PART I. FINANCIAL INFORMATION | | | | | | | | | | | | | | | | Item 1. Financial Statements | | | | | | | | | | | | | | | | EXXON MOBIL CORPORATION | CONDENSED CONSOLIDATED STATEMENT OF INCOME | (millions of dollars) | | | | | | | | | | | | | | | | | | | | | Three Months Ended | | | NineSix Months Ended
| | | | | | SeptemberJune 30,
| | | SeptemberJune 30,
| | | | | | 2017
| | | 20162018
| | | 2017 | | | 20162018
| | | 2017 | Revenues and other income | | | | | | | | | | | | | | Sales and other operating revenue(1) | | | 64,41571,456
| | | 56,76756,026
| | | 186,330136,892
| | | 160,232112,500
| | Income from equity affiliates | | | 1,4721,729
| | | 1,1031,525
| | | 4,7073,639
| | | 3,4783,235
| | Other income | | | 278316
| | | 807526
| | | 1,2911,181
| | | 1,3681,013
| | | Total revenues and other income | | | 66,16573,501
| | | 58,67758,077
| | | 192,328141,712
| | | 165,078116,748
| Costs and other deductions | | | | | | | | | | | | | | Crude oil and product purchases | | | 31,43241,327
| | | 28,03530,194
| | | 91,98577,615
| | | 75,87260,553
| | Production and manufacturing expenses | | | 8,3348,918
| | | 7,7098,060
| | | 24,58617,409
| | | 23,34615,626
| | Selling, general and administrative expenses | | | 2,7252,993
| | | 2,7362,556
| | | 7,9525,740
| | | 7,9755,061
| | Depreciation and depletion | | | 4,8804,589
| | | 4,6054,652
| | | 14,0519,059
| | | 14,1919,171
| | Exploration expenses, including dry holes | | | 284332
| | | 327514
| | | 1,087619
| | | 1,127803
| | Non-service pension and postretirement benefit expense | | | 308 | | | 419 | | | 645 | | | 792 | | Interest expense | | | 111147
| | | 106158
| | | 415351
| | | 258
| | Sales-based taxes (1)
| | | 5,864
| | | 5,437
| | | 16,795
| | | 15,687304
| | Other taxes and duties | | | 6,9528,375
| | | 6,4967,368
| | | 19,80016,522
| | | 19,27014,364
| | | Total costs and other deductions | | | 60,58266,989
| | | 55,45153,921
| | | 176,671127,960
| | | 157,726106,674
| Income before income taxes | | | 5,5836,512
| | | 3,2264,156
| | | 15,65713,752
| | | 7,35210,074
| | Income taxes | | | 1,4982,526
| | | 337892
| | | 4,2184,983
| | | 1,0012,720
| Net income including noncontrolling interests | | | 4,0853,986
| | | 2,8893,264
| | | 11,4398,769
| | | 6,3517,354
| | Net income attributable to noncontrolling interests | | | 11536
| | | 239(86)
| | | 109169
| | | 191(6)
| Net income attributable to ExxonMobil | | | 3,9703,950
| | | 2,6503,350
| | | 11,3308,600
| | | 6,1607,360
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Earnings per common share (dollars) | | | 0.930.92
| | | 0.630.78
| | | 2.662.01
| | | 1.471.73
| | | | | | | | | | | | | | | Earnings per common share - assuming dilution (dollars) | | | 0.930.92
| | | 0.630.78
| | | 2.662.01
| | | 1.471.73
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Dividends per common share (dollars) | | | 0.82 | | | 0.77 | | | 0.751.59
| | | 2.29
| | | 2.231.52
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | (1) Sales-based taxes included in sales and other
|
|
|
|
|
|
|
|
|
|
|
|
| | | operating revenue
|
|
| 5,864
|
|
| 5,437
|
|
| 16,795
|
|
| 15,687
|
The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.
EXXON MOBIL CORPORATION | EXXON MOBIL CORPORATION | EXXON MOBIL CORPORATION | CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | (millions of dollars) | (millions of dollars) | (millions of dollars) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended | | | Nine Months Ended | | | | | Three Months Ended | | | Six Months Ended | | | | | | September 30, | | | September 30, | | | | | June 30, | | | June 30, | | | | | | 2017 | | | 2016 | | | 2017 | | | 2016 | | | | | 2018 | | | 2017 | | | 2018 | | | 2017 | | | | | | | | | | | | | | | | | | | | | | | | | | Net income including noncontrolling interests | Net income including noncontrolling interests | | | 4,085 | | 2,889 | | 11,439 | | 6,351 | Net income including noncontrolling interests | | | 3,986 | | 3,264 | | 8,769 | | 7,354 | Other comprehensive income (net of income taxes) | Other comprehensive income (net of income taxes) | | | | | | | | | | | | | Other comprehensive income (net of income taxes) | | | | | | | | | | | | | | Foreign exchange translation adjustment | | | 2,342 | | | (107) | | | 5,424 | | | 2,506 | Foreign exchange translation adjustment | | | (2,040) | | 1,674 | | (2,844) | | 3,082 | | Adjustment for foreign exchange translation (gain)/loss | | | | | | | | | | | | | Adjustment for foreign exchange translation (gain)/loss | | | | | | | | | | | | | | | included in net income | | | - | | | - | | | 234 | | | - | | included in net income | | | 18 | | 234 | | 186 | | 234 | | Postretirement benefits reserves adjustment | | | | | | | | | | | | | Postretirement benefits reserves adjustment | | | | | | | | | | | | | | | (excluding amortization) | | | (145) | | | 34 | | | (329) | | | 25 | | (excluding amortization) | | | 43 | | (159) | | (391) | | (184) | | Amortization and settlement of postretirement benefits reserves | | | | | | | | | | | | | Amortization and settlement of postretirement benefits reserves | | | | | | | | | | | | | | | adjustment included in net periodic benefit costs | | | 311 | | | 278 | | | 850 | | | 859 | | adjustment included in net periodic benefit costs | | | 229 | | 283 | | 466 | | 539 | | | Total other comprehensive income | | | 2,508 | | | 205 | | | 6,179 | | | 3,390 | | Total other comprehensive income | | | (1,750) | | | 2,032 | | | (2,583) | | | 3,671 | Comprehensive income including noncontrolling interests | Comprehensive income including noncontrolling interests | | | 6,593 | | | 3,094 | | | 17,618 | | | 9,741 | Comprehensive income including noncontrolling interests | | | 2,236 | | | 5,296 | | | 6,186 | | | 11,025 | | Comprehensive income attributable to | | | | | | | | | | | | | Comprehensive income attributable to | | | | | | | | | | | | | | | noncontrolling interests | | | 372 | | | 166 | | | 700 | | | 536 | | noncontrolling interests | | | (97) | | | 169 | | | (106) | | | 328 | Comprehensive income attributable to ExxonMobil | Comprehensive income attributable to ExxonMobil | | | 6,221 | | 2,928 | | 16,918 | | 9,205 | Comprehensive income attributable to ExxonMobil | | | 2,333 | | 5,127 | | 6,292 | | 10,697 |
The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.
EXXON MOBIL CORPORATION | EXXON MOBIL CORPORATION | | EXXON MOBIL CORPORATION | | CONDENSED CONSOLIDATED BALANCE SHEET | CONDENSED CONSOLIDATED BALANCE SHEET | | CONDENSED CONSOLIDATED BALANCE SHEET | | (millions of dollars) | (millions of dollars) | | (millions of dollars) | | | | | | | | | | | | | | | | | | | | | | | | Sept. 30, | | | Dec. 31, | | | | | | | June 30, | | | Dec. 31, | | | | | | | | 2017 | | | 2016 | | | | | | | 2018 | | | 2017 | | Assets | Assets | | | | | | | Assets | | | | | | | Current assets | | | | | | | Current assets | | | | | | | | Cash and cash equivalents | | | 4,266 | | | 3,657 | | | Cash and cash equivalents | | | 3,430 | | | 3,177 | | | | Notes and accounts receivable – net | | | 23,263 | | 21,394 | | | Notes and accounts receivable – net | | 26,993 | | 25,597 | | | | Inventories | | | | | | | | Inventories | | | | | | | | | Crude oil, products and merchandise | | | 12,488 | | 10,877 | | | | Crude oil, products and merchandise | | 14,373 | | 12,871 | | | | | Materials and supplies | | | 4,255 | | 4,203 | | | | Materials and supplies | | 4,110 | | 4,121 | | | | Other current assets | | | 1,480 | | 1,285 | | | Other current assets | | 1,649 | | 1,368 | | | | | Total current assets | | | 45,752 | | 41,416 | | | | Total current assets | | 50,555 | | 47,134 | | | Investments, advances and long-term receivables | | | 37,649 | | 35,102 | | Investments, advances and long-term receivables | | 39,691 | | 39,160 | | | Property, plant and equipment – net | | | 255,556 | | 244,224 | | Property, plant and equipment – net | | 248,209 | | 252,630 | | | Other assets, including intangibles – net | | | 10,470 | | 9,572 | | Other assets, including intangibles – net | | 10,335 | | 9,767 | | | | | Total assets | | | 349,427 | | | 330,314 | | | | Total assets | | | 348,790 | | | 348,691 | | | | | | | | | | | | | | | | | | | | Liabilities | Liabilities | | | | | | | Liabilities | | | | | | | Current liabilities | | | | | | | Current liabilities | | | | | | | | Notes and loans payable | | | 15,741 | | | 13,830 | | | Notes and loans payable | | | 20,500 | | | 17,930 | | | | Accounts payable and accrued liabilities | | | 34,698 | | 31,193 | | | Accounts payable and accrued liabilities | | 38,490 | | 36,796 | | | | Income taxes payable | | | 3,338 | | 2,615 | | | Income taxes payable | | 3,457 | | 3,045 | | | | | Total current liabilities | | | 53,777 | | 47,638 | | | | Total current liabilities | | 62,447 | | 57,771 | | | Long-term debt | | | 24,869 | | 28,932 | | Long-term debt | | 20,720 | | 24,406 | | | Postretirement benefits reserves | | | 20,874 | | 20,680 | | Postretirement benefits reserves | | 21,504 | | 21,132 | | | Deferred income tax liabilities | | | 34,430 | | 34,041 | | Deferred income tax liabilities | | 26,783 | | 26,893 | | | Long-term obligations to equity companies | | | 5,003 | | 5,124 | | Long-term obligations to equity companies | | 4,575 | | 4,774 | | | Other long-term obligations | | | 21,276 | | 20,069 | | Other long-term obligations | | 19,228 | | 19,215 | | | | | Total liabilities | | | 160,229 | | | 156,484 | | | | Total liabilities | | | 155,257 | | | 154,191 | | | | | | | | | | | | | | | | | | | | Commitments and contingencies (Note 3) | Commitments and contingencies (Note 3) | | | | | | | Commitments and contingencies (Note 3) | | | | | | | | | | | | | | | | | | | | Equity | Equity | | | | | | | Equity | | | | | | | Common stock without par value | | | | | | | Common stock without par value | | | | | | | | (9,000 million shares authorized, 8,019 million shares issued) | | | 14,783 | | 12,157 | | | (9,000 million shares authorized, 8,019 million shares issued) | | 15,086 | | 14,656 | | | Earnings reinvested | | | 409,449 | | 407,831 | | Earnings reinvested | | 416,418 | | 414,540 | | | Accumulated other comprehensive income | | | (16,651) | | (22,239) | | Accumulated other comprehensive income | | (18,609) | | (16,262) | | | Common stock held in treasury | | | | | | | Common stock held in treasury | | | | | | | | (3,782 million shares at September 30, 2017 and | | | | | | | (3,785 million shares at June 30, 2018 and | | | | | | | | 3,871 million shares at December 31, 2016) | | | (225,305) | | (230,424) | | | 3,780 million shares at December 31, 2017) | | (225,673) | | (225,246) | | | | | ExxonMobil share of equity | | | 182,276 | | 167,325 | | | | ExxonMobil share of equity | | 187,222 | | 187,688 | | | Noncontrolling interests | | | 6,922 | | 6,505 | | Noncontrolling interests | | 6,311 | | 6,812 | | | | | Total equity | | | 189,198 | | 173,830 | | | | Total equity | | 193,533 | | 194,500 | | | | | Total liabilities and equity | | | 349,427 | | | 330,314 | | | | Total liabilities and equity | | | 348,790 | | | 348,691 | |
The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.
EXXON MOBIL CORPORATION | EXXON MOBIL CORPORATION | | EXXON MOBIL CORPORATION | | CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | | CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | | (millions of dollars) | (millions of dollars) | | (millions of dollars) | | | | | | | | | | | | | | | | | | | | | | Nine Months Ended | | | | | | Six Months Ended | | | | | | | September 30, | | | | | | June 30, | | | | | | | 2017 | | | 2016 | | | | | | 2018 | | | 2017 | | Cash flows from operating activities | Cash flows from operating activities | | | | | | | | Cash flows from operating activities | | | | | | | | | Net income including noncontrolling interests | | | 11,439 | | | 6,351 | | Net income including noncontrolling interests | | | 8,769 | | | 7,354 | | | Depreciation and depletion | | | 14,051 | | | 14,191 | | Depreciation and depletion | | | 9,059 | | | 9,171 | | | Changes in operational working capital, excluding cash and debt | | | (547) | | | (2,386) | | Changes in operational working capital, excluding cash and debt | | | (982) | | | (228) | | | All other items – net | | | (2,288) | | | (3,470) | | All other items – net | | | (547) | | | (1,177) | | | | Net cash provided by operating activities | | | 22,655 | | | 14,686 | | | Net cash provided by operating activities | | | 16,299 | | | 15,120 | | | | | | | | | | | | | | | | | | | | | Cash flows from investing activities | Cash flows from investing activities | | | | | | | | Cash flows from investing activities | | | | | | | | | Additions to property, plant and equipment | | | (10,901) | | | (12,276) | | Additions to property, plant and equipment | | | (8,276) | | | (5,988) | | | Proceeds associated with sales of subsidiaries, property, plant and | | | | | | | | Proceeds associated with sales of subsidiaries, property, plant and | | | | | | | | | | equipment, and sales and returns of investments | | | 1,695 | | | 2,182 | | | equipment, and sales and returns of investments | | | 1,748 | | | 841 | | | Additional investments and advances | | | (1,950) | | | (1,398) | | Additional investments and advances | | | (704) | | | (1,793) | | | Other investing activities including collection of advances | | | 1,962 | | | 761 | | Other investing activities including collection of advances | | | 277 | | | 301 | | | | Net cash used in investing activities | | | (9,194) | | | (10,731) | | | Net cash used in investing activities | | | (6,955) | | | (6,639) | | | | | | | | | | | | | | | | | | | | | Cash flows from financing activities | Cash flows from financing activities | | | | | | | | Cash flows from financing activities | | | | | | | | | Additions to long-term debt | | | 60 | | | 11,964 | | Additions to long-term debt | | | - | | | 60 | | | Additions to short-term debt | | | 1,735 | | | - | | Additions to short-term debt | | | - | | | 1,735 | | | Reductions in short-term debt | | | (4,971) | | | (286) | | Reductions in short-term debt | | | (4,256) | | | (2,722) | | | Additions/(reductions) in commercial paper, and debt with three | | | | | | | | Additions/(reductions) in commercial paper, and debt with three | | | | | | | | | | months or less maturity (1) | | | 339 | | | (4,062) | | | months or less maturity (1) | | | 2,902 | | | (321) | | | Cash dividends to ExxonMobil shareholders | | | (9,712) | | | (9,320) | | Cash dividends to ExxonMobil shareholders | | | (6,793) | | | (6,423) | | | Cash dividends to noncontrolling interests | | | (139) | | | (122) | | Cash dividends to noncontrolling interests | | | (135) | | | (91) | | | Changes in noncontrolling interests | | | (90) | | | - | | Changes in noncontrolling interests | | | (275) | | | (29) | | | Common stock acquired | | | (515) | | | (727) | | Common stock acquired | | | (429) | | | (514) | | | Common stock sold | | | - | | | 6 | | | Net cash used in financing activities | | | (8,986) | | | (8,305) | | | | Net cash used in financing activities | | | (13,293) | | | (2,547) | | | Effects of exchange rate changes on cash | Effects of exchange rate changes on cash | | | 441 | | | (20) | | Effects of exchange rate changes on cash | | | (105) | | | 209 | | Increase/(decrease) in cash and cash equivalents | Increase/(decrease) in cash and cash equivalents | | | 609 | | | 1,388 | | Increase/(decrease) in cash and cash equivalents | | | 253 | | | 385 | | Cash and cash equivalents at beginning of period | Cash and cash equivalents at beginning of period | | | 3,657 | | | 3,705 | | Cash and cash equivalents at beginning of period | | | 3,177 | | | 3,657 | | Cash and cash equivalents at end of period | Cash and cash equivalents at end of period | | | 4,266 | | | 5,093 | | Cash and cash equivalents at end of period | | | 3,430 | | | 4,042 | | | | | | | | | | | | | | | | | | | | | Supplemental Disclosures | Supplemental Disclosures | | | | | | | | Supplemental Disclosures | | | | | | | | | Income taxes paid | | | 4,611 | | | 3,049 | | Income taxes paid | | | 4,426 | | | 3,247 | | | Cash interest paid | | | 965 | | | 709 | | Cash interest paid | | | 477 | | | 587 | |
2017 Non-CashNoncash Transactions In the first ninesix months of 2017, the Corporation completed the acquisitions of InterOil Corporation and of companies that own certain oil and gas properties in the Permian Basin and other assets. These transactions included a significant non-cash component. Additional information is providednoncash component associated with the issuance of a combined 96 million shares of Exxon Mobil Corporation common stock in Note 9.acquisition consideration. (1) Includes a net reductionaddition of commercial paper with a maturity of over three months of $0.5$0.9 billion in 20172018 and a net addition of $1.0$0.2 billion in 2016.2017. The gross amount of commercial paper with a maturity of over three months issued was $2.7$2.2 billion in 2017both 2018 and $2.9 billion in 2016,2017, while the gross amount repaid was $3.2$1.3 billion in 20172018 and $1.9$2.0 billion in 2016.2017. The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.
| EXXON MOBIL CORPORATION | | CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | | (millions of dollars) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ExxonMobil Share of Equity | | | | | | | | | | | | | | | | | Accumulated | | | | | | | | | | | | | | | | | | | | | | | Other | | Common | | | | | | | | | | | | | | | | | | | | | Compre- | | Stock | | ExxonMobil | | Non- | | | | | | | | | Common | | Earnings | | hensive | | Held in | | Share of | | controlling | | Total | | | | | | Stock | | Reinvested | | Income | | Treasury | | Equity | | Interests | | Equity | | | | | | | | | | | | | | | | | | | | | | | | | | Balance as of December 31, 2015 | | | 11,612 | | | 412,444 | | | (23,511) | | | (229,734) | | | 170,811 | | | 5,999 | | | 176,810 | | Amortization of stock-based awards | | | 612 | | | - | | | - | | | - | | | 612 | | | - | | | 612 | | Tax benefits related to stock-based | | | | | | | | | | | | | | | | | | | | | | | awards | | | 11 | | | - | | | - | | | - | | | 11 | | | - | | | 11 | | Other | | | (7) | | | - | | | - | | | - | | | (7) | | | - | | | (7) | | Net income for the period | | | - | | | 6,160 | | | - | | | - | | | 6,160 | | | 191 | | | 6,351 | | Dividends – common shares | | | - | | | (9,320) | | | - | | | - | | | (9,320) | | | (122) | | | (9,442) | | Other comprehensive income | | | - | | | - | | | 3,045 | | | - | | | 3,045 | | | 345 | | | 3,390 | | Acquisitions, at cost | | | - | | | - | | | - | | | (727) | | | (727) | | | - | | | (727) | | Dispositions | | | - | | | - | | | - | | | 12 | | | 12 | | | - | | | 12 | Balance as of September 30, 2016 | | | 12,228 | | | 409,284 | | | (20,466) | | | (230,449) | | | 170,597 | | | 6,413 | | | 177,010 | | | | | | | | | | | | | | | | | | | | | | | | | Balance as of December 31, 2016 | | | 12,157 | | | 407,831 | | | (22,239) | | | (230,424) | | | 167,325 | | | 6,505 | | | 173,830 | | Amortization of stock-based awards | | | 635 | | | - | | | - | | | - | | | 635 | | | - | | | 635 | | Other | | | (87) | | | - | | | - | | | - | | | (87) | | | (54) | | | (141) | | Net income for the period | | | - | | | 11,330 | | | - | | | - | | | 11,330 | | | 109 | | | 11,439 | | Dividends – common shares | | | - | | | (9,712) | | | - | | | - | | | (9,712) | | | (139) | | | (9,851) | | Other comprehensive income | | | - | | | - | | | 5,588 | | | - | | | 5,588 | | | 591 | | | 6,179 | | Acquisitions, at cost | | | - | | | - | | | - | | | (596) | | | (596) | | | (90) | | | (686) | | Issued for acquisitions | | | 2,078 | | | - | | | - | | | 5,711 | | | 7,789 | | | - | | | 7,789 | | Dispositions | | | - | | | - | | | - | | | 4 | | | 4 | | | - | | | 4 | Balance as of September 30, 2017 | | | 14,783 | | | 409,449 | | | (16,651) | | | (225,305) | | | 182,276 | | | 6,922 | | | 189,198 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nine Months Ended September 30, 2017 | | | | | Nine Months Ended September 30, 2016 | | | | | | | | | Held in | | | | | | | | | | | Held in | | | | | Common Stock Share Activity | | Issued | | Treasury | | Outstanding | | | | | Issued | | Treasury | | Outstanding | | | | | (millions of shares) | | | | | (millions of shares) | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance as of December 31 | | | 8,019 | | | (3,871) | | | 4,148 | | | | | | 8,019 | | | (3,863) | | | 4,156 | | | | Acquisitions | | | - | | | (7) | | | (7) | | | | | | - | | | (9) | | | (9) | | | | Issued for acquisitions | | | - | | | 96 | | | 96 | | | | | | - | | | - | | | - | | | | Dispositions | | | - | | | - | | | - | | | | | | - | | | - | | | - | | Balance as of September 30 | | | 8,019 | | | (3,782) | | | 4,237 | | | | | | 8,019 | | | (3,872) | | | 4,147 |
| EXXON MOBIL CORPORATION | | CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | | (millions of dollars) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ExxonMobil Share of Equity | | | | | | | | | | | | | | | | | Accumulated | | | | | | | | | | | | | | | | | | | | | | | Other | | Common | | | | | | | | | | | | | | | | | | | | | Compre- | | Stock | | ExxonMobil | | Non- | | | | | | | | | Common | | Earnings | | hensive | | Held in | | Share of | | controlling | | Total | | | | | | Stock | | Reinvested | | Income | | Treasury | | Equity | | Interests | | Equity | | | | | | | | | | | | | | | | | | | | | | | | | | Balance as of December 31, 2016 | | | 12,157 | | | 407,831 | | | (22,239) | | | (230,424) | | | 167,325 | | | 6,505 | | | 173,830 | | Amortization of stock-based awards | | | 467 | | | - | | | - | | | - | | | 467 | | | - | | | 467 | | Other | | | (85) | | | - | | | - | | | - | | | (85) | | | (53) | | | (138) | | Net income for the period | | | - | | | 7,360 | | | - | | | - | | | 7,360 | | | (6) | | | 7,354 | | Dividends | | | - | | | (6,423) | | | - | | | - | | | (6,423) | | | (91) | | | (6,514) | | Other comprehensive income | | | - | | | - | | | 3,337 | | | - | | | 3,337 | | | 334 | | | 3,671 | | Acquisitions, at cost | | | - | | | - | | | - | | | (595) | | | (595) | | | (29) | | | (624) | | Issued for acquisitions | | | 2,078 | | | - | | | - | | | 5,711 | | | 7,789 | | | - | | | 7,789 | | Dispositions | | | - | | | - | | | - | | | 3 | | | 3 | | | - | | | 3 | Balance as of June 30, 2017 | | | 14,617 | | | 408,768 | | | (18,902) | | | (225,305) | | | 179,178 | | | 6,660 | | | 185,838 | | | | | | | | | | | | | | | | | | | | | | | | | Balance as of December 31, 2017 | | | 14,656 | | | 414,540 | | | (16,262) | | | (225,246) | | | 187,688 | | | 6,812 | | | 194,500 | | Amortization of stock-based awards | | | 436 | | | - | | | - | | | - | | | 436 | | | - | | | 436 | | Other | | | (6) | | | - | | | - | | | - | | | (6) | | | (7) | | | (13) | | Net income for the period | | | - | | | 8,600 | | | - | | | - | | | 8,600 | | | 169 | | | 8,769 | | Dividends | | | - | | | (6,793) | | | - | | | - | | | (6,793) | | | (135) | | | (6,928) | | Cumulative effect of accounting | | | | | | | | | | | | | | | | | | | | | | | | | change | | | - | | | 71 | | | (39) | | | - | | | 32 | | | 15 | | | 47 | | Other comprehensive income | | | - | | | - | | | (2,308) | | | - | | | (2,308) | | | (275) | | | (2,583) | | Acquisitions, at cost | | | - | | | - | | | - | | | (429) | | | (429) | | | (268) | | | (697) | | Dispositions | | | - | | | - | | | - | | | 2 | | | 2 | | | - | | | 2 | Balance as of June 30, 2018 | | | 15,086 | | | 416,418 | | | (18,609) | | | (225,673) | | | 187,222 | | | 6,311 | | | 193,533 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Six Months Ended June 30, 2018 | | | | | Six Months Ended June 30, 2017 | | | | | | | | | Held in | | | | | | | | | | | Held in | | | | | Common Stock Share Activity | | Issued | | Treasury | | Outstanding | | | | | Issued | | Treasury | | Outstanding | | | | | (millions of shares) | | | | | (millions of shares) | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance as of December 31 | | | 8,019 | | | (3,780) | | | 4,239 | | | | | | 8,019 | | | (3,871) | | | 4,148 | | | | Acquisitions | | | - | | | (5) | | | (5) | | | | | | - | | | (7) | | | (7) | | | | Issued for acquisitions | | | - | | | - | | | - | | | | | | - | | | 96 | | | 96 | | | | Dispositions | | | - | | | - | | | - | | | | | | - | | | - | | | - | | Balance as of June 30 | | | 8,019 | | | (3,785) | | | 4,234 | | | | | | 8,019 | | | (3,782) | | | 4,237 |
The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.
EXXON MOBIL CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Financial Statement Preparation These unaudited condensed consolidated financial statements should be read in the context of the consolidated financial statements and notes thereto filed with the Securities and Exchange Commission in the Corporation's 20162017 Annual Report on Form 10-K. In the opinion of the Corporation, the information furnished herein reflects all known accruals and adjustments necessary for a fair statement of the results for the periods reported herein. All such adjustments are of a normal recurring nature. Prior data has been reclassified in certain cases to conform to the current presentation basis. The Corporation's exploration and production activities are accounted for under the "successful efforts" method.
2. Recently Issued Accounting StandardsChanges In May 2014,Effective January 1, 2018, ExxonMobil adopted the Financial Accounting Standards Board issued a newBoard’s standard, Revenue from Contracts with Customers (Topic 606)., as amended. The standard establishes a single revenue recognition model for all contracts with customers, eliminates industry and transaction specific requirements, and expands disclosure requirements. The standard is required to bewas adopted beginning January 1, 2018. “Sales and Other Operating Revenue” on the Consolidated Statement of Income includes sales, excise and value-added taxes on sales transactions. When the Corporation adopts the standard, revenue will exclude sales-based taxes collected on behalf of third parties. This change in reporting will not impact earnings. The Corporation expects to adopt the standard using the Modified Retrospective method, under which prior years’year results are not restated, but supplemental information on the impact of the new standard is provided for any material impacts of the standard on 2018 results. The Corporation continues to evaluate other areasadoption of the standard which aredid not expected to have a material effectimpact on any of the lines reported in the Corporation’s financial statements. The cumulative effect of adoption of the standard was de minimis. The Corporation did not elect any practical expedients that require disclosure. See Note 9.
InEffective January 2016,1, 2018, ExxonMobil adopted the Financial Accounting Standards Board issued an updated standard,Board’s Update, Financial Instruments—Instruments–Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The standard requires investments in equity securities other than consolidated subsidiaries and equity method investments to be measured at fair value with changes in the fair value recognized through net income. Companies can electThe Corporation elected a modified approach for equity securities that do not have a readily determinable fair value. ExxonMobil is evaluatingThis modified approach measures investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The cumulative effect adjustment related to the adoption of this standard increased equity $47 million. The portion of unrealized gains and its effectlosses recognized during the reporting period on equity securities still held at June 30, 2018 and the Corporation’scarrying value of equity securities without readily determinable fair values at June 30, 2018 were not significant to the Corporation. The standard also expanded disclosures related to financial statements and plans to adopt it in 2018.instruments. See Note 7.
In March 2017,Effective January 1, 2018, ExxonMobil adopted the Financial Accounting Standards Board issued an Accounting StandardsBoard’s Update, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.Cost. The update requires separate presentation of the service cost component from other components of net benefit costs to becosts. The other components are reported in a new line on the same lineCorporation’s Statement of Income, “Non-service pension and postretirement benefit expense.” The Corporation elected to use the income statementpractical expedient which uses the amounts disclosed in the pension and other postretirement benefit plan note for the prior comparative periods as other compensation costs andthe estimation basis for applying the retrospective presentation requirements, as it is impracticable to determine the amounts capitalized in those periods. Beginning in 2018, the other components of net benefit costs (non-service costs) to be presented separatelyare included in the Corporate and financing segment. The estimated after-tax impact from the service cost component. change in segmentation is an increase in Corporate and financing expenses of about $100 million for the second quarter and $200 million for the first six months of 2018. The increase in the Corporate and financing expenses is offset by lower expenses across the operating segments. Additionally, only the service cost component of net benefit costs will beis eligible for capitalization. capitalization in situations where it is otherwise appropriate to capitalize employee costs in connection with the construction or production of an asset.
The update is required to be adopted beginning January 1, 2018. The Corporation expects to add a new line “Non-service pension and postretirement benefit expense” to itsimpact of the retrospective presentation change on ExxonMobil's Consolidated Statement of Income. This line would reflectIncome for the non-service costs that were previously included in “Productionthree months and manufacturing expenses” and “Selling, general and administrative expenses”. The updatesix months ended June 30, 2017, is not expected to have a material impact on the Corporation’s financial statements. Beginningshown below. | | | Three Months Ended | | Six Months Ended | | | | June 30, 2017 | | June 30, 2017 | | | | As Reported | | Change | | As Adjusted | | As Reported | | Change | | As Adjusted | | | | (millions of dollars) | | | | | | | | | | | | | | | Production and manufacturing expenses | 8,407 | | (347) | | 8,060 | | 16,252 | | (626) | | 15,626 | Selling, general and administrative expenses | 2,628 | | (72) | | 2,556 | | 5,227 | | (166) | | 5,061 | Non-service pension and postretirement benefit expense | - | | 419 | | 419 | | - | | 792 | | 792 |
Effective January 1, 2018, the Corporation expects to include all of the non-service costs in its Corporate and financing segment. In February 2016,2019, ExxonMobil will adopt the Financial Accounting Standards Board issued a newBoard’s standard, Leases (Topic 842)., as amended. The standard requires all leases with an initial term greater than one year to be recorded on the balance sheet as ana right of use asset and a lease liability. ExxonMobilThe Corporation acquired lease accounting software to facilitate implementation, and is evaluatingcurrently installing, configuring and testing the standardsoftware. Based on leases outstanding at the end of 2017, the Corporation estimates the operating lease right of use asset and itslease liability would have been in the range of $4 billion to $5 billion at that time. The effect on the Corporation’s financial statementsbalance sheet as a result of implementing the standard on January 1, 2019, could differ considerably depending on operating leases commenced in 2018 as well as interest rates and plans to adopt it in 2019. other factors such as the expiry or renewal of leases
3. Litigation and Other Contingencies Litigation A variety of claims have been made against ExxonMobil and certain of its consolidated subsidiaries in a number of pending lawsuits. Management has regular litigation reviews, including updates from corporate and outside counsel, to assess the need for accounting recognition or disclosure of these contingencies. The Corporation accrues an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. The Corporation does not record liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote. For contingencies where an unfavorable outcome is reasonably possible and which are significant, the Corporation discloses the nature of the contingency and, where feasible, an estimate of the possible loss. For purposes of our contingency disclosures, “significant” includes material matters, as well as other matters which management believes should be disclosed. ExxonMobil will continue to defend itself vigorously in these matters. Based on a consideration of all relevant facts and circumstances, the Corporation does not believe the ultimate outcome of any currently pending lawsuit against ExxonMobil will have a material adverse effect upon the Corporation's operations, financial condition, or financial statements taken as a whole. Other Contingencies The Corporation and certain of its consolidated subsidiaries were contingently liable at SeptemberJune 30, 2017,2018, for guarantees relating to notes, loans and performance under contracts. Where guarantees for environmental remediation and other similar matters do not include a stated cap, the amounts reflect management’s estimate of the maximum potential exposure. These guarantees are not reasonably likely to have a material effect on the Corporation’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. | | | | | | As of September 30, 2017 | | | | | | | | | Equity | | | Other | | | | | | | | | | | | Company | | | Third Party | | | | | | | | | | | | Obligations (1) | | | Obligations | | | Total | | | | | | | | | (millions of dollars) | | | | Guarantees | | | | | | | | | | | | | | Debt-related | | | 107 | | | 30 | | | 137 | | | | | Other | | | 2,754 | | | 4,267 | | | 7,021 | | | | | | Total | | | 2,861 | | | 4,297 | | | 7,158 | | | | | | | | | | | | | | | | | | | (1) ExxonMobil share | | | | | | | | | | | |
| | | | | | As of June 30, 2018 | | | | | | | | | Equity | | | Other | | | | | | | | | | | | Company | | | Third Party | | | | | | | | | | | | Obligations (1) | | | Obligations | | | Total | | | | | | | | | (millions of dollars) | | | | Guarantees | | | | | | | | | | | | | | Debt-related | | | 408 | | | 58 | | | 466 | | | | | Other | | | 1,188 | | | 4,678 | | | 5,866 | | | | | | Total | | | 1,596 | | | 4,736 | | | 6,332 | | | | | | | | | | | | | | | | | | | (1) ExxonMobil share | | | | | | | | | | | |
Additionally, the Corporation and its affiliates have numerous long-term sales and purchase commitments in their various business activities, all of which are expected to be fulfilled with no adverse consequences material to the Corporation’s operations or financial condition. The operations and earnings of the Corporation and its affiliates throughout the world have been, and may in the future be, affected from time to time in varying degree by political developments and laws and regulations, such as forced divestiture of assets; restrictions on production, imports and exports; price controls; tax increases and retroactive tax claims; expropriation of property; cancellation of contract rights and environmental regulations. Both the likelihood of such occurrences and their overall effect upon the Corporation vary greatly from country to country and are not predictable. In accordance with a nationalization decree issued by Venezuela’s president in February 2007, by May 1, 2007, a subsidiary of the Venezuelan National Oil Company (PdVSA) assumed the operatorship of the Cerro Negro Heavy Oil Project. This Project had been operated and owned by ExxonMobil affiliates holding a 41.67 percent ownership interest in the Project. The decree also required conversion of the Cerro Negro Project into a “mixed enterprise” and an increase in PdVSA’s or one of its affiliate’s ownership interest in the Project, with the stipulation that if ExxonMobil refused to accept the terms for the formation of the mixed enterprise within a specified period of time, the government would “directly assume the activities” carried out by the joint venture. ExxonMobil refused to accede to the terms proffered by the government, and on June 27, 2007, the government expropriated ExxonMobil’s 41.67 percent interest in the Cerro Negro Project.
On September 6, 2007, affiliates of ExxonMobil filed a Request for Arbitration with the International Centre for Settlement of Investment Disputes (ICSID). The ICSID Tribunal issued a decision on June 10, 2010, finding that it had jurisdiction to proceed on the basis of the Netherlands-Venezuela Bilateral Investment Treaty. On October 9, 2014, the ICSID Tribunal issued its final award finding in favor of the ExxonMobil affiliates and awarding $1.6 billion as of the date of expropriation, June 27, 2007, and interest from that date at 3.25%3.25 percent compounded annually until the date of payment in full. The Tribunal also noted that one of the Cerro Negro Project agreements provides a mechanism to prevent double recovery between the ICSID award and all or part of an earlier award of $908 million to an ExxonMobil affiliate, Mobil Cerro Negro, Ltd., against PdVSA and a PdVSA affiliate, PdVSA CN, in an arbitration under the rules of the International Chamber of Commerce. On February 2, 2015, Venezuela filed a Request for Annulment of the ICSID award. On March 9, 2017, the ICSID Committee hearing the Request for Annulment issued a decision partially annulling the award of the Tribunal issued on October 9, 2014. The Committee affirmed the compensation due for the La Ceiba projectProject and for export curtailments at the Cerro Negro project,Project, but annulled the portion of the award relating to the Cerro Negro Project’s expropriation ($1.4 billion) based on its determination that the prior Tribunal failed to adequately explain why the cap on damages in the indemnity owed by PdVSA did not affect or limit the amount owed for the expropriation of the Cerro Negro project.Project. As a result, ExxonMobil retainsretained an award for $260 million (including accrued interest). ExxonMobil reachedIn accordance with an agreement withbetween ExxonMobil and Venezuela for full payment of the $260 million and Venezuela has begun performing on it.been fully paid. The agreement does not impact ExxonMobil’s ability to re-arbitrate the issue that was the basis for the annulment in a new ICSID arbitration proceeding. The United States District Court for the Southern District of New York entered judgment on the ICSID award on October 10, 2014. Motions filed by Venezuela to vacate that judgment on procedural grounds and to modify the judgment by reducing the rate of interest to be paid on the ICSID award from the entry of the court’s judgment, until the date of payment, were denied on February 13, 2015, and March 4, 2015, respectively. On March 9, 2015, Venezuela filed a notice of appeal of the court’s actions on the two motions. On July 11, 2017, the United States Court of Appeals for the Second Circuit rendered its opinion overturning the District Court’s decision and vacating the judgment on the grounds that a different procedure should have been used to reduce the award to judgment. The Corporation is evaluating next steps.
A stay of the District Court’s judgment has continued pending the completion of the Second Circuit appeal. The net impact of these matters on the Corporation’s consolidated financial results cannot be reasonably estimated. Regardless, the Corporation does not expect the resolution to have a material effect upon the Corporation’s operations or financial condition.
An affiliate of ExxonMobil is one of the Contractors under a Production Sharing Contract (PSC) with the Nigerian National Petroleum Corporation (NNPC) covering the Erha block located in the offshore waters of Nigeria. ExxonMobil's affiliate is the operator of the block and owns a 56.25 percent interest under the PSC. The Contractors are in dispute with NNPC regarding NNPC's lifting of crude oil in excess of its entitlement under the terms of the PSC. In accordance with the terms of the PSC, the Contractors initiated arbitration in Abuja, Nigeria, under the Nigerian Arbitration and Conciliation Act. On October 24, 2011, a three-member arbitral Tribunal issued an award upholding the Contractors' position in all material respects and awarding damages to the Contractors jointly in an amount of approximately $1.8 billion plus $234 million in accrued interest. The Contractors petitioned a Nigerian federal court for enforcement of the award, and NNPC petitioned the same court to have the award set aside. On May 22, 2012, the court set aside the award. The Contractors appealed that judgment to the Court of Appeal, Abuja Judicial Division. On July 22, 2016, the Court of Appeal upheld the decision of the lower court setting aside the award. On October 21, 2016, the Contractors appealed the decision to the Supreme Court of Nigeria. In June 2013, the Contractors filed a lawsuit against NNPC in the Nigerian federal high court in order to preserve their ability to seek enforcement of the PSC in the courts if necessary. Following dismissal by this court, the Contractors appealed to the Nigerian Court of Appeal in June 2016. In October 2014, the Contractors filed suit in the United States District Court for the Southern District of New York to enforce, if necessary, the arbitration award against NNPC assets residing within that jurisdiction. NNPC has moved to dismiss the lawsuit. The stay in the proceedings in the Southern District of New York has been lifted. At this time, the net impact of this matter on the Corporation's consolidated financial results cannot be reasonably estimated. However, regardless of the outcome of enforcement proceedings, the Corporation does not expect the proceedings to have a material effect upon the Corporation's operations or financial condition.
4. Other Comprehensive Income Information | | | | | | Cumulative | | | Post- | | | | | | | | | | Foreign | | | retirement | | | | | | | | | | Exchange | | | Benefits | | | | | ExxonMobil Share of Accumulated Other | | | Translation | | | Reserves | | | | | Comprehensive Income | | | Adjustment | | | Adjustment | | | Total | | | | | | | (millions of dollars) | | | | | | | | | | | | | | | Balance as of December 31, 2015 | | | (14,170) | | | (9,341) | | | (23,511) | | Current period change excluding amounts reclassified | | | | | | | | | | | | from accumulated other comprehensive income | | | 2,189 | | | 23 | | | 2,212 | | Amounts reclassified from accumulated other | | | | | | | | | | | | comprehensive income | | | - | | | 833 | | | 833 | | Total change in accumulated other comprehensive income | | | 2,189 | | | 856 | | | 3,045 | | Balance as of September 30, 2016 | | | (11,981) | | | (8,485) | | | (20,466) | | | | | | | | | | | | | | | Balance as of December 31, 2016 | | | (14,501) | | | (7,738) | | | (22,239) | | Current period change excluding amounts reclassified | | | | | | | | | | | | from accumulated other comprehensive income | | | 4,925 | | | (300) | | | 4,625 | | Amounts reclassified from accumulated other | | | | | | | | | | | | comprehensive income | | | 140 | | | 823 | | | 963 | | Total change in accumulated other comprehensive income | | | 5,065 | | | 523 | | | 5,588 | | Balance as of September 30, 2017 | | | (9,436) | | | (7,215) | | | (16,651) |
| | | | | | Cumulative | | | Post- | | | | | | | | | | Foreign | | | retirement | | | | | | | | | | Exchange | | | Benefits | | | | | ExxonMobil Share of Accumulated Other | | | Translation | | | Reserves | | | | | Comprehensive Income | | | Adjustment | | | Adjustment | | | Total | | | | | | | (millions of dollars) | | | | | | | | | | | | | | | Balance as of December 31, 2016 | | | (14,501) | | | (7,738) | | | (22,239) | | Current period change excluding amounts reclassified | | | | | | | | | | | | from accumulated other comprehensive income | | | 2,849 | | | (172) | | | 2,677 | | Amounts reclassified from accumulated other | | | | | | | | | | | | comprehensive income | | | 140 | | | 520 | | | 660 | | Total change in accumulated other comprehensive income | | | 2,989 | | | 348 | | | 3,337 | | Balance as of June 30, 2017 | | | (11,512) | | | (7,390) | | | (18,902) | | | | | | | | | | | | | | | Balance as of December 31, 2017 | | | (9,482) | | | (6,780) | | | (16,262) | | Current period change excluding amounts reclassified | | | | | | | | | | | | from accumulated other comprehensive income | | | (2,573) | | | (409) | | | (2,982) | | Amounts reclassified from accumulated other | | | | | | | | | | | | comprehensive income | | | 186 | | | 449 | | | 635 | | Total change in accumulated other comprehensive income | | | (2,387) | | | 40 | | | (2,347) | | Balance as of June 30, 2018 | | | (11,869) | | | (6,740) | | | (18,609) |
| | | | | | | | | | | | Three Months Ended | | | Nine Months Ended | | Amounts Reclassified Out of Accumulated Other | | | September 30, | | | September 30, | | Comprehensive Income - Before-tax Income/(Expense) | | | 2017 | | | 2016 | | | 2017 | | | 2016 | | | | | | (millions of dollars) | | | | | | | | | | | | | | | | | | Foreign exchange translation gain/(loss) included in net income | | | | | | | | | | | | | (Statement of Income line: Other income) | - | | | - | | | (234) | | | - | | Amortization and settlement of postretirement benefits reserves | | | | | | | | | | | | | adjustment included in net periodic benefit costs (1) | (450) | | | (415) | | | (1,215) | | | (1,248) |
| | | | | | | | | | | | Three Months Ended | | | Six Months Ended | | Amounts Reclassified Out of Accumulated Other | | | June 30, | | | June 30, | | Comprehensive Income - Before-tax Income/(Expense) | | | 2018 | | | 2017 | | | 2018 | | | 2017 | | | | | | (millions of dollars) | | | | | | | | | | | | | | | | | | Foreign exchange translation gain/(loss) included in net income | | | | | | | | | | | | | (Statement of Income line: Other income) | (18) | | | (234) | | | (186) | | | (234) | | Amortization and settlement of postretirement benefits reserves | | | | | | | | | | | | | adjustment included in net periodic benefit costs | | | | | | | | | | | | | (Statement of Income Line: Non-service pension and | | | | | | | | | | | | | postretirement benefit expense) | (290) | | | (406) | | | (610) | | | (765) |
(1) These accumulated other comprehensive income components are included in the computation of net periodic pension cost. (See Note 6 – Pension and Other Postretirement Benefits for additional details.)
| | | | | | Three Months Ended | | | Nine Months Ended | | Income Tax (Expense)/Credit For | | | September 30, | | | September 30, | | Components of Other Comprehensive Income | | | 2017 | | | 2016 | | | 2017 | | | 2016 | | | | | | (millions of dollars) | | | | | | | | | | | | | | | | | | Foreign exchange translation adjustment | | | 17 | | | (9) | | | (9) | | | (6) | | Postretirement benefits reserves adjustment | | | | | | | | | | | | | | | (excluding amortization) | | | 74 | | | (11) | | | 154 | | | 20 | | Amortization and settlement of postretirement benefits reserves | | | | | | | | | | | | | | adjustment included in net periodic benefit costs | | | (139) | | | (137) | | | (365) | | | (389) | | Total | | | (48) | | | (157) | | | (220) | | | (375) |
| | | | | | Three Months Ended | | | Six Months Ended | | Income Tax (Expense)/Credit For | | | June 30, | | | June 30, | | Components of Other Comprehensive Income | | | 2018 | | | 2017 | | | 2018 | | | 2017 | | | | | | (millions of dollars) | | | | | | | | | | | | | | | | | | Foreign exchange translation adjustment | | | 5 | | | (8) | | | 5 | | | (26) | | Postretirement benefits reserves adjustment | | | | | | | | | | | | | | | (excluding amortization) | | | (58) | | | 75 | | | 66 | | | 80 | | Amortization and settlement of postretirement benefits reserves | | | | | | | | | | | | | | adjustment included in net periodic benefit costs | | | (61) | | | (123) | | | (144) | | | (226) | | Total | | | (114) | | | (56) | | | (73) | | | (172) |
5. Earnings Per Share | | | | | Three Months Ended | | | Nine Months Ended | | | | | | September 30, | | | September 30, | | | | | | 2017 | | | 2016 | | | 2017 | | | 2016 | | | | | | | | | | | | | | | | | Earnings per common share | | | | | | | | | | | | | Net income attributable to ExxonMobil (millions of dollars) | | 3,970 | | | 2,650 | | | 11,330 | | | 6,160 | | | | | | | | | | | | | | | Weighted average number of common shares | | | | | | | | | | | | | | outstanding (millions of shares) | | 4,271 | | | 4,178 | | | 4,252 | | | 4,178 | | | | | | | | | | | | | | | | | Earnings per common share (dollars) (1) | | 0.93 | | | 0.63 | | | 2.66 | | | 1.47 | | | | | | | | | | | | | | | |
| | | | | Three Months Ended | | | Six Months Ended | | | | | | June 30, | | | June 30, | | | | | | 2018 | | | 2017 | | | 2018 | | | 2017 | | | | | | | | | | | | | | | | | Earnings per common share | | | | | | | | | | | | | Net income attributable to ExxonMobil (millions of dollars) | | 3,950 | | | 3,350 | | | 8,600 | | | 7,360 | | | | | | | | | | | | | | | Weighted average number of common shares | | | | | | | | | | | | | | outstanding (millions of shares) | | 4,271 | | | 4,271 | | | 4,270 | | | 4,244 | | | | | | | | | | | | | | | | | Earnings per common share (dollars) (1) | | 0.92 | | | 0.78 | | | 2.01 | | | 1.73 | | | | | | | | | | | | | | | |
(1) The calculation of earnings per common share and earnings per common share – assuming dilution are the same in each period shown.
6. Pension and Other Postretirement Benefits | | | | | | | Three Months Ended | | | Nine Months Ended | | | | | | | | September 30, | | | September 30, | | | | | | | | 2017 | | | 2016 | | | 2017 | | | 2016 | | | | | | | | | | | | | | | | | | | | | | | | (millions of dollars) | | Components of net benefit cost | | | | | | | | | | | | | | | Pension Benefits - U.S. | | | | | | | | | | | | | | | | Service cost | | | 200 | | | 200 | | | 583 | | | 606 | | | | Interest cost | | | 199 | | | 198 | | | 598 | | | 594 | | | | Expected return on plan assets | | | (194) | | | (182) | | | (582) | | | (545) | | | | Amortization of actuarial loss/(gain) and prior | | | | | | | | | | | | | | | | | service cost | | | 110 | | | 124 | | | 332 | | | 373 | | | | Net pension enhancement and | | | | | | | | | | | | | | | | | curtailment/settlement cost | | | 187 | | | 111 | | | 450 | | | 333 | | | | Net benefit cost | | | 502 | | | 451 | | | 1,381 | | | 1,361 | | | | | | | | | | | | | | | | | | | | Pension Benefits - Non-U.S. | | | | | | | | | | | | | | | | Service cost | | | 155 | | | 131 | | | 445 | | | 430 | | | | Interest cost | | | 198 | | | 206 | | | 574 | | | 636 | | | | Expected return on plan assets | | | (260) | | | (227) | | | (743) | | | (701) | | | | Amortization of actuarial loss/(gain) and prior | | | | | | | | | | | | | | | | | service cost | | | 135 | | | 151 | | | 388 | | | 452 | | | | Net pension enhancement and | | | | | | | | | | | | | | | | | curtailment/settlement cost | | | - | | | - | | | (5) | | | - | | | | Net benefit cost | | | 228 | | | 261 | | | 659 | | | 817 | | | | | | | | | | | | | | | | | | | | Other Postretirement Benefits | | | | | | | | | | | | | | | | Service cost | | | 36 | | | 38 | | | 92 | | | 115 | | | | Interest cost | | | 88 | | | 85 | | | 227 | | | 258 | | | | Expected return on plan assets | | | (6) | | | (6) | | | (17) | | | (18) | | | | Amortization of actuarial loss/(gain) and prior | | | | | | | | | | | | | | | | | service cost | | | 18 | | | 29 | | | 45 | | | 90 | | | | Net benefit cost | | | 136 | | | 146 | | | 347 | | | 445 |
| | | | | | | Three Months Ended | | | Six Months Ended | | | | | | | | June 30, | | | June 30, | | | | | | | | 2018 | | | 2017 | | | 2018 | | | 2017 | | | | | | | | | | | | | | | | | | | | | | | | (millions of dollars) | | Components of net benefit cost | | | | | | | | | | | | | | | Pension Benefits - U.S. | | | | | | | | | | | | | | | | Service cost | | | 204 | | | 186 | | | 413 | | | 383 | | | | Interest cost | | | 181 | | | 200 | | | 361 | | | 399 | | | | Expected return on plan assets | | | (181) | | | (194) | | | (363) | | | (388) | | | | Amortization of actuarial loss/(gain) and prior | | | | | | | | | | | | | | | | | service cost | | | 92 | | | 112 | | | 183 | | | 222 | | | | Net pension enhancement and | | | | | | | | | | | | | | | | | curtailment/settlement cost | | | 63 | | | 158 | | | 126 | | | 263 | | | | Net benefit cost | | | 359 | | | 462 | | | 720 | | | 879 | | | | | | | | | | | | | | | | | | | | Pension Benefits - Non-U.S. | | | | | | | | | | | | | | | | Service cost | | | 154 | | | 145 | | | 312 | | | 290 | | | | Interest cost | | | 186 | | | 189 | | | 386 | | | 376 | | | | Expected return on plan assets | | | (237) | | | (244) | | | (489) | | | (483) | | | | Amortization of actuarial loss/(gain) and prior | | | | | | | | | | | | | | | | | service cost | | | 113 | | | 126 | | | 231 | | | 253 | | | | Net pension enhancement and | | | | | | | | | | | | | | | | | curtailment/settlement cost | | | - | | | - | | | 33 | | | (5) | | | | Net benefit cost | | | 216 | | | 216 | | | 473 | | | 431 | | | | | | | | | | | | | | | | | | | | Other Postretirement Benefits | | | | | | | | | | | | | | | | Service cost | | | 35 | | | 30 | | | 71 | | | 56 | | | | Interest cost | | | 76 | | | 67 | | | 151 | | | 139 | | | | Expected return on plan assets | | | (6) | | | (5) | | | (12) | | | (11) | | | | Amortization of actuarial loss/(gain) and prior | | | | | | | | | | | | | | | | | service cost | | | 21 | | | 10 | | | 38 | | | 27 | | | | Net benefit cost | | | 126 | | | 102 | | | 248 | | | 211 |
7. Financial Instruments and Derivatives Financial Instruments. Effective January 1, 2018, ExxonMobil adopted the Financial Accounting Standards Board’s Update, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The estimated fair value of financial instruments is determined by reference to observable market dataat June 30, 2018, and other valuation techniques as appropriate. The only category of financial instruments where the difference betweenrelated hierarchy level for the fair value and recorded book valuemeasurement is notable is long-term debt. The estimated fair value of total long-term debt, excluding capitalized lease obligations, was $24,199 million at September 30, 2017, and $27,968 million at December 31, 2016, as compared to recorded book values of $23,523 million at September 30, 2017, and $27,707 million at December 31, 2016.follows: The fair value of long-term debt by hierarchy level at September 30, 2017, is: Level 1 $24,021 million; Level 2 $172 million; and Level 3 $6 million. Level 1 represents quoted prices in active markets. Level 2 includes debt whose fair value is based upon a publicly available index. Level 3 involves using internal data augmented by relevant market indicators if available.
| | | | | At June 30, 2018 | | | | | | (millions of dollars) | | | | | | | | | | | | | | | | | | | | Carrying | | Fair Value | | | | | | Value | | Level 1 | | Level 2 | | Level 3 | | Total | Assets | | | | | | | | | | | | Derivative assets (included in the Balance Sheet line: Other | | | | | | | | | | | | | current assets) | | 98 | | 98 | | - | | - | | 98 | | Advances to/receivables from equity companies (included in | | | | | | | | | | | | | the Balance Sheet line: Investments, advances and | | | | | | | | | | | | | long-term receivables) | | 8,828 | | - | | 1,774 | | 6,953 | | 8,727 | | Other long-term financial assets (included in the Balance | | | | | | | | | | | | | Sheet lines: Investments, advances and long-term receivables | | | | | | | | | | | | | and Other assets, including intangibles – net) | | 1,698 | | 759 | | - | | 990 | | 1,749 | | | | | | | | | | | | | | | Liabilities | | | | | | | | | | | | Derivative liabilities (included in the Balance Sheet line: | | | | | | | | | | | | | Accounts payable and accrued liabilities) | | 240 | | 240 | | - | | - | | 240 | | Long-term debt (excluding capitalized lease obligations) | | 19,282 | | 19,065 | | 117 | | 4 | | 19,186 | | Long-term obligations to equity companies | | 4,575 | | - | | - | | 4,646 | | 4,646 | | Other long-term financial liabilities (included in the | | | | | | | | | | | | | Balance Sheet line: Other long-term obligations) | | 1,088 | | - | | - | | 1,085 | | 1,085 |
8. Disclosures about SegmentsDerivative Instruments. The Corporation’s size, strong capital structure, geographic diversity and Related Informationthe complementary nature of the Upstream, Downstream and Chemical businesses reduce the Corporation’s enterprise-wide risk from changes in interest rates, currency rates and commodity prices. In addition, the Corporation uses commodity-based contracts, including derivatives, to manage commodity price risk and for trading purposes. Credit risk associated with the Corporation’s derivative position is mitigated by several factors, including the use of derivative clearing exchanges and the quality of and financial limits placed on derivative counterparties. The Corporation believes that there are no material market or credit risks to the Corporation’s financial position, results of operations or liquidity as a result of the derivatives. The Corporation maintains a system of controls that includes the authorization, reporting and monitoring of derivative activity. Derivative instruments are currently not subject to a master netting agreement, and the Corporation has not offset collateral against the carrying value. The carrying value of derivative instruments, none of which are designated as hedging instruments, is as follows:
| | | | | | | | | June 30, | | | Dec. 31, | | | | | | | | | | 2018 | | | 2017 | | | | | | | | | | (millions of dollars) | Exchange Traded Futures and Swaps | | | | | | | | | | | Assets | | | | | | 98 | | | 25 | | Liabilities | | | | | | (240) | | | (63) | | Collateral receivable/(payable) | | | | | | 189 | | | 94 | | | Total | | | | | | 47 | | | 56 |
At June 30, 2018, the net notional long/(short) position of derivative instruments was (22) million barrels for crude and was (7) million barrels for products. | | | | | | Three Months Ended | | | Nine Months Ended | | | | | | | September 30, | | | September 30, | | | | | | | 2017 | | | 2016 | | | 2017 | | | 2016 | | Earnings After Income Tax | | (millions of dollars) | | | Upstream | | | | | | | | | | | | | | | | United States | | | (238) | | | (477) | | | (439) | | | (1,823) | | | | Non-U.S. | | | 1,805 | | | 1,097 | | | 5,442 | | | 2,661 | | | Downstream | | | | | | | | | | | | | | | | United States | | | 391 | | | 225 | | | 1,030 | | | 824 | | | | Non-U.S. | | | 1,141 | | | 1,004 | | | 3,003 | | | 2,136 | | | Chemical | | | | | | | | | | | | | | | | United States | | | 403 | | | 434 | | | 1,413 | | | 1,524 | | | | Non-U.S. | | | 689 | | | 737 | | | 1,835 | | | 2,219 | | | All other | | | (221) | | | (370) | | | (954) | | | (1,381) | | | Corporate total | | | 3,970 | | | 2,650 | | | 11,330 | | | 6,160 | | | | | | | | | | | | | | | | | | Sales and Other Operating Revenue (1) | | | | | | | | | | | | | | | Upstream | | | | | | | | | | | | | | | | United States | | | 2,282 | | | 2,152 | | | 6,955 | | | 5,373 | | | | Non-U.S. | | | 3,736 | | | 3,177 | | | 10,865 | | | 9,371 | | | Downstream | | | | | | | | | | | | | | | | United States | | | 16,312 | | | 14,930 | | | 47,059 | | | 40,981 | | | | Non-U.S. | | | 34,837 | | | 29,969 | | | 99,978 | | | 85,135 | | | Chemical | | | | | | | | | | | | | | | | United States | | | 2,589 | | | 2,474 | | | 8,119 | | | 7,377 | | | | Non-U.S. | | | 4,646 | | | 4,049 | | | 13,313 | | | 11,970 | | | All other | | | 13 | | | 16 | | | 41 | | | 25 | | | Corporate total | | | 64,415 | | | 56,767 | | | 186,330 | | | 160,232 | | | | | | | | | | | | | | | | | | (1) | Includes sales-based taxes | | | | | | | | | | | | | | | | | | | | | | | | | | | | Intersegment Revenue | | | | | | | | | | | | | | | Upstream | | | | | | | | | | | | | | | | United States | | | 1,365 | | | 875 | | | 3,937 | | | 2,598 | | | | Non-U.S. | | | 5,734 | | | 4,401 | | | 16,356 | | | 12,843 | | | Downstream | | | | | | | | | | | | | | | | United States | | | 3,134 | | | 2,775 | | | 10,621 | | | 8,057 | | | | Non-U.S. | | | 5,866 | | | 4,903 | | | 16,048 | | | 13,514 | | | Chemical | | | | | | | | | | | | | | | | United States | | | 1,675 | | | 1,615 | | | 5,290 | | | 4,805 | | | | Non-U.S. | | | 1,482 | | | 1,043 | | | 3,776 | | | 3,073 | | | All other | | | 51 | | | 60 | | | 154 | | | 174 |
9. InterOil CorporationRealized and Permian Basin Properties Acquisitionsunrealized gains/(losses) on derivative instruments that were recognized in the Consolidated Statement of Income are included in the following lines on a before-tax basis: | | | | | | Three Months Ended | | | Six Months Ended | | | | | | | June 30, | | | June 30, | | | | | | | 2018 | | | 2017 | | | 2018 | | | 2017 | | | | | | | (millions of dollars) | | | | | | | | | | | | | | | | | Sales and other operating revenue | | | (11) | | | 8 | | | (3) | | | 27 | Crude oil and product purchases | | | (193) | | | 25 | | | (274) | | | 43 | | | Total | | | (204) | | | 33 | | | (277) | | | 70 |
InterOil Corporation
On February 22, 2017, the Corporation completed the acquisition of InterOil Corporation (IOC) for $2.7 billion. The IOC acquisition was unproved properties in Papua New Guinea. Consideration included 28 million shares of Exxon Mobil Corporation common stock having a value on the acquisition date of $2.2 billion, a Contingent Resource Payment (CRP) with a fair value of $0.3 billion and cash of $0.2 billion. The CRP provides IOC shareholders $7.07 per share in cash for each incremental independently certified Trillion Cubic Feet Equivalent (TCFE) of resources above 6.2 TCFE, up to 11.0 TCFE. IOC’s assets include a contingent receivable related to the same resource base for volumes in excess of 3.5 TCFE at amounts ranging from $0.24 - $0.40 per thousand cubic feet equivalent. The fair value of the contingent receivable was $1.1 billion at the acquisition date. Fair values of contingent amounts were based on assumptions about the outcome of the resource certification, future business plans and appropriate discount rates.
On September 6, 2017, the resource certification was finalized triggering both payment of the CRP to former IOC shareholders and receipt of the current portion of the contingent receivable. The earnings impact from settlement of the CRP and the related contingent receivable was not material.
Permian Basin Properties8. Disclosures about Segments and Related Information
On February 28, 2017, the Corporation completed the acquisition for $6.2 billion of a number of companies from the Bass family in Fort Worth, Texas, that indirectly own mostly unproved oil and gas properties in the Permian Basin and other assets. Consideration included 68 million shares of Exxon Mobil Corporation common stock having a value on the acquisition date of $5.5 billion, together with additional contingent cash payments tied to future drilling and completion activities (up to a maximum of $1.02 billion). The fair value of the contingent payment was $0.7 billion as of the acquisition date and is expected to be paid beginning in 2020 and ending no later than 2032 commensurate with the development of the resource. Fair value of the contingent payment was based on assumptions including drilling and completion activities, appropriate discount rates and tax rates.
Below is a summary of the net assets acquired for each acquisition.
| | | | | | Three Months Ended | | | Six Months Ended | | | | | | | June 30, | | | June 30, | | | | | | | 2018 | | | 2017 | | | 2018 | | | 2017 | | Earnings After Income Tax | | (millions of dollars) | | | Upstream | | | | | | | | | | | | | | | | United States | | | 439 | | | (183) | | | 868 | | | (201) | | | | Non-U.S. | | | 2,601 | | | 1,367 | | | 5,669 | | | 3,637 | | | Downstream | | | | | | | | | | | | | | | | United States | | | 695 | | | 347 | | | 1,014 | | | 639 | | | | Non-U.S. | | | 29 | | | 1,038 | | | 650 | | | 1,862 | | | Chemical | | | | | | | | | | | | | | | | United States | | | 453 | | | 481 | | | 956 | | | 1,010 | | | | Non-U.S. | | | 437 | | | 504 | | | 945 | | | 1,146 | | | Corporate and financing (1) | | | (704) | | | (204) | | | (1,502) | | | (733) | | | Corporate total | | | 3,950 | | | 3,350 | | | 8,600 | | | 7,360 | | | | | | | | | | | | | | | | | | Sales and Other Operating Revenue | | | | | | | | | | | | | | | Upstream | | | | | | | | | | | | | | | | United States | | | 2,548 | | | 2,349 | | | 4,909 | | | 4,673 | | | | Non-U.S. | | | 3,587 | | | 3,444 | | | 7,215 | | | 6,953 | | | Downstream | | | | | | | | | | | | | | | | United States | | | 19,658 | | | 14,528 | | | 36,653 | | | 29,110 | | | | Non-U.S. | | | 37,406 | | | 28,867 | | | 71,778 | | | 57,911 | | | Chemical | | | | | | | | | | | | | | | | United States | | | 3,019 | | | 2,746 | | | 6,008 | | | 5,529 | | | | Non-U.S. | | | 5,226 | | | 4,078 | | | 10,304 | | | 8,296 | | | Corporate and financing | | | 12 | | | 14 | | �� | 25 | | | 28 | | | Corporate total | | | 71,456 | | | 56,026 | | | 136,892 | | | 112,500 | | | | | | | | | | | | | | | | | Intersegment Revenue | | | | | | | | | | | | | | | Upstream | | | | | | | | | | | | | | | | United States | | | 2,071 | | | 1,282 | | | 4,133 | | | 2,572 | | | | Non-U.S. | | | 7,381 | | | 4,723 | | | 14,252 | | | 10,622 | | | Downstream | | | | | | | | | | | | | | | | United States | | | 5,749 | | | 3,841 | | | 10,693 | | | 7,487 | | | | Non-U.S. | | | 7,611 | | | 4,968 | | | 14,700 | | | 10,182 | | | Chemical | | | | | | | | | | | | | | | | United States | | | 2,350 | | | 1,845 | | | 4,544 | | | 3,615 | | | | Non-U.S. | | | 1,973 | | | 1,104 | | | 3,816 | | | 2,294 | | | Corporate and financing | | | 50 | | | 47 | | | 99 | | | 103 |
| | | | IOC | | Permian | | | | | (billions of dollars) | | | | | | | | | Current assets | | | 0.6 | | - | | Property, plant and equipment | | | 2.9 | | 6.3 | | Other | | | 0.6 | | - | | Total assets | | | 4.1 | | 6.3 | | | | | | | | | Current liabilities | | | 0.5 | | - | | Long-term liabilities | | | 0.9 | | 0.1 | | Total liabilities | | | 1.4 | | 0.1 | | | | | | | | | Net assets acquired | | | 2.7 | | 6.2 |
10.(1) Accounting for Suspended Exploratory Well Costs
ForSee Note 2 for additional details regarding the categorychange in segmentation of exploratory well costs at year-end 2016 that were suspended more than one year, a total of $240 million was expensed in the first nine months of 2017.Non-service pension and postretirement benefit expense.
| Geographic | | | | | | | | | | | | | | | Three Months Ended | | | Six Months Ended | | | | | | June 30, | | | June 30, | | Sales and Other Operating Revenue | | 2018 | | | 2017 | | | 2018 | | | 2017 | | | | | | (millions of dollars) | | | | | | | | | | | | | | | | | United States | | 25,225 | | | 19,623 | | | 47,570 | | | 39,312 | | Non-U.S. | | 46,231 | | | 36,403 | | | 89,322 | | | 73,188 | | | Total | | 71,456 | | | 56,026 | | | 136,892 | | | 112,500 | | | | | | | | | | | | | | | | | Significant Non-U.S. revenue sources include: (1) | | | | | | | | | | | | | | Canada | | 6,163 | | | 4,598 | | | 11,538 | | | 9,232 | | | United Kingdom | | 4,771 | | | 4,117 | | | 9,443 | | | 8,252 | | | Belgium | | 4,090 | | | 3,321 | | | 8,067 | | | 6,586 | | | Singapore | | 3,458 | | | 2,625 | | | 6,885 | | | 5,376 | | | France | | 3,572 | | | 2,738 | | | 6,817 | | | 5,306 | | | Italy | | 3,214 | | | 2,735 | | | 6,368 | | | 5,404 | | | Germany | | 2,435 | | | 2,069 | | | 4,666 | | | 4,073 |
(1) Revenue is determined by primary country of operations. Excludes certain sales and other operating revenues in Non‑U.S. operations where attribution to a specific country is not practicable.
9. Additional Information on Revenue Recognition Accounting Policy for Revenue Recognition The Corporation generally sells crude oil, natural gas and petroleum and chemical products under short-term agreements at prevailing market prices. In some cases (e.g., natural gas), products may be sold under long-term agreements, with periodic price adjustments to reflect market conditions. Revenue is recognized at the amount the Corporation expects to receive when the customer has taken control, which is typically when title transfers and the customer has assumed the risks and rewards of ownership. The prices of certain sales are based on price indexes that are sometimes not available until the next period. In such cases, estimated realizations are accrued when the sale is recognized, and are finalized when the price is available. Such adjustments to revenue from performance obligations satisfied in previous periods are not significant. Payment for revenue transactions is typically due within 30 days. Future volume delivery obligations that are unsatisfied at the end of the period are expected to be fulfilled through ordinary production or purchases. These performance obligations are based on market prices at the time of the transaction and are fully constrained due to market price volatility. “Sales and other operating revenue” and “Notes and accounts receivable” primarily arise from contracts with customers. Long-term receivables are primarily from non-customers. Contract assets are mainly from marketing assistance programs and are not significant. Contract liabilities are mainly customer prepayments and accruals of expected volume discounts and are not significant.
EXXON MOBIL CORPORATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations FUNCTIONAL EARNINGS SUMMARY | FUNCTIONAL EARNINGS SUMMARY | FUNCTIONAL EARNINGS SUMMARY | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Third Quarter | | | First Nine Months | | | | Second Quarter | | | First Six Months | Earnings (U.S. GAAP) | Earnings (U.S. GAAP) | | | 2017 | | | 2016 | | 2017 | | | 2016 | Earnings (U.S. GAAP) | | | 2018 | | | 2017 | | 2018 | | | 2017 | | | | (millions of dollars) | | | (millions of dollars) | Upstream | Upstream | | | | | | | | | | | | | Upstream | | | | | | | | | | | | | | United States | | | (238) | | | (477) | | (439) | | | (1,823) | United States | | | 439 | | | (183) | | 868 | | | (201) | | Non-U.S. | | | 1,805 | | | 1,097 | | 5,442 | | | 2,661 | Non-U.S. | | | 2,601 | | | 1,367 | | 5,669 | | | 3,637 | Downstream | Downstream | | | | | | | | | | | | Downstream | | | | | | | | | | | | | United States | | | 391 | | | 225 | | 1,030 | | | 824 | United States | | | 695 | | | 347 | | 1,014 | | | 639 | | Non-U.S. | | | 1,141 | | | 1,004 | | 3,003 | | | 2,136 | Non-U.S. | | | 29 | | | 1,038 | | 650 | | | 1,862 | Chemical | Chemical | | | | | | | | | | | | Chemical | | | | | | | | | | | | | United States | | | 403 | | | 434 | | 1,413 | | | 1,524 | United States | | | 453 | | | 481 | | 956 | | | 1,010 | | Non-U.S. | | | 689 | | | 737 | | 1,835 | | | 2,219 | Non-U.S. | | | 437 | | | 504 | | 945 | | | 1,146 | Corporate and financing | | | (221) | | | (370) | | (954) | | | (1,381) | | Corporate and financing (1) | | Corporate and financing (1) | | | (704) | | | (204) | | (1,502) | | | (733) | | Net income attributable to ExxonMobil (U.S. GAAP) | | | 3,970 | | | 2,650 | | 11,330 | | | 6,160 | Net income attributable to ExxonMobil (U.S. GAAP) | | | 3,950 | | | 3,350 | | 8,600 | | | 7,360 | | | | | | | | | | | | | | | | | | | | | | | | | | Earnings per common share (dollars) | Earnings per common share (dollars) | | | 0.93 | | | 0.63 | | 2.66 | | | 1.47 | Earnings per common share (dollars) | | | 0.92 | | | 0.78 | | 2.01 | | | 1.73 | | | | | | | | | | | | | | | | | | | | | | | | | | Earnings per common share - assuming dilution (dollars) | Earnings per common share - assuming dilution (dollars) | | | 0.93 | | | 0.63 | | 2.66 | | | 1.47 | Earnings per common share - assuming dilution (dollars) | | | 0.92 | | | 0.78 | | 2.01 | | | 1.73 |
(1) See Note 2 to the financial statements for additional details regarding the change in segmentation of Non-service pension and postretirement benefit expense. References in this discussion to corporateCorporate earnings mean net income attributable to ExxonMobil (U.S. GAAP) from the consolidated income statement. Unless otherwise indicated, references to earnings, Upstream, Downstream, Chemical and Corporate and financing segment earnings, and earnings per share are ExxonMobil's share after excluding amounts attributable to noncontrolling interests. REVIEW OF THIRDSECOND QUARTER 20172018 RESULTS ExxonMobil’s thirdsecond quarter 20172018 earnings ofwere $4 billion, or $0.93$0.92 per diluted share, compared with $2.7$3.4 billion a year earlier, as commodity prices improvedliquids realizations increased and performance in the Upstream and Downstream strengthened.refining margins improved. Earnings of $11.3$8.6 billion for the first ninesix months of 20172018 increased 8417 percent from $6.2$7.4 billion in 2016.2017. Earnings per share assuming dilution were $2.66.$2.01. Capital and exploration expenditures were $14.1$11.5 billion, down 3up 42 percent from 2016.2017. Oil‑equivalent production was 43.8 million barrels per day, down 17 percent from the prior year. Excluding entitlement effects and divestments, oil‑equivalent production was up 1down 4 percent from the prior year. The Corporation distributed $9.7$6.8 billion in dividends to shareholders.
| | | | | Third Quarter | | | First Nine Months | | | | | | 2017 | | | 2016 | | | 2017 | | | 2016 | | | | | (millions of dollars) | Upstream earnings | | | | | | | | | | | | | | United States | | | (238) | | | (477) | | | (439) | | | (1,823) | | Non-U.S. | | | 1,805 | | | 1,097 | | | 5,442 | | | 2,661 | | | Total | | | 1,567 | | | 620 | | | 5,003 | | | 838 |
| | | | | Second Quarter | | | First Six Months | | | | | | 2018 | | | 2017 | | | 2018 | | | 2017 | | | | | (millions of dollars) | Upstream earnings | | | | | | | | | | | | | | United States | | | 439 | | | (183) | | | 868 | | | (201) | | Non-U.S. | | | 2,601 | | | 1,367 | | | 5,669 | | | 3,637 | | | Total | | | 3,040 | | | 1,184 | | | 6,537 | | | 3,436 |
Upstream earnings were $1,567$3,040 million in the thirdsecond quarter of 2017,2018, up $947$1,856 million from the thirdsecond quarter of 2016. Higher liquids and gas realizations2017. ·Realizations increased earnings by $860 million. Higher$2,380 million mainly due to higher liquids realizations. ·Lower volume and mix effects increaseddecreased earnings by $20$270 million. ·All other items increaseddecreased earnings by $70$250 million as lower expensesmainly due to higher expenses. ·U.S. Upstream earnings were partly offset by unfavorable foreign exchange effects.$439 million, up $622 million from the prior year quarter. ·Non‑U.S. Upstream earnings were $2,601 million, up $1,234 million from the prior year quarter. ·On an oil-equivalentoil‑equivalent basis, production increased 2decreased 7 percent from the thirdsecond quarter of 2016. 2017. ·Liquids production totaled 2.32.2 million barrels per day, up 69,000down 57,000 barrels per day as lower downtimevolumes from decline, divestments, lower entitlements and higher project volumesscheduled maintenance, were partlypartially offset by field decline. growth in North America. ·Natural gas production was 9.68.6 billion cubic feet per day, down 161,307 million cubic feet per day from 2016 as fielddriven by decline and lower demand were partly offset by project ramp‑up, primarily in Australia, and work programs. U.S. Upstream results were a loss of $238 millionlargely in the third quarter of 2017, compared to a loss of $477 million in the third quarter of 2016. Non‑U.S. Upstream earnings were $1,805 million, up $708 million from the prior year.aligned with value focus, higher downtime, lower entitlements and divestments.
Upstream earnings were $5,003$6,537 million in the first ninesix months of 2017,2018, up $4,165$3,101 million from 2016. Higher realizationsthe first six months of 2017. ·Realizations increased earnings by $4.1 billion. Unfavorable$3,830 million mainly due to higher liquids realizations. ·Lower volume and mix effects decreased earnings by $300$480 million. ·All other items increaseddecreased earnings by $380$250 million, primarilymainly due to lowerhigher expenses, partly offset by unfavorable tax itemsthe gain on the Scarborough sale in Australia. ·U.S. Upstream earnings were $868 million, up $1,069 million from the currentfirst six months of prior year. ·Non-U.S. Upstream earnings were $5,669 million, up $2,032 million from the first six months of prior year. ·On an oil‑equivalentoil-equivalent basis, production decreased 7 percent from the first six months of 42017. ·Liquids production totaled 2.2 million barrels per day, was down 1 percent compared to 2016. Liquids production of 2.3 million barrels per day decreased 65,00087,000 barrels per day as fieldlower volumes from decline, divestments and lower entitlements, were partlypartially offset by increased project volumes and work programs. growth in North America. ·Natural gas production of 10.1was 9.3 billion cubic feet per day, increased 106down 1,090 million cubic feet per day driven by lower volumes from 2016 as project ramp‑up, primarily in Australia, was partly offset by field decline. U.S. Upstream results were a loss of $439 million in 2017, compared to a loss of $1,823 million in 2016. Non‑U.S. Upstream earnings were $5,442 million, up $2,781 million from the prior year.downtime, decline and entitlements.
| | | | Third Quarter | | | First Nine Months | | | | Second Quarter | | | First Six Months | Upstream additional information | Upstream additional information | | | | (thousands of barrels daily) | | Upstream additional information | | | | (thousands of barrels daily) | | Volumes reconciliation (Oil-equivalent production)(1) | Volumes reconciliation (Oil-equivalent production)(1) | | | | | | | | | Volumes reconciliation (Oil-equivalent production)(1) | | | | | | | | | 2016 | | | | 3,811 | | | | 4,030 | | | 2017 | | 2017 | | | | 3,922 | | | | 4,036 | | | Entitlements - Net Interest | | | | (1) | | | | - | | Entitlements - Net Interest | | | | (3) | | | | (3) | | | Entitlements - Price / Spend / Other | | | | (14) | | | | (68) | | Entitlements - Price / Spend / Other | | | | (52) | | | | (58) | | | Quotas | | | | - | | | | - | | Quotas | | | | - | | | | - | | | Divestments | | | | (5) | | | | (6) | | Divestments | | | | (68) | | | | (61) | | | Growth / Other | | | | 87 | | | | 27 | | Growth / Other | | | | (152) | | | | (146) | | 2017 | | | | 3,878 | | | | 3,983 | | | 2018 | | 2018 | | | | 3,647 | | | | 3,768 | | | | | | | | | | | | | | | | | | | | | | | (1) Gas converted to oil-equivalent at 6 million cubic feet = 1 thousand barrels. | (1) Gas converted to oil-equivalent at 6 million cubic feet = 1 thousand barrels. | | | (1) Gas converted to oil-equivalent at 6 million cubic feet = 1 thousand barrels. | | |
Listed below are descriptions of ExxonMobil’s volumes reconciliation factors which are provided to facilitate understanding of the terms. Entitlements - Net Interest are changes to ExxonMobil’s share of production volumes caused by non-operational changes to volume-determining factors. These factors consist of net interest changes specified in Production Sharing Contracts (PSCs) which typically occur when cumulative investment returns or production volumes achieve defined thresholds, changes in equity upon achieving pay-out in partner investment carry situations, equity redeterminations as specified in venture agreements, or as a result of the termination or expiry of a concession. Once a net interest change has occurred, it typically will not be reversed by subsequent events, such as lower crude oil prices. Entitlements - Price, Spend and Other are changes to ExxonMobil’s share of production volumes resulting from temporary changes to non-operational volume-determining factors. These factors include changes in oil and gas prices or spending levels from one period to another. According to the terms of contractual arrangements or government royalty regimes, price or spending variability can increase or decrease royalty burdens and/or volumes attributable to ExxonMobil. For example, at higher prices, fewer barrels are required for ExxonMobil to recover its costs. These effects generally vary from period to period with field spending patterns or market prices for oil and natural gas. Such factors can also include other temporary changes in net interest as dictated by specific provisions in production agreements. Quotas are changes in ExxonMobil’s allowable production arising from production constraints imposed by countries which are members of the Organization of the Petroleum Exporting Countries (OPEC). Volumes reported in this category would have been readily producible in the absence of the quota. Divestments are reductions in ExxonMobil’s production arising from commercial arrangements to fully or partially reduce equity in a field or asset in exchange for financial or other economic consideration. Growth and Other factors comprise all other operational and non-operational factors not covered by the above definitions that may affect volumes attributable to ExxonMobil. Such factors include, but are not limited to, production enhancements from project and work program activities, acquisitions including additions from asset exchanges, downtime, market demand, natural field decline, and any fiscal or commercial terms that do not affect entitlements.
| | | | | Third Quarter | | | First Nine Months | | | | | | 2017 | | | 2016 | | | 2017 | | | 2016 | | | | | (millions of dollars) | Downstream earnings | | | | | | | | | | | | | | United States | | | 391 | | | 225 | | | 1,030 | | | 824 | | Non-U.S. | | | 1,141 | | | 1,004 | | | 3,003 | | | 2,136 | | | Total | | | 1,532 | | | 1,229 | | | 4,033 | | | 2,960 |
| | | | | Second Quarter | | | First Six Months | | | | | | 2018 | | | 2017 | | | 2018 | | | 2017 | | | | | (millions of dollars) | Downstream earnings | | | | | | | | | | | | | | United States | | | 695 | | | 347 | | | 1,014 | | | 639 | | Non-U.S. | | | 29 | | | 1,038 | | | 650 | | | 1,862 | | | Total | | | 724 | | | 1,385 | | | 1,664 | | | 2,501 |
Downstream earnings were $1,532$724 million up $303in the second quarter of 2018, down $661 million from the thirdsecond quarter of 2016. Higher refining margins2017. ·Margins increased earnings by $1 billion. Volume$260 million, as higher U.S. margins were partially offset by lower Non‑U.S. margins. ·Lower volume and mix effects decreased earnings by $160 million. $210 million, primarily due to downtime and maintenance. ·All other items decreased earnings by $550$710 million, reflecting the absenceincluding unfavorable foreign exchange impacts of favorable asset management$240 million, lower divestment gains of $380$130 million, inand other unfavorable impacts of $340 million. ·U.S. Downstream earnings were $695 million, up $348 million from the prior year quarter. ·Non‑U.S. Downstream earnings were $29 million, down $1,009 million from the sale of Canadian retail assets and higher expenses related to Hurricane Harvey. prior year quarter. ·Petroleum product sales of 5.5 million barrels per day were 43,00056,000 barrels per day lower than last year’s thirdthe prior year quarter. Earnings from the U.S. Downstream were $391 million, up $166 million from the third quarter of 2016. Non‑U.S. Downstream earnings of $1,141 million were $137 million higher than prior year.
Downstream earnings of $4,033were $1,664 million in the first ninesix months of 2017 increased $1,0732018, down $837 million from 2016. Stronger refining and marketing marginsthe first six months of 2017. ·Margins increased earnings by $1.3 billion, while$230 million, as higher U.S. margins were partially offset by lower Non-U.S. margins. ·Lower volume and mix effects increaseddecreased earnings by $110 million. $270 million, primarily due to downtime and maintenance. ·All other items decreased earnings by $290$800 million, mainly reflectingincluding unfavorable foreign exchange impacts of $220 million, lower divestment gains of $220 million, and other unfavorable impacts of $360 million. ·U.S. Downstream earnings were $1,014 million, up $375 million from the absencefirst six months of prior year. ·Non-U.S. Downstream earnings were $650 million, down $1,212 million from the Canadian retail assets sale. first six months of prior year. ·Petroleum product sales of 5.5 million barrels per day were 26,00010,000 barrels per day higherlower than 2016.the first six months of prior year. U.S. Downstream earnings were $1,030 million, an increase of $206 million from 2016. Non‑U.S. Downstream earnings were $3,003 million, up $867 million from the prior year. 19
| | | | | Third Quarter | | | First Nine Months | | | | | | 2017 | | | 2016 | | | 2017 | | | 2016 | | | | | (millions of dollars) | Chemical earnings | | | | | | | | | | | | | | United States | | | 403 | | | 434 | | | 1,413 | | | 1,524 | | Non-U.S. | | | 689 | | | 737 | | | 1,835 | | | 2,219 | | | Total | | | 1,092 | | | 1,171 | | | 3,248 | | | 3,743 |
| | | | | Second Quarter | | | First Six Months | | | | | | 2018 | | | 2017 | | | 2018 | | | 2017 | | | | | (millions of dollars) | Chemical earnings | | | | | | | | | | | | | | United States | | | 453 | | | 481 | | | 956 | | | 1,010 | | Non-U.S. | | | 437 | | | 504 | | | 945 | | | 1,146 | | | Total | | | 890 | | | 985 | | | 1,901 | | | 2,156 |
Chemical earnings of $1,092$890 million in the second quarter of 2018, were $79$95 million lower than the thirdsecond quarter of 2016. 2017. ·Weaker margins decreased earnings by $200$210 million. ·Volume and mix effects increased earnings by $120 million. Third ·All other items decreased earnings by $10 million, as higher expenses were partially offset by favorable foreign exchange impacts. ·U.S. Chemical earnings were $453 million, down $28 million from the prior year quarter. ·Non‑U.S. Chemical earnings were $437 million, down $67 million from the prior year quarter. ·Second quarter prime product sales of 6.46.9 million metric tons were 313,000732,000 metric tons or 5 percent higher than the prior year despite Hurricane Harvey impacts. U.S. Chemical earnings of $403 million were $31 million lower than the third quarter of 2016. Non‑U.S. Chemical earnings of $689 million were $48 million lower than prior year.due to project growth and acquisitions.
Chemical earnings of $3,248were $1,901 million forin the first ninesix months of 2017 decreased $4952018, down $255 million from 2016. the first six months of 2017. ·Weaker margins decreased earnings by $320$460 million. ·Volume and mix effects increased earnings by $70$220 million. ·All other items decreased earnings by $250$20 million, primarily due toas higher expenses were partially offset by favorable foreign exchange and tax impacts. ·U.S. Chemical earnings were $956 million, down $54 million from increased turnaround activity and new business growth. the first six months of prior year. ·Non-U.S. Chemical earnings were $945 million, down $201 million from the first six months of prior year. ·Prime product sales of 18.613.5 million metric tons in the first six months were up 22,0001.3 million metric tons fromhigher than the first ninesix months of 2016.prior year due to project growth and acquisitions. U.S. Chemical earnings were $1,413 million, down $111 million from 2016. Non‑U.S. Chemical earnings of $1,835 million were $384 million lower than prior year.
| | | Third Quarter | | | First Nine Months | | | | 2017 | | | 2016 | | | 2017 | | | 2016 | | | (millions of dollars) | | | | | | | | | | | | | | Corporate and financing earnings | | | (221) | | | (370) | | | (954) | | | (1,381) |
| | | Second Quarter | | | First Six Months | | | | 2018 | | | 2017 | | | 2018 | | | 2017 | | | (millions of dollars) | | | | | | | | | | | | | | Corporate and financing earnings | | | (704) | | | (204) | | | (1,502) | | | (733) |
Corporate and financing expenses were $221$704 million for the thirdsecond quarter of 2018, up $500 million from the second quarter of 2017, down $149 million from the third quarter of 2016 mainly due to the absence of favorable impacts fromtax items, the resolutionimpact of long‑standinga lower U.S. tax items.rate, and higher pension-related costs. Corporate and financing expenses were $954$1,502 million in the first ninesix months of 2018, up $769 million from the first six months of 2017, compared to $1,381 million in 2016, with the decrease mainly due to the absence of favorable impacts fromtax items, the resolutionimpact of long‑standinga lower U.S. tax items.rate, and higher pension and financing related costs.
LIQUIDITY AND CAPITAL RESOURCES | LIQUIDITY AND CAPITAL RESOURCES | LIQUIDITY AND CAPITAL RESOURCES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Third Quarter | | | First Nine Months | | | | | Second Quarter | | | First Six Months | | | | | | 2017 | | | 2016 | | | 2017 | | | 2016 | | | | | 2018 | | | 2017 | | | 2018 | | | 2017 | | | | | (millions of dollars) | | | | (millions of dollars) | Net cash provided by/(used in) | Net cash provided by/(used in) | | | | | | | | | | | | | Net cash provided by/(used in) | | | | | | | | | | | | | | Operating activities | | | | | | | | 22,655 | | 14,686 | Operating activities | | | | | | | | 16,299 | | 15,120 | | Investing activities | | | | | | | | (9,194) | | (10,731) | Investing activities | | | | | | | | (6,955) | | (6,639) | | Financing activities | | | | | | | | (13,293) | | (2,547) | Financing activities | | | | | | | | (8,986) | | (8,305) | Effect of exchange rate changes | Effect of exchange rate changes | | | | | | | | 441 | | (20) | Effect of exchange rate changes | | | | | | | | (105) | | 209 | Increase/(decrease) in cash and cash equivalents | Increase/(decrease) in cash and cash equivalents | | | | | | | | 609 | | 1,388 | Increase/(decrease) in cash and cash equivalents | | | | | | | | 253 | | 385 | | | | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents (at end of period) | Cash and cash equivalents (at end of period) | | | | | | | | 4,266 | | 5,093 | Cash and cash equivalents (at end of period) | | | | | | | | 3,430 | | 4,042 | | | | | | | | | | | | | | | | | | | | | | | | | | Cash flow from operations and asset sales | Cash flow from operations and asset sales | | | | | | | | | | | Cash flow from operations and asset sales | | | | | | | | | | | | Net cash provided by operating activities (U.S. GAAP) | | | 7,535 | | 5,355 | | 22,655 | | 14,686 | Net cash provided by operating activities (U.S. GAAP) | | | 7,780 | | 6,947 | | 16,299 | | 15,120 | | Proceeds associated with sales of subsidiaries, property, | | | | | | | | | | Proceeds associated with sales of subsidiaries, property, | | | | | | | | | | | | plant & equipment, and sales and returns of investments | | | 854 | | 976 | | 1,695 | | 2,182 | | plant & equipment, and sales and returns of investments | | | 307 | | 154 | | 1,748 | | 841 | | Cash flow from operations and asset sales | | | 8,389 | | 6,331 | | 24,350 | | 16,868 | Cash flow from operations and asset sales | | | 8,087 | | 7,101 | | 18,047 | | 15,961 |
Because of the ongoing nature of our asset management and divestment program, we believe it is useful for investors to consider proceeds associated with asset sales together with cash provided by operating activities when evaluating cash available for investment in the business and financing activities, including shareholder distributions. Cash flow from operations and asset sales in the thirdsecond quarter of 20172018 was $8.4$8.1 billion, including asset sales of $0.9$0.3 billion, an increase of $2.1$1.0 billion from the comparable 20162017 period primarily due toreflecting higher earnings. Cash provided by operating activities totaled $22.7$16.3 billion for the first ninesix months of 2017, $8.02018, $1.2 billion higher than 2016.2017. The major source of funds was net income including noncontrolling interests of $11.4$8.8 billion, an increase of $5.1$1.4 billion from the prior year period. The adjustment for the non-cashnoncash provision of $14.1$9.1 billion for depreciation and depletion decreased bywas down $0.1 billion.billion from 2017. Changes in operational working capital decreasedreduced cash flows by $0.5$1.0 billion, compared to a decrease of $0.2 billion in 2017 versus a reduction of $2.4 billion in 2016.the prior year period. All other items net decreased cash flows by $2.3$0.5 billion in 2017 compared to2018 versus a reduction of $3.5$1.2 billion in 2016.2017. See the Condensed Consolidated Statement of Cash Flows for additional details. Investing activities for the first ninesix months of 20172018 used net cash of $9.2$7.0 billion, a decreasean increase of $1.5$0.3 billion compared to the prior year. Spending for additions to property, plant and equipment of $10.9$8.3 billion was $1.4$2.3 billion lowerhigher than 2016.2017. Proceeds from asset sales of $1.7 billion decreased $0.5increased $0.9 billion. Additional investmentsInvestments and advances were $2.0decreased $1.1 billion, an increaseprincipally reflecting the absence of $0.6 billion, and principally reflect the deposit into escrow of the maximum potential contingent consideration payable as a result of the acquisition of InterOil Corporation. Other investing activities including collectionCorporation in 2017. This was partly offset by cash outflows in 2018 related to the acquisition of advances increased cash flows by $2.0 billion, including the return of unused contingent consideration from the InterOil acquisition escrow, and were up $1.2 billion from the previous year.a Downstream business in Indonesia. Cash flow from operations and asset sales in the first ninesix months of 20172018 was $24.4$18.0 billion, including asset sales of $1.7 billion, an increase of $7.5$2.1 billion from the comparable 20162017 period primarily due toreflecting higher earnings.earnings and increased asset sale proceeds. Net cash used by financing activities was $13.3$9.0 billion in the first ninesix months of 2017,2018, an increase of $10.7$0.7 billion from 2016 mainly reflecting the absence of the Corporation’s issuance of $12.02017. The net reduction in short and long term debt was $1.4 billion compared to $1.2 billion in long-term debt in the prior year.2017. During the first ninesix months of 2017,2018, Exxon Mobil Corporation purchased 65 million shares of its common stock for the treasury at a gross cost of $0.5$0.4 billion. These purchases were made to offset shares or units settled in shares issued in conjunction with the company’s benefit plans and programs. Shares outstanding increaseddecreased from 4,1484,239 million at year-end to 4,2374,234 million at the end of the thirdsecond quarter of 2017, mainly due to shares issued for the acquisitions of InterOil Corporation and of companies that hold acreage in the Permian Basin.2018. Purchases may be made both in the open market and through negotiated transactions, and may be increased, decreased or discontinued at any time without prior notice. The Corporation distributed a total of $3.3$6.8 billion to shareholders in the third quarterfirst six months of 20172018 through dividends.
Total cash and cash equivalents of $4.3$3.4 billion at the end of the thirdsecond quarter of 20172018 compared to $5.1$3.2 billion at the end of the third quarter of 2016.year-end 2017. Total debt at the end of the thirdsecond quarter of 20172018 was $40.6$41.2 billion compared to $42.8$42.3 billion at year-end 2016.2017. The Corporation's debt to total capital ratio was 17.717.6 percent at the end of the thirdsecond quarter of 20172018 compared to 19.717.9 percent at year-end 2016.2017. The Corporation has access to significant capacity of long-term and short-term liquidity. Internally generated funds are generally expected to cover financial requirements, supplemented by short-term and long-term debt as required. The Corporation, as part of its ongoing asset management program, continues to evaluate its mix of assets for potential upgrade. Because of the ongoing nature of this program, dispositions will continue to be made from time to time which will result in either gains or losses. Additionally, the Corporation continues to evaluate opportunities to enhance its business portfolio through acquisitions of assets or companies, and enters into such transactions from time to time. Key criteria for evaluating acquisitions include potential for future growth and attractive current valuations. Acquisitions may be made with cash, shares of the Corporation’s common stock, or both. Litigation and other contingencies are discussed in Note 3 to the unaudited condensed consolidated financial statements. TAXES | TAXES | | | | | | | | | | | TAXES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Third Quarter | | | First Nine Months | | | | | | Second Quarter | | | First Six Months | | | | | | | 2017 | | | 2016 | | | 2017 | | | 2016 | | | | | | 2018 | | | 2017 | | | 2018 | | | 2017 | | | | | | (millions of dollars) | | | | | (millions of dollars) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Income taxes | Income taxes | | | 1,498 | | 337 | | 4,218 | | 1,001 | | Income taxes | | | 2,526 | | 892 | | 4,983 | | 2,720 | | | Effective income tax rate | | | 33 | % | | 20 | % | | 34 | % | | 26 | % | Effective income tax rate | | | 44 | % | | 31 | % | | 42 | % | | 35 | % | Sales-based taxes | | | 5,864 | | 5,437 | | 16,795 | | 15,687 | | | All other taxes and duties | | | 7,488 | | 7,054 | | 21,561 | | 21,076 | | | Total other taxes and duties (1) | | Total other taxes and duties (1) | | | 9,003 | | 7,960 | | 17,818 | | 15,589 | | | | Total | | | 14,850 | | 12,828 | | 42,574 | | 37,764 | | | Total | | | 11,529 | | 8,852 | | 22,801 | | 18,309 | |
Income, sales-based and all other(1) Includes “Other taxes and duties totaled $14.8duties” plus taxes that are included in “Production and manufacturing expenses” and “Selling, general and administrative expenses.”
Total taxes were $11.5 billion for the thirdsecond quarter of 2017,2018, an increase of $2.0$2.7 billion from 2016.2017. Income tax expense increased by $1.2$1.6 billion to $1.5$2.5 billion reflecting higher pre-tax income. The effective income tax rate was 3344 percent compared to 2031 percent in the prior year period reflectingperiod. This increase mainly reflects the effectabsence of favorable one-time tax items and a higher share of earnings in highhigher tax jurisdictions. Sales-based taxes and allTotal other taxes and duties increased by $0.8$1.0 billion to $13.3 billion as a result of higher sales realizations.$9.0 billion. Income, sales-based and all otherTotal taxes and duties totaled $42.6were $22.8 billion for the first ninesix months of 2017,2018, an increase of $4.8$4.5 billion from 2016.2017. Income tax expense increased by $3.2$2.3 billion to $4.2$5.0 billion reflecting higher pre-tax income. The effective income tax rate was 3442 percent compared to 2635 percent in the prior year period due to a higher share of earnings in highhigher tax jurisdictions. Sales-based taxes and allTotal other taxes and duties increased by $1.6$2.2 billion to $38.4 billion as a result$17.8 billion.
During the first six months of higher sales realizations.2018, there were no significant changes to the Corporation’s reasonable estimates of the income tax effects reflected in 2017 for the changes in tax law and tax rate from the enactment of the U.S. Tax Cuts and Jobs Act and following guidance outlined in the SEC Staff Accounting Bulletin No. 118. The impact of tax law changes on the Corporation’s financial statements could differ from its estimates due to further analysis of the new law, regulatory guidance, technical corrections legislation, guidance under U.S. GAAP, or other considerations. If significant changes occur, the Corporation will provide updated information in connection with future regulatory filings. In the United States, the Corporation has various ongoing U.S. federal income tax positions at issue with the Internal Revenue Service (IRS) for tax years beginning in 2006. The IRS has asserted penalties associated with several of those positions. The Corporation has not recognized the penalties as an expense because the Corporation does not expect the penalties to be sustained under applicable law. The Corporation has filed a refund suit for tax years 2006-2009 in a U.S. federal district court with respect to the positions at issue for those years. Unfavorable resolution of all positions at issue with the IRS would not have a materially adverse effect on the Corporation’s net income or liquidity.
CAPITAL AND EXPLORATION EXPENDITURES | CAPITAL AND EXPLORATION EXPENDITURES | | CAPITAL AND EXPLORATION EXPENDITURES | | | | | | | | | | | | | | | | | �� | | | | | | | | | | | | | | | | Third Quarter | | | First Nine Months | | | | | Second Quarter | | | First Six Months | | | | | | 2017 | | | 2016 | | | 2017 | | | 2016 | | | | | 2018 | | | 2017 | | | 2018 | | | 2017 | | | | | (millions of dollars) | | | | (millions of dollars) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Upstream (including exploration expenses) | Upstream (including exploration expenses) | | | 3,175 | | 3,072 | | | 9,080 | | | 10,970 | | Upstream (including exploration expenses) | | | 4,855 | | 2,786 | | | 8,614 | | | 5,905 | | Downstream | Downstream | | | 611 | | 589 | | | 1,742 | | | 1,759 | | Downstream | | | 1,230 | | 586 | | | 1,844 | | | 1,131 | | Chemical | Chemical | | | 2,183 | | 503 | | | 3,215 | | | 1,677 | | Chemical | | | 533 | | 535 | | | 998 | | | 1,032 | | Other | Other | | | 18 | | 26 | | | 44 | | | 69 | | Other | | | 9 | | 18 | | | 38 | | | 26 | | | Total | | | 5,987 | | 4,190 | | | 14,081 | | | 14,475 | | Total | | | 6,627 | | 3,925 | | | 11,494 | | | 8,094 | |
Capital and exploration expenditures in the thirdsecond quarter of 20172018 were $6$6.6 billion, includingup 69 percent from the Jurong aromatics plant acquisition.second quarter of 2017. Capital and exploration expenditures in the first ninesix months of 20172018 were $14.1$11.5 billion, down 3up 42 percent from the first ninesix months of 20162017 due primarily to lower upstream major project spending partially offset by the Jurong aromatics plant acquisition.increased U.S. drilling activity. The Corporation anticipates an investment level of $22$24 billion in 2017.2018. Actual spending could vary depending on the progress of individual projects and property acquisitions.
In 2013 and 2014, the Corporation and Rosneft established various entities to conduct exploration and research activities. In 2014, the European Union and United States imposed sanctions relating to the Russian energy sector. ExxonMobil continues to comply with all sanctions and regulatory licenses applicable to its affiliates’ investments in the Russian Federation. See Part II. Other Information, Item 1. Legal Proceedings in this report for information concerning a civil penalty assessment related to this matter which the Corporation is contesting. The Corporation withdrew from the aforementioned joint ventures with Rosneft, effective April 30, 2018.
The Groningen field is operated by Nederlandse Aardolie Maatschappij (NAM), a Netherlands company owned 50 percent by affiliates of the Corporation. NAM has a 60 percent interest in the Groningen field. On March 29, 2018, the Dutch Cabinet notified Parliament of its intention to further reduce previously legislated Groningen gas extraction in response to seismic events over the last several years. Affiliates of the Corporation and their partners have actively been in discussions with the government on the associated implementation measures which resulted in a signed Heads of Agreement (HoA – agreement on principles) on June 25, 2018. The HoA stipulates that additional agreements must be negotiated which will define further details, and the parties will endeavor to execute them by the end of September. In anticipation of a lower production outlook, the Corporation has reduced its estimate of proved reserves by 0.8 billion oil-equivalent barrels. In addition, the seismic activity has yielded various claims. Where losses are probable and reasonably estimable, liabilities have been recorded. The Corporation does not expect these matters to have a material effect on the Corporation’s operations or financial condition. While the future production profile and other considerations related to the Groningen field could vary depending on a wide variety of factors, reduced gas extraction in the future is expected to result in lower reported production, earnings and cash flows than in recent years for the Corporation’s share of NAM.
RECENTLY ISSUED ACCOUNTING STANDARDS In May 2014,Effective January 1, 2019, ExxonMobil will adopt the Financial Accounting Standards Board issued a newBoard’s standard, Revenue from Contracts with CustomersLeases (Topic 842). The standard establishes a single revenue recognition model for all contracts with customers, eliminates industry specific requirements, and expands disclosure requirements. The standard is required to be adopted beginning January 1, 2018. “Sales and Other Operating Revenue” on the Consolidated Statement of Income includes sales, excise and value-added taxes on sales transactions. When the Corporation adopts the standard, revenue will exclude sales-based taxes collected on behalf of third parties. This change in reporting will not impact earnings. The Corporation expects to adopt the standard using the Modified Retrospective method, under which prior years’ results are not restated, but supplemental information on the impact of the new standard is provided for 2018 results. The Corporation continues to evaluate other areas of the standard, which are not expected to have a material effect on the Corporation’s financial statements.
In January 2016, the Financial Accounting Standards Board issued an updated standard, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The standard requires investments in equity securities other than consolidated subsidiaries and equity method investments to be measured at fair value with changes in the fair value recognized through net income. Companies can elect a modified approach for equity securities that do not have a readily determinable fair value. ExxonMobil is evaluating the standard and its effect on the Corporation’s financial statements and plans to adopt it in 2018.
In March 2017, the Financial Accounting Standards Board issued an Accounting Standards Update, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The update requires the service cost component of net benefit costs to be reported in the same line of the income statement, as other compensation costs and the other components of net benefit costs (non-service costs) to be presented separately from the service cost component. Additionally, only the service cost component of net benefit costs will be eligible for capitalization. The update is required to be adopted beginning January 1, 2018. The Corporation expects to add a new line “Non-service pension and postretirement benefit expense” to its Consolidated Statement of Income. This line would reflect the non-service costs that were previously included in “Production and manufacturing expenses” and “Selling, general and administrative expenses”. The update is not expected to have a material impact on the Corporation’s financial statements. Beginning January 1, 2018, the Corporation expects to include all of the non-service costs in its Corporate and financing segment.
In February 2016, the Financial Accounting Standards Board issued a new standard, Leases.amended. The standard requires all leases with an initial term greater than one year to be recorded on the balance sheet as ana right of use asset and a lease liability. ExxonMobilThe Corporation acquired lease accounting software to facilitate implementation, and is evaluatingcurrently installing, configuring and testing the standardsoftware. Based on leases outstanding at the end of 2017, the Corporation estimates the operating lease right of use asset and itslease liability would have been in the range of $4 billion to $5 billion at that time. The effect on the Corporation’s financial statementsbalance sheet as a result of implementing the standard on January 1, 2019, could differ considerably depending on operating leases commenced in 2018 as well as interest rates and plans to adopt it in 2019. other factors such as the expiry or renewal of leases during the year.
CRITICAL ACCOUNTING ESTIMATES
As part of its annual planning and budgeting cycle which is completed in the fourth quarter each year, the Corporation develops crude and natural gas price outlooks as well as estimates of future costs and other factors necessary to complete its plan. Management’s price outlook and other factors, including factors such as operating costs, resource productivity, and capital efficiency, are re-assessed when facts and circumstances warrant but no less often than annually. To the extent any impairment testing may be required, management uses assumptions that are reasonable in relation to these factors in developing estimates of future cash flows. An asset group would be impaired if its estimated undiscounted cash flows were less than the asset’s carrying value, and impairment would be measured by the amount by which the carrying value exceeds fair value. Development of future undiscounted cash flow estimates requires significant management judgment, particularly in cases where an asset’s life is expected to extend decades into the future, and an important component of the estimate is management’s outlook on prices and other factors as noted above.
The Corporation has identified emerging trends such as increasing estimates of available natural gas supplies and ongoing reductions in costs of supply for natural gas. In the fourth quarter of 2017, the Corporation will incorporate the impacts of these trends and the resulting lower price outlook in its annual planning and budgeting cycle. Once complete, the Corporation expects to perform an impairment assessment for its North American natural gas asset groups utilizing the information developed as part of the planning and budgeting process. It is not practicable at this time to estimate the impact these trends would have on the undiscounted cash flows for individual asset groups or any resulting impairment charges. However these trends are likely to place the Corporation’s North American natural gas asset groups at risk for potential impairment. The Corporation will complete its analysis of relevant factors as discussed above and perform any necessary impairment testing in connection with the preparation of the Corporation’s year-end financial statements for inclusion in its 2017 Form 10-K.
FORWARD-LOOKING STATEMENTS Statements relating to future plans and objectives, projections, events or conditions are forward-looking statements. Future results, including project plans, costs, timing, and capacities; efficiency gains; capital and exploration expenditures; production rates;business growth; integration benefits; resource recoveries; the impact of new technologies; potential impairment charges; and share purchase levels, could differ materially due to factors including:a number of factors. These include changes in supply and demand for oil, gas or petrochemical pricespetrochemicals or other market or economic conditions affecting the oil, gas orand petrochemical industries, including the scope and durationindustries; reservoir performance; timely completion of economic recessions; the outcome of exploration and development efforts; changes in law or government regulation, including tax and environmental requirements;new projects; the impact of fiscal and commercial terms and the outcome of commercial negotiations; changes in law, taxes, or government regulation and timely granting of governmental permits; war and other political or security disturbances; the actions of competitors; unforeseen technical or operating difficulties; unexpected technological developments; general economic conditions including the occurrence and duration of economic recessions; the results of research programs; changes in technical or operating conditions; actions of competitors; and other factors discussed under the heading “FactorsFactors Affecting Future Results” inResults on the “Investors” sectionInvestors page of our website at www.exxonmobil.com and in Item 1A of ExxonMobil's 20162017 Form 10-K. We assume no duty to update these statements as of any future date. The term “project” as used in this report can refer to a variety of different activities and does not necessarily have the same meaning as in any government payment transparency reports.
Item 3. Quantitative and Qualitative Disclosures About Market Risk Information about market risks for the ninesix months ended SeptemberJune 30, 2017,2018, does not differ materially from that discussed under Item 7A of the registrant's Annual Report on Form 10-K for 2016.2017.
Item 4. Controls and Procedures As indicated in the certifications in Exhibit 31 of this report, the Corporation’s Chief Executive Officer, Principal Financial Officer and Principal Accounting Officer have evaluated the Corporation’s disclosure controls and procedures as of SeptemberJune 30, 2017.2018. Based on that evaluation, these officers have concluded that the Corporation’s disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Corporation in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to them in a manner that allows for timely decisions regarding required disclosures and are effective in ensuring that such information is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. There were no changes during the Corporation’s last fiscal quarter that materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.
PART II. OTHER INFORMATION Item 1. Legal Proceedings As last reported in the Corporation’s Form 10-Q10-K for the second quarter of 2016, in a matter related to the discharge of crude oil from the Pegasus Pipeline in Mayflower, Faulkner County, Arkansas, the Pipeline and Hazardous Materials Safety Administration (PHMSA)2017, on October 1, 2015, issued a Final Order arising from a November 2013 Notice of Probable Violation alleging that ExxonMobil Pipeline Company (EMPCo) violated multiple federal Pipeline Safety Regulations. The Final Order imposed a penalty of $2,630,400, which EMPCo paid on April 21, 2016. On June 27, 2016, EMPCo filed an appeal with the U.S. Court of Appeals for the Fifth Circuit, contesting PHMSA’s regulatory findings and compliance order directives and seeking a refund of the penalty paid. On August 14,20, 2017, the Fifth Circuit dismissed five of the six violations EMPCo challenged from PHMSA’s final administrative order, and vacated $1,634,100 in associated penalties, which PHMSA must now refund to EMPCo. The Fifth Circuit also remanded the remaining violation back to PHMSA for re-calculation of the civil penalty previously imposed. As reported in the Corporation’s Form 10-Q for the second quarter of 2017, the United States District Court for the Southern District of Texas entered a revised judgment on April 26, 2017, in a citizen suit captioned Environment Texas Citizen Lobby, Inc. et al. v. Exxon Mobil Corporation, awarding approximately $20 million in civil penalties, payable to the United States Treasury. In the suit filed in December 2010, Environment Texas Citizen Lobby, Inc. and the Sierra Club, Lone Star Chapter, filed a citizen suit seeking declaratory and injunctive relief, penalties, attorney fees and litigation costs associated with alleged violations of Title V of the Clean Air Act. Plaintiffs alleged that ExxonMobil repeatedly violated, and will continue to violate, its air operating permits, the Texas State Implementation Plan and the Clean Air Act by emitting air pollutants into the atmosphere from the Baytown complex in excess of applicable emission limitations or otherwise without authorization at the Baytown, Texas, refinery, chemical plant and olefins plant. ExxonMobil filed its appeal of the judgment in the U.S. Court of Appeals for the Fifth Circuit on August 25, 2017.
As reported in the Corporation’s Form 10-Q for the first quarter of 2016, the company has been in discussions with the United States Department of Justice (DOJ) and the United States Environmental Protection Agency (EPA) notified XTO Energy Inc. (XTO) concerning alleged violations of the Clean Air Act and the Fort Berthold Indian Reservation Federal Implementation Plan regarding the alleged failure of vapor control systems to properly route tank vapors to control devices at well pads and tank farms on the Fort Berthold Indian Reservation. In January 2018, XTO, the DOJ and the EPA agreed to the terms of a Consent Decree concerning those alleged violations. XTO has agreed to pay a penalty of $320,000, install automatic tank gauging on 30 well sites, and monitor and report emissions for three years. The executed Consent Decree was approved by the United States Federal District Court for the District of North Dakota – Western Division, in Bismarck, North Dakota, on July 10, 2018.
As last reported in the Corporation’s Form 10-Q for the third quarter of 2017, the company agreed with the DOJ and the EPA to resolve claims of non-compliance with the Clean Air Act related to flaring at its eight U.S. chemical facilities with flares. The EPA has alleged the sites failed to properly operate and monitor flares. ExxonMobil Chemical Company hasThe company reached a settlement agreement with the DOJ, the EPA and the Louisiana Department of Environmental Quality to resolve these claims. The complaint and the consent decree are expected to bewere filed in the U.S. District Court for the Southern District of Texas.Texas on October 31, 2017, and became effective June 6, 2018. The company has agreed to paypaid a total penalty of $2,500,000, and agreed to pay $2,572,000 to fund supplemental environmental projects. The company has also agreed to make investments in new equipment at the facilities. On May 24, 2018, the State of Ohio Department of Natural Resources, Division of Oil & Gas Resources Management (ODNR) notified XTO of its interest in settling possible enforcement of alleged violations by XTO of the Ohio Revised Code, Ohio Administrative Code, and implementing regulations arising out of the Schnegg well incident in Belmont County, Ohio, in early 2018. The ODNR alleges the following violations by XTO: (1) causing brine to be discharged and contact the ground and/or surface water; (2) failure to place cement in the casing string per Ohio codes; (3) allowing a well to flow gas uncontrolled; (4) failure to construct, drill and operate a well in the manner as permitted and planned; and (5) failure to notify ODNR upon discovery the well had sustained annular pressure above the prescribed pressure. The ODNR is seeking a civil penalty in excess of $100,000 as well as injunctive relief, and XTO is working with the state to resolve the matter. Also relating to the Schnegg well incident, on May 25, 2018, the State of Ohio Environmental Protection Agency (OEPA) notified XTO of its interest in settling possible enforcement of alleged violations by XTO of the Ohio Revised Code and implementing regulations, including but not limited to: (1) failure to maintain and operate its facility in a manner using good pollution control practices; (2) failure to provide a malfunction report; (3) failure to complete and properly report quarterly inspections; and (4) failure to submit site-specific work practice plans within applicable time limits. The OEPA is seeking a civil penalty in excess of $100,000 as well as injunctive relief, and XTO is working with the state to resolve the matter. As last reported in the Corporation’s Form 10-Q for the secondfirst quarter of 2017,2018, on July 20, 2017, the United States Department of Treasury, Office of Foreign Assets Control (OFAC) assessed a civil penalty against Exxon Mobil Corporation, ExxonMobil Development Company and ExxonMobil Oil Corporation for violating the Ukraine-Related Sanctions Regulations, 31 C.F.R. part 589. The assessed civil penalty is in the amount of $2,000,000. ExxonMobil and its affiliates have been and continue to be in compliance with all sanctions and disagree that any violation has occurred. ExxonMobil and its affiliates have filed a complaint on July 20, 2017, in the United States Federal District Court, Northern District of Texas seeking judicial review of, and to enjoin, the civil penalty under the Administrative Procedures Act and the United States Constitution, including on the basis that it represents an arbitrary and capricious action by OFAC and a violation of the Company’s due process rights. Refer to the relevant portions of Note 3 of this Quarterly Report on Form 10-Q for further information on legal proceedings.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | | | | | | | | | | | | Issuer Purchase of Equity Securities for Quarter Ended September 30, 2017
| | | | | | | | | | | |
|
|
|
|
|
|
|
| Total Number of
|
| Maximum Number
|
|
|
|
|
|
|
|
| Shares Purchased
|
| of Shares that May
|
|
|
|
| Total Number
|
| Average
|
| as Part of Publicly
|
| Yet Be Purchased
|
|
|
|
| of Shares
|
| Price Paid
|
| Announced Plans
|
| Under the Plans or
| Period
|
|
| Purchased
|
| per Share
|
| or Programs
|
| Programs
| | | | | | | | | | | | July 2017
| | -
| | | | -
| | | August 2017
| | -
| | | | -
| | | September 2017
| | -
| | | | -
| | | | Total
| | | -
| | | | -
| | (See Note 1)
|
During the third quarter, the Corporation did not purchase any shares of its common stock for the treasury.
Note 1 - On August 1, 2000, the Corporation announced its intention to resume purchases of shares of its common stock for the treasury both to offset shares issued in conjunction with company benefit plans and programs and to gradually reduce the number of shares outstanding. The announcement did not specify an amount or expiration date. The Corporation has continued to purchase shares since this announcement and to report purchased volumes in its quarterly earnings releases. In its earnings release dated February 2, 2016, the Corporation stated it will continue to acquire shares to offset dilution in conjunction with benefit plans and programs, but had suspended making purchases to reduce shares outstanding effective beginning the first quarter of 2016.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |