all beat expectations when they reported earnings.  

Write to Sabrina Escobar at sabrina.escobar@barrons.com