Mobil Corp. rocketed to its highest ever annual profit last year as a result of surging oil prices, regaining its status as one of the most prosperous companies in America and erasing billions of dollars in losses incurred during the pandemic. Exxon XOM 1.35% increase; green up pointing triangle.

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In its quarterly earnings Tuesday, Exxon Mobil outpaced big banks, technology giants and vaccine makers with its record earnings of $55.7 billion for 2022. According to a Wall Street Journal analysis, only Apple Inc. Apple Inc. AAPL 0.17%growth; green up pointing triangle and Microsoft Corp. increased by 1.33% and posted a green triangle have surpassed Exxon's profit so far in fiscal 2022 and only Alphabet Inc. Google Inc. is projected to earn 0.82% more in fiscal 2022 than Exxon, according to a Wall Street Journal analysis.

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The company's bounty is a turnaround from the historic proxy fight it lost to Engine No. 1, which attacked Exxon's finances, arguing the company didn't have a long-term strategy. As a result of a collapse in the oil market in 2020, Exxon suffered its first annual loss in at least four decades, of more than $22 billion. In that year, its shares fell as much as 55% after nearly a century in the Dow Jones Industrial Average.

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Due to Russian forces storming into Ukraine and an improvement in global economies, oil and gas prices worldwide surged last year. In 2020, markets also faced the loss of several oil refineries as the pandemic began and gasoline prices jumped to a record high. 

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According to Dow Jones data, Exxon shares increased about 80% for the year, second only to Occidental Petroleum Corp., Hess Corp., and Marathon Petroleum Corp. in percentage terms. According to S&P Global Market Intelligence, Exxon collected $76.8 billion from its operations so far.

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A lack of competitive, lower-emission alternatives will keep the world in need of oil and natural gas, according to Exxon CEO Darren Woods. Exxon's business of extracting oil and gas and selling fuels has been able to invest and develop advantages because some of its competitors are stepping away from fossil fuel investments.

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During the company's quarterly conference call, Mr. Woods said, "We're underinvesting in this space, and in a depletion business, we're not keeping up with that depletion.". "Markets are tight," he said.

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Exxon's net profit margin increased to 14% last year from 10% in 2012 as it focused on its most lucrative projects and controlled costs.

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The company's growth engines for oil production are Guyana and the Permian Basin, which straddles West Texas and New Mexico. Woods noted the company's recent expansion of Beaumont's refinery capacity by 250,000 barrels a day, as well as its investments in Guyana and the Permian Basin. During last year's Permian and Guyana operations, Exxon increased production more than 30%.

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In addition to its highest annual return since 2012, the company's return on capital employed in the year reached 25%. In comparison with the previous year, the company earned $413.7 billion in revenue for the full year.

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A profit of $12.8 billion was recorded by Exxon in the fourth quarter, up from $8.9 billion in the same period a year earlier. FactSet reports that the company earned $3.09 a share in the fourth quarter, below Wall Street expectations of $3.28 a share.

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Following Tuesday's earnings announcement, Exxon shares fell about 1%.

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As a result of higher European oil industry taxes and asset impairments, Exxon recorded unfavorable identified items worth $1.3 billion. As a result of Russia's expropriation of Exxon's stake in the Sakhalin-1 oil-and-gas project in Russia's Far East, which it had operated since the 1990s, the impact of this was partially offset by one-time adjustments.

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In 2022, Irving, Texas-based Exxon Corporation outperformed JPMorgan Chase, Johnson & Johnson and Verizon Communications Inc. Several other companies, including Pfizer Inc., Facebook parent Meta Platforms Inc. and Amazon.com Inc., had projected greater earnings that year. In 2021, however, Amazon is expected to lose money despite making a record $33.4 billion.

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Several public oil producers reported record quarterly free cash flow generation due to high oil prices, including shale companies, pipeline operators, and oil-field services firms. Over the past year, the S&P 500 energy sector has outperformed every other segment of the index. It has dropped about 9% since this time last year on the broader S&P 500 index.

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In 2008, Exxon earned $45.2 billion in annual profits, but last year it earned $55.7 billion, an increase of over $10 billion.

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According to the Journal's analysis, Exxon's closest rival Chevron reported historic profits of $35.5 billion last year, not far behind Exxon and JPMorgan on the list of the most profitable U.S. companies.

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After being written off two years ago, the industry has made a remarkable turnaround. As a result of the historic decline in energy demand at the start of the pandemic in 2020, companies idled hundreds of drilling rigs, cut billions in spending, and shut down wells that produced millions of barrels of oil a day—the last after crude prices briefly fell into negative territory in April. In addition to Chesapeake Energy Corp. and Whiting Petroleum Corp., dozens of other shale oil companies filed for bankruptcy.

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Investing in energy has been avoided by institutional investors for years, according to investors. As a result of last year's tightening of global energy supplies, Tomas Ackerman, a co-founder and partner at Carnelian Energy Capital, pointed out that U.S. oil plays a key role in stabilizing global commodities prices. U.S. oil-and-gas companies have historically performed poorly, so investors are still reluctant to invest.

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According to Mr. Ackerman, generalists haven't jumped into energy in a big way. Oil prices are elevated because of a lack of global supply, which is reflected in Exxon and Chevron's performance."

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According to Mr. Ackerman, companies now focus on shareholder returns and free cash flow, thereby attracting institutional investors to publicly traded energy companies.

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Despite their historic profits, Exxon and Chevron have been sharply criticized by the Biden administration. U.S. officials have accused oil companies of focusing on returning profits to shareholders rather than pumping more oil and gas when Americans are feeling the pain at the pump. President Biden said Exxon "made more money than God" this year.

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The oil industry has responded by highlighting its investments. Despite billions of dollars in divestitures, the Kremlin's move to wipe out Exxon's stake in the Sakhalin-1, Exxon's oil-and-gas production rose by 25,000 barrels a day in 2022. According to her, the company's output would have risen by 140,000 barrels of oil equivalent a day without those changes.

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Investing in the business is increasingly important, according to Ms. Mikells. Supply is needed around the world."