UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 20202021
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________to__________
Commission File Number 1-2256
Exxon Mobil Corporation
(Exact name of registrant as specified in its charter)
| | | | | | | | |
New Jersey | | 13-5409005 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification Number) |
5959 Las Colinas Boulevard, Irving, Texas 75039-2298
(Address of principal executive offices) (Zip Code)
(972) 940-6000
(Registrant's telephone number, including area code)
_______________________
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | |
Title of Each Class | | Trading Symbol | | Name of Each Exchange on Which Registered |
Common Stock, without par value | | XOM | | New York Stock Exchange |
0.142% Notes due 2024 | | XOM24B | | New York Stock Exchange |
0.524% Notes due 2028 | | XOM28 | | New York Stock Exchange |
0.835% Notes due 2032 | | XOM32 | | New York Stock Exchange |
1.408% Notes due 2039 | | XOM39A | | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | |
Large accelerated filer | ☑ | Accelerated filer | ☐ |
| | | |
Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
|
| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
| | | | | | | | |
Class | | Outstanding as of SeptemberJune 30, 20202021 |
Common stock, without par value | | 4,228,234,1144,233,562,917 |
EXXON MOBIL CORPORATION
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBERJUNE 30, 20202021
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION |
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Item 1. Financial Statements | |
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Condensed Consolidated Statement of Income Three and ninesix months ended SeptemberJune 30, 20202021 and 20192020 | 3 | |
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Condensed Consolidated Statement of Comprehensive Income Three and ninesix months ended SeptemberJune 30, 20202021 and 20192020 | 4 | |
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Condensed Consolidated Balance Sheet As of SeptemberJune 30, 20202021 and December 31, 20192020 | 5 | |
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Condensed Consolidated Statement of Cash Flows NineSix months ended SeptemberJune 30, 20202021 and 20192020 | 6 | |
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Condensed Consolidated Statement of Changes in Equity Three months ended SeptemberJune 30, 20202021 and 20192020 | 7 | |
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Condensed Consolidated Statement of Changes in Equity NineSix months ended SeptemberJune 30, 20202021 and 20192020 | 8 | |
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Notes to Condensed Consolidated Financial Statements | 9 | |
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | 2019 | |
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Item 3. Quantitative and Qualitative Disclosures About Market Risk | 3028 | |
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Item 4. Controls and Procedures | 3028 | |
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PART II. OTHER INFORMATION |
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Item 1. Legal Proceedings | 3129 | |
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Item 1A. Risk Factors | 31 | |
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 3229 | |
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Item 6. Exhibits | 3229 | |
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Index to Exhibits | 3330 | |
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Signature | 3431 | |
| |
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
| EXXON MOBIL CORPORATION | EXXON MOBIL CORPORATION | EXXON MOBIL CORPORATION |
CONDENSED CONSOLIDATED STATEMENT OF INCOME | CONDENSED CONSOLIDATED STATEMENT OF INCOME | CONDENSED CONSOLIDATED STATEMENT OF INCOME |
(millions of dollars) | (millions of dollars) | (millions of dollars) |
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | | Three Months Ended June 30, | | Six Months Ended June 30, |
| | | 2020 | | 2019 | | 2020 | | 2019 | | | 2021 | | 2020 | | 2021 | | 2020 |
Revenues and other income | Revenues and other income | | | | | | | Revenues and other income | | | | | | |
Sales and other operating revenue | Sales and other operating revenue | | 45,425 | | | 63,422 | | | 132,836 | | | 192,559 | | Sales and other operating revenue | | 65,943 | | | 32,277 | | | 123,495 | | | 87,411 | |
Income from equity affiliates | Income from equity affiliates | | 517 | | | 1,196 | | | 1,395 | | | 4,264 | | Income from equity affiliates | | 1,436 | | | 103 | | | 2,909 | | | 878 | |
Other income | Other income | | 257 | | | 431 | | | 731 | | | 942 | | Other income | | 363 | | | 225 | | | 485 | | | 474 | |
Total revenues and other income | Total revenues and other income | | 46,199 | | | 65,049 | | | 134,962 | | | 197,765 | | Total revenues and other income | | 67,742 | | | 32,605 | | | 126,889 | | | 88,763 | |
Costs and other deductions | Costs and other deductions | | | | | Costs and other deductions | | | | |
Crude oil and product purchases | Crude oil and product purchases | | 23,950 | | | 35,290 | | | 70,102 | | | 109,033 | | Crude oil and product purchases | | 37,329 | | | 14,069 | | | 69,930 | | | 46,152 | |
Production and manufacturing expenses | Production and manufacturing expenses | | 7,103 | | | 8,848 | | | 22,295 | | | 27,340 | | Production and manufacturing expenses | | 8,471 | | | 6,895 | | | 16,533 | | | 15,192 | |
Selling, general and administrative expenses | Selling, general and administrative expenses | | 2,444 | | | 2,753 | | | 7,432 | | | 8,350 | | Selling, general and administrative expenses | | 2,345 | | | 2,409 | | | 4,773 | | | 4,988 | |
Depreciation and depletion | Depreciation and depletion | | 4,983 | | | 4,873 | | | 15,718 | | | 14,075 | | Depreciation and depletion | | 4,952 | | | 4,916 | | | 9,956 | | | 10,735 | |
Exploration expenses, including dry holes | Exploration expenses, including dry holes | | 188 | | | 299 | | | 690 | | | 912 | | Exploration expenses, including dry holes | | 176 | | | 214 | | | 340 | | | 502 | |
Non-service pension and postretirement benefit expense | Non-service pension and postretirement benefit expense | | 272 | | | 357 | | | 812 | | | 1,028 | | Non-service pension and postretirement benefit expense | | 162 | | | 271 | | | 540 | | | 540 | |
Interest expense | Interest expense | | 279 | | | 232 | | | 845 | | | 629 | | Interest expense | | 254 | | | 317 | | | 512 | | | 566 | |
Other taxes and duties | Other taxes and duties | | 7,352 | | | 7,676 | | | 19,338 | | | 22,756 | | Other taxes and duties | | 7,746 | | | 5,154 | | | 14,406 | | | 11,986 | |
Total costs and other deductions | Total costs and other deductions | | 46,571 | | | 60,328 | | | 137,232 | | | 184,123 | | Total costs and other deductions | | 61,435 | | | 34,245 | | | 116,990 | | | 90,661 | |
Income (Loss) before income taxes | Income (Loss) before income taxes | | (372) | | | 4,721 | | | (2,270) | | | 13,642 | | Income (Loss) before income taxes | | 6,307 | | | (1,640) | | | 9,899 | | | (1,898) | |
Income taxes | Income taxes | | 337 | | | 1,474 | | | 378 | | | 4,598 | | Income taxes | | 1,526 | | | (471) | | | 2,322 | | | 41 | |
Net income (loss) including noncontrolling interests | Net income (loss) including noncontrolling interests | | (709) | | | 3,247 | | | (2,648) | | | 9,044 | | Net income (loss) including noncontrolling interests | | 4,781 | | | (1,169) | | | 7,577 | | | (1,939) | |
Net income (loss) attributable to noncontrolling interests | Net income (loss) attributable to noncontrolling interests | | (29) | | | 77 | | | (278) | | | 394 | | Net income (loss) attributable to noncontrolling interests | | 91 | | | (89) | | | 157 | | | (249) | |
Net income (loss) attributable to ExxonMobil | Net income (loss) attributable to ExxonMobil | | (680) | | | 3,170 | | | (2,370) | | | 8,650 | | Net income (loss) attributable to ExxonMobil | | 4,690 | | | (1,080) | | | 7,420 | | | (1,690) | |
| Earnings (Loss) per common share (dollars) | Earnings (Loss) per common share (dollars) | | (0.15) | | | 0.75 | | | (0.55) | | | 2.03 | | Earnings (Loss) per common share (dollars) | | 1.10 | | | (0.26) | | | 1.74 | | | (0.40) | |
| Earnings (Loss) per common share - assuming dilution (dollars) | Earnings (Loss) per common share - assuming dilution (dollars) | | (0.15) | | | 0.75 | | | (0.55) | | | 2.03 | | Earnings (Loss) per common share - assuming dilution (dollars) | | 1.10 | | | (0.26) | | | 1.74 | | | (0.40) | |
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 September 30, | | Nine Months Ended September 30, | | | Three Months Ended June 30, | | Six Months Ended June 30, |
| | | 2020 | | 2019 | | 2020 | | 2019 | | | 2021 | | 2020 | | 2021 | | 2020 |
Net income (loss) including noncontrolling interests | Net income (loss) including noncontrolling interests | | (709) | | | 3,247 | | | (2,648) | | | 9,044 | | Net income (loss) including noncontrolling interests | | 4,781 | | | (1,169) | | | 7,577 | | | (1,939) | |
Other comprehensive income (loss) (net of income taxes) | Other comprehensive income (loss) (net of income taxes) | | | Other comprehensive income (loss) (net of income taxes) | | |
Foreign exchange translation adjustment | Foreign exchange translation adjustment | | 1,469 | | | (1,424) | | | (1,305) | | | (75) | | Foreign exchange translation adjustment | | 423 | | | 2,875 | | | 572 | | | (2,774) | |
Adjustment for foreign exchange translation (gain)/loss included in net income | | 14 | | | 0 | | | 14 | | | 0 | | |
| Postretirement benefits reserves adjustment (excluding amortization) | Postretirement benefits reserves adjustment (excluding amortization) | | (140) | | | 103 | | | (189) | | | 43 | | Postretirement benefits reserves adjustment (excluding amortization) | | (47) | | | (136) | | | 121 | | | (49) | |
Amortization and settlement of postretirement benefits reserves adjustment included in net periodic benefit costs | Amortization and settlement of postretirement benefits reserves adjustment included in net periodic benefit costs | | 206 | | | 186 | | | 613 | | | 512 | | Amortization and settlement of postretirement benefits reserves adjustment included in net periodic benefit costs | | 215 | | | 203 | | | 593 | | | 407 | |
Total other comprehensive income (loss) | Total other comprehensive income (loss) | | 1,549 | | | (1,135) | | | (867) | | | 480 | | Total other comprehensive income (loss) | | 591 | | | 2,942 | | | 1,286 | | | (2,416) | |
Comprehensive income (loss) including noncontrolling interests | Comprehensive income (loss) including noncontrolling interests | | 840 | | | 2,112 | | | (3,515) | | | 9,524 | | Comprehensive income (loss) including noncontrolling interests | | 5,372 | | | 1,773 | | | 8,863 | | | (4,355) | |
Comprehensive income (loss) attributable to noncontrolling interests | Comprehensive income (loss) attributable to noncontrolling interests | | 92 | | | 14 | | | (449) | | | 587 | | Comprehensive income (loss) attributable to noncontrolling interests | | 178 | | | 131 | | | 324 | | | (541) | |
Comprehensive income (loss) attributable to ExxonMobil | Comprehensive income (loss) attributable to ExxonMobil | | 748 | | | 2,098 | | | (3,066) | | | 8,937 | | Comprehensive income (loss) attributable to ExxonMobil | | 5,194 | | | 1,642 | | | 8,539 | | | (3,814) | |
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) |
| | September 30, 2020 | | December 31, 2019 | | June 30, 2021 | | December 31, 2020 |
Assets | Assets | | | | Assets | | | |
Current assets | Current assets | | | | Current assets | | | |
Cash and cash equivalents | Cash and cash equivalents | 8,832 | | | 3,089 | | Cash and cash equivalents | 3,465 | | | 4,364 | |
Notes and accounts receivable – net | Notes and accounts receivable – net | 19,974 | | | 26,966 | | Notes and accounts receivable – net | 28,540 | | | 20,581 | |
Inventories | Inventories | | Inventories | |
Crude oil, products and merchandise | Crude oil, products and merchandise | 13,162 | | | 14,010 | | Crude oil, products and merchandise | 14,711 | | | 14,169 | |
Materials and supplies | Materials and supplies | 4,723 | | | 4,518 | | Materials and supplies | 4,564 | | | 4,681 | |
Other current assets | Other current assets | 2,002 | | | 1,469 | | Other current assets | 1,562 | | | 1,098 | |
Total current assets | Total current assets | 48,693 | | | 50,052 | | Total current assets | 52,842 | | | 44,893 | |
Investments, advances and long-term receivables | Investments, advances and long-term receivables | 43,609 | | | 43,164 | | Investments, advances and long-term receivables | 44,774 | | | 43,515 | |
Property, plant and equipment – net | Property, plant and equipment – net | 250,496 | | | 253,018 | | Property, plant and equipment – net | 223,012 | | | 227,553 | |
Other assets, including intangibles – net | Other assets, including intangibles – net | 15,245 | | | 16,363 | | Other assets, including intangibles – net | 16,661 | | | 16,789 | |
Total assets | Total assets | 358,043 | | | 362,597 | | Total assets | 337,289 | | | 332,750 | |
| Liabilities | Liabilities | | Liabilities | |
Current liabilities | Current liabilities | | Current liabilities | |
Notes and loans payable | Notes and loans payable | 21,911 | | | 20,578 | | Notes and loans payable | 15,293 | | | 20,458 | |
Accounts payable and accrued liabilities | Accounts payable and accrued liabilities | 33,340 | | | 41,831 | | Accounts payable and accrued liabilities | 45,780 | | | 35,221 | |
Income taxes payable | Income taxes payable | 1,217 | | | 1,580 | | Income taxes payable | 1,165 | | | 684 | |
Total current liabilities | Total current liabilities | 56,468 | | | 63,989 | | Total current liabilities | 62,238 | | | 56,363 | |
Long-term debt | Long-term debt | 46,888 | | | 26,342 | | Long-term debt | 45,319 | | | 47,182 | |
Postretirement benefits reserves | Postretirement benefits reserves | 22,097 | | | 22,304 | | Postretirement benefits reserves | 22,082 | | | 22,415 | |
Deferred income tax liabilities | Deferred income tax liabilities | 24,467 | | | 25,620 | | Deferred income tax liabilities | 18,511 | | | 18,165 | |
Long-term obligations to equity companies | Long-term obligations to equity companies | 3,486 | | | 3,988 | | Long-term obligations to equity companies | 3,038 | | | 3,253 | |
Other long-term obligations | Other long-term obligations | 20,025 | | | 21,416 | | Other long-term obligations | 20,545 | | | 21,242 | |
Total liabilities | Total liabilities | 173,431 | | | 163,659 | | Total liabilities | 171,733 | | | 168,620 | |
| Commitments and contingencies (Note 3) | Commitments and contingencies (Note 3) | | Commitments and contingencies (Note 3) | 0 | | 0 |
| Equity | Equity | | Equity | |
Common stock without par value | Common stock without par value | | Common stock without par value | |
(9,000 million shares authorized, 8,019 million shares issued) | (9,000 million shares authorized, 8,019 million shares issued) | 15,997 | | | 15,637 | | (9,000 million shares authorized, 8,019 million shares issued) | 16,006 | | | 15,688 | |
Earnings reinvested | Earnings reinvested | 407,728 | | | 421,341 | | Earnings reinvested | 383,922 | | | 383,943 | |
Accumulated other comprehensive income | Accumulated other comprehensive income | (20,189) | | | (19,493) | | Accumulated other comprehensive income | (15,586) | | | (16,705) | |
Common stock held in treasury | Common stock held in treasury | | Common stock held in treasury | |
(3,791 million shares at September 30, 2020 and 3,785 million shares at December 31, 2019) | (226,136) | | | (225,835) | | |
(3,785 million shares at June 30, 2021 and 3,786 million shares at December 31, 2020) | | (3,785 million shares at June 30, 2021 and 3,786 million shares at December 31, 2020) | (225,771) | | | (225,776) | |
ExxonMobil share of equity | ExxonMobil share of equity | 177,400 | | | 191,650 | | ExxonMobil share of equity | 158,571 | | | 157,150 | |
Noncontrolling interests | Noncontrolling interests | 7,212 | | | 7,288 | | Noncontrolling interests | 6,985 | | | 6,980 | |
Total equity | Total equity | 184,612 | | | 198,938 | | Total equity | 165,556 | | | 164,130 | |
Total liabilities and equity | Total liabilities and equity | 358,043 | | | 362,597 | | Total liabilities and equity | 337,289 | | | 332,750 | |
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 September 30, | | Six Months Ended June 30, |
| | 2020 | | 2019 | | 2021 | | 2020 |
Cash flows from operating activities | Cash flows from operating activities | | | | Cash flows from operating activities | | | |
Net income (loss) including noncontrolling interests | Net income (loss) including noncontrolling interests | (2,648) | | | 9,044 | | Net income (loss) including noncontrolling interests | 7,577 | | | (1,939) | |
Depreciation and depletion | Depreciation and depletion | 15,718 | | | 14,075 | | Depreciation and depletion | 9,956 | | | 10,735 | |
Noncash inventory adjustment - lower of cost or market | 61 | | | 0 | | |
| Changes in operational working capital, excluding cash and debt | Changes in operational working capital, excluding cash and debt | (1,539) | | | 2,564 | | Changes in operational working capital, excluding cash and debt | 1,573 | | | (2,247) | |
All other items – net | All other items – net | (929) | | | (2,319) | | All other items – net | (192) | | | (275) | |
Net cash provided by operating activities | Net cash provided by operating activities | 10,663 | | | 23,364 | | Net cash provided by operating activities | 18,914 | | | 6,274 | |
| Cash flows from investing activities | Cash flows from investing activities | | Cash flows from investing activities | |
Additions to property, plant and equipment | Additions to property, plant and equipment | (13,653) | | | (17,657) | | Additions to property, plant and equipment | (5,147) | | | (10,362) | |
Proceeds associated with sales of subsidiaries, property, plant and | | |
equipment, and sales and returns of investments | 229 | | | 600 | | |
Proceeds from asset sales and returns of investments | | Proceeds from asset sales and returns of investments | 557 | | | 129 | |
Additional investments and advances | Additional investments and advances | (3,443) | | | (2,532) | | Additional investments and advances | (613) | | | (1,524) | |
Other investing activities including collection of advances | Other investing activities including collection of advances | 1,710 | | | 769 | | Other investing activities including collection of advances | 132 | | | 309 | |
Net cash used in investing activities | Net cash used in investing activities | (15,157) | | | (18,820) | | Net cash used in investing activities | (5,071) | | | (11,448) | |
| Cash flows from financing activities | Cash flows from financing activities | | Cash flows from financing activities | |
Additions to long-term debt | Additions to long-term debt | 23,186 | | | 7,019 | | Additions to long-term debt | 0 | | | 23,186 | |
Reductions in long-term debt | Reductions in long-term debt | (4) | | | 0 | | Reductions in long-term debt | 0 | | | (3) | |
Additions to short-term debt (1) | | Additions to short-term debt (1) | 9,662 | | | 20,491 | |
Reductions in short-term debt(1) | Reductions in short-term debt(1) | (1,651) | | | (3,836) | | Reductions in short-term debt(1) | (18,000) | | | (15,078) | |
Additions/(reductions) in commercial paper, and debt with three months or less maturity (1) | 139 | | | 6,139 | | |
Additions/(reductions) in debt with three months or less maturity | | Additions/(reductions) in debt with three months or less maturity | 1,320 | | | (5,998) | |
Contingent consideration payments | Contingent consideration payments | (21) | | | 0 | | Contingent consideration payments | (28) | | | (21) | |
Cash dividends to ExxonMobil shareholders | Cash dividends to ExxonMobil shareholders | (11,150) | | | (10,936) | | Cash dividends to ExxonMobil shareholders | (7,441) | | | (7,434) | |
Cash dividends to noncontrolling interests | Cash dividends to noncontrolling interests | (137) | | | (157) | | Cash dividends to noncontrolling interests | (112) | | | (93) | |
Changes in noncontrolling interests | Changes in noncontrolling interests | 511 | | | 30 | | Changes in noncontrolling interests | (207) | | | 317 | |
Common stock acquired | Common stock acquired | (305) | | | (421) | | Common stock acquired | (1) | | | (305) | |
Net cash used in financing activities | Net cash used in financing activities | 10,568 | | | (2,162) | | Net cash used in financing activities | (14,807) | | | 15,062 | |
Effects of exchange rate changes on cash | Effects of exchange rate changes on cash | (331) | | | (73) | | Effects of exchange rate changes on cash | 65 | | | (401) | |
Increase/(decrease) in cash and cash equivalents | Increase/(decrease) in cash and cash equivalents | 5,743 | | | 2,309 | | Increase/(decrease) in cash and cash equivalents | (899) | | | 9,487 | |
Cash and cash equivalents at beginning of period | Cash and cash equivalents at beginning of period | 3,089 | | | 3,042 | | Cash and cash equivalents at beginning of period | 4,364 | | | 3,089 | |
Cash and cash equivalents at end of period | Cash and cash equivalents at end of period | 8,832 | | | 5,351 | | Cash and cash equivalents at end of period | 3,465 | | | 12,576 | |
| Supplemental Disclosures | Supplemental Disclosures | | Supplemental Disclosures | |
Income taxes paid | Income taxes paid | 2,341 | | | 5,259 | | Income taxes paid | 2,079 | | | 1,768 | |
Cash interest paid | Cash interest paid | | Cash interest paid | |
Included in cash flows from operating activities | Included in cash flows from operating activities | 726 | | | 515 | | Included in cash flows from operating activities | 466 | | | 290 | |
Capitalized, included in cash flows from investing activities | Capitalized, included in cash flows from investing activities | 516 | | | 540 | | Capitalized, included in cash flows from investing activities | 313 | | | 335 | |
Total cash interest paid | Total cash interest paid | 1,242 | | | 1,055 | | Total cash interest paid | 779 | | | 625 | |
(1) Includes a net addition of commercial paper with a maturity of overgreater than three months of $6.4 billion in 2020 and $3.1 billion in 2019. The gross amount of commercial paper with a maturity of over three months issued was $28.8 billion in 2020 and $13.4 billion in 2019, while the gross amount repaid was $22.4 billion in 2020 and $10.3 billion in 2019.months.
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 CHANGES IN EQUITY | CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY |
(millions of dollars) | (millions of dollars) | (millions of dollars) |
| | ExxonMobil Share of Equity | | | | | | ExxonMobil Share of Equity | | | | |
| | Common Stock | | Earnings Reinvested | | Accumulated Other Comprehensive Income | | Common Stock Held in Treasury | | ExxonMobil Share of Equity | | Non-controlling Interests | | Total Equity | | Common Stock | | Earnings Reinvested | | Accumulated Other Comprehensive Income | | Common Stock Held in Treasury | | ExxonMobil Share of Equity | | Non-controlling Interests | | Total Equity |
Balance as of June 30, 2019 | 15,639 | | | 419,913 | | | (18,205) | | | (225,970) | | | 191,377 | | | 7,088 | | | 198,465 | | |
Balance as of March 31, 2020 | | Balance as of March 31, 2020 | 15,636 | | | 416,919 | | | (24,339) | | | (226,137) | | | 182,079 | | | 6,664 | | | 188,743 | |
Amortization of stock-based awards | | Amortization of stock-based awards | 177 | | | — | | | — | | | — | | | 177 | | | — | | | 177 | |
Other | | Other | (1) | | | — | | | — | | | — | | | (1) | | | 223 | | | 222 | |
Net income (loss) for the period | | Net income (loss) for the period | — | | | (1,080) | | | — | | | — | | | (1,080) | | | (89) | | | (1,169) | |
Dividends - common shares | | Dividends - common shares | — | | | (3,715) | | | — | | | — | | | (3,715) | | | (48) | | | (3,763) | |
Other comprehensive income (loss) | | Other comprehensive income (loss) | — | | | — | | | 2,722 | | | — | | | 2,722 | | | 220 | | | 2,942 | |
| Dispositions | | Dispositions | — | | | — | | | — | | | 1 | | | 1 | | | — | | | 1 | |
Balance as of June 30, 2020 | | Balance as of June 30, 2020 | 15,812 | | | 412,124 | | | (21,617) | | | (226,136) | | | 180,183 | | | 6,970 | | | 187,153 | |
| Balance as of March 31, 2021 | | Balance as of March 31, 2021 | 15,884 | | | 382,953 | | | (16,090) | | | (225,773) | | | 156,974 | | | 7,127 | | | 164,101 | |
Amortization of stock-based awards | Amortization of stock-based awards | 156 | | | — | | | — | | | — | | | 156 | | | — | | | 156 | | Amortization of stock-based awards | 126 | | | — | | | — | | | — | | | 126 | | | — | | | 126 | |
Other | Other | — | | | — | | | — | | | — | | | — | | | 228 | | | 228 | | Other | (4) | | | — | | | — | | | — | | | (4) | | | 33 | | | 29 | |
Net income (loss) for the period | Net income (loss) for the period | — | | | 3,170 | | | — | | | — | | | 3,170 | | | 77 | | | 3,247 | | Net income (loss) for the period | — | | | 4,690 | | | — | | | — | | | 4,690 | | | 91 | | | 4,781 | |
Dividends - common shares | Dividends - common shares | — | | | (3,716) | | | — | | | — | | | (3,716) | | | (57) | | | (3,773) | | Dividends - common shares | — | | | (3,721) | | | — | | | — | | | (3,721) | | | (60) | | | (3,781) | |
Other comprehensive income (loss) | Other comprehensive income (loss) | — | | | — | | | (1,072) | | | — | | | (1,072) | | | (63) | | | (1,135) | | Other comprehensive income (loss) | — | | | — | | | 504 | | | — | | | 504 | | | 87 | | | 591 | |
Acquisitions, at cost | Acquisitions, at cost | — | | | — | | | — | | | — | | | — | | | (79) | | | (79) | | Acquisitions, at cost | — | | | — | | | — | | | — | | | — | | | (293) | | | (293) | |
Dispositions | Dispositions | — | | | — | | | — | | | — | | | — | | | — | | | — | | Dispositions | — | | | — | | | — | | | 2 | | | 2 | | | — | | | 2 | |
Balance as of September 30, 2019 | 15,795 | | | 419,367 | | | (19,277) | | | (225,970) | | | 189,915 | | | 7,194 | | | 197,109 | | |
| Balance as of June 30, 2020 | 15,812 | | | 412,124 | | | (21,617) | | | (226,136) | | | 180,183 | | | 6,970 | | | 187,153 | | |
Amortization of stock-based awards | 187 | | | — | | | — | | | — | | | 187 | | | — | | | 187 | | |
Other | (2) | | | — | | | — | | | — | | | (2) | | | 194 | | | 192 | | |
Net income (loss) for the period | — | | | (680) | | | — | | | — | | | (680) | | | (29) | | | (709) | | |
Dividends - common shares | — | | | (3,716) | | | — | | | — | | | (3,716) | | | (44) | | | (3,760) | | |
Other comprehensive income (loss) | — | | | — | | | 1,428 | | | — | | | 1,428 | | | 121 | | | 1,549 | | |
Acquisitions, at cost | — | | | — | | | — | | | — | | | — | | | — | | | — | | |
Dispositions | — | | | — | | | — | | | — | | | — | | | — | | | — | | |
Balance as of September 30, 2020 | 15,997 | | | 407,728 | | | (20,189) | | | (226,136) | | | 177,400 | | | 7,212 | | | 184,612 | | |
Balance as of June 30, 2021 | | Balance as of June 30, 2021 | 16,006 | | | 383,922 | | | (15,586) | | | (225,771) | | | 158,571 | | | 6,985 | | | 165,556 | |
| | | Three Months Ended September 30, 2020 | | | | Three Months Ended September 30, 2019 | | Three Months Ended June 30, 2021 | | | | Three Months Ended June 30, 2020 |
Common Stock Share Activity | Common Stock Share Activity | Issued | | Held in Treasury | | Outstanding | | | | Issued | | Held in Treasury | | Outstanding | Common Stock Share Activity | Issued | | Held in Treasury | | Outstanding | | | | Issued | | Held in Treasury | | Outstanding |
| | (millions of shares) | | | | (millions of shares) | | (millions of shares) | | | | (millions of shares) |
Balance as of June 30 | 8,019 | | | (3,791) | | | 4,228 | | | 8,019 | | | (3,788) | | | 4,231 | | |
Balance as of March 31 | | Balance as of March 31 | 8,019 | | | (3,785) | | | 4,234 | | | 8,019 | | | (3,791) | | | 4,228 | |
Acquisitions | Acquisitions | — | | | — | | | — | | | — | | | — | | | — | | Acquisitions | — | | | — | | | — | | | — | | | — | | | — | |
Dispositions | Dispositions | — | | | — | | | — | | | — | | | — | | | — | | Dispositions | — | | | — | | | — | | | — | | | — | | | — | |
Balance as of September 30 | 8,019 | | | (3,791) | | | 4,228 | | | 8,019 | | | (3,788) | | | 4,231 | | |
Balance as of June 30 | | Balance as of June 30 | 8,019 | | | (3,785) | | | 4,234 | | | 8,019 | | | (3,791) | | | 4,228 | |
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 CHANGES IN EQUITY | CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY |
(millions of dollars) | (millions of dollars) | (millions of dollars) |
| | ExxonMobil Share of Equity | | | | | | ExxonMobil Share of Equity | | | | |
| Common Stock | | Earnings Reinvested | | Accumulated Other Comprehensive Income | | Common Stock Held in Treasury | | ExxonMobil Share of Equity | | Non-controlling Interests | | Total Equity | |
Balance as of December 31, 2018 | 15,258 | | | 421,653 | | | (19,564) | | | (225,553) | | | 191,794 | | | 6,734 | | | 198,528 | | |
Amortization of stock-based awards | 545 | | | — | | | — | | | — | | | 545 | | | — | | | 545 | | |
Other | (8) | | | — | | | — | | | — | | | (8) | | | 275 | | | 267 | | |
Net income (loss) for the period | — | | | 8,650 | | | — | | | — | | | 8,650 | | | 394 | | | 9,044 | | |
Dividends - common shares | — | | | (10,936) | | | — | | | — | | | (10,936) | | | (157) | | | (11,093) | | |
Other comprehensive income (loss) | — | | | — | | | 287 | | | — | | | 287 | | | 193 | | | 480 | | |
Acquisitions, at cost | — | | | — | | | — | | | (421) | | | (421) | | | (245) | | | (666) | | |
Dispositions | — | | | — | | | — | | | 4 | | | 4 | | | — | | | 4 | | |
Balance as of September 30, 2019 | 15,795 | | | 419,367 | | | (19,277) | | | (225,970) | | | 189,915 | | | 7,194 | | | 197,109 | | |
| | | | Common Stock | | Earnings Reinvested | | Accumulated Other Comprehensive Income | | Common Stock Held in Treasury | | ExxonMobil Share of Equity | | Non-controlling Interests | | Total Equity |
Balance as of December 31, 2019 | Balance as of December 31, 2019 | 15,637 | | | 421,341 | | | (19,493) | | | (225,835) | | | 191,650 | | | 7,288 | | | 198,938 | | Balance as of December 31, 2019 | 15,637 | | | 421,341 | | | (19,493) | | | (225,835) | | | 191,650 | | | 7,288 | | | 198,938 | |
Amortization of stock-based awards | Amortization of stock-based awards | 545 | | | — | | | — | | | — | | | 545 | | | — | | | 545 | | Amortization of stock-based awards | 358 | | | — | | | — | | | — | | | 358 | | | — | | | 358 | |
Other | Other | (185) | | | — | | | — | | | — | | | (185) | | | 574 | | | 389 | | Other | (183) | | | — | | | — | | | — | | | (183) | | | 380 | | | 197 | |
Net income (loss) for the period | Net income (loss) for the period | — | | | (2,370) | | | — | | | — | | | (2,370) | | | (278) | | | (2,648) | | Net income (loss) for the period | — | | | (1,690) | | | — | | | — | | | (1,690) | | | (249) | | | (1,939) | |
Dividends - common shares | Dividends - common shares | — | | | (11,150) | | | — | | | — | | | (11,150) | | | (137) | | | (11,287) | | Dividends - common shares | — | | | (7,434) | | | — | | | — | | | (7,434) | | | (93) | | | (7,527) | |
Cumulative effect of accounting change | Cumulative effect of accounting change | — | | | (93) | | | — | | | — | | | (93) | | | (1) | | | (94) | | Cumulative effect of accounting change | — | | | (93) | | | — | | | — | | | (93) | | | (1) | | | (94) | |
Other comprehensive income (loss) | Other comprehensive income (loss) | — | | | — | | | (696) | | | — | | | (696) | | | (171) | | | (867) | | Other comprehensive income (loss) | — | | | — | | | (2,124) | | | — | | | (2,124) | | | (292) | | | (2,416) | |
Acquisitions, at cost | Acquisitions, at cost | — | | | — | | | — | | | (305) | | | (305) | | | (63) | | | (368) | | Acquisitions, at cost | — | | | — | | | — | | | (305) | | | (305) | | | (63) | | | (368) | |
Dispositions | Dispositions | — | | | — | | | — | | | 4 | | | 4 | | | — | | | 4 | | Dispositions | — | | | — | | | — | | | 4 | | | 4 | | | — | | | 4 | |
Balance as of September 30, 2020 | 15,997 | | | 407,728 | | | (20,189) | | | (226,136) | | | 177,400 | | | 7,212 | | | 184,612 | | |
Balance as of June 30, 2020 | | Balance as of June 30, 2020 | 15,812 | | | 412,124 | | | (21,617) | | | (226,136) | | | 180,183 | | | 6,970 | | | 187,153 | |
| Balance as of December 31, 2020 | | Balance as of December 31, 2020 | 15,688 | | | 383,943 | | | (16,705) | | | (225,776) | | | 157,150 | | | 6,980 | | | 164,130 | |
Amortization of stock-based awards | | Amortization of stock-based awards | 328 | | | — | | | — | | | — | | | 328 | | | — | | | 328 | |
Other | | Other | (10) | | | — | | | — | | | — | | | (10) | | | 86 | | | 76 | |
Net income (loss) for the period | | Net income (loss) for the period | — | | | 7,420 | | | — | | | — | | | 7,420 | | | 157 | | | 7,577 | |
Dividends - common shares | | Dividends - common shares | — | | | (7,441) | | | — | | | — | | | (7,441) | | | (112) | | | (7,553) | |
| Other comprehensive income (loss) | | Other comprehensive income (loss) | — | | | — | | | 1,119 | | | — | | | 1,119 | | | 167 | | | 1,286 | |
Acquisitions, at cost | | Acquisitions, at cost | — | | | — | | | — | | | (1) | | | (1) | | | (293) | | | (294) | |
Dispositions | | Dispositions | — | | | — | | | — | | | 6 | | | 6 | | | — | | | 6 | |
Balance as of June 30, 2021 | | Balance as of June 30, 2021 | 16,006 | | | 383,922 | | | (15,586) | | | (225,771) | | | 158,571 | | | 6,985 | | | 165,556 | |
| | | Nine Months Ended September 30, 2020 | | | | Nine Months Ended September 30, 2019 | | Six Months Ended June 30, 2021 | | | | Six Months Ended June 30, 2020 |
Common Stock Share Activity | Common Stock Share Activity | Issued | | Held in Treasury | | Outstanding | | | | Issued | | Held in Treasury | | Outstanding | Common Stock Share Activity | Issued | | Held in Treasury | | Outstanding | | | | Issued | | Held in Treasury | | Outstanding |
| | (millions of shares) | | | | (millions of shares) | | (millions of shares) | | | | (millions of shares) |
Balance as of December 31 | Balance as of December 31 | 8,019 | | | (3,785) | | | 4,234 | | | 8,019 | | | (3,782) | | | 4,237 | | Balance as of December 31 | 8,019 | | | (3,786) | | | 4,233 | | | 8,019 | | | (3,785) | | | 4,234 | |
Acquisitions | Acquisitions | — | | | (6) | | | (6) | | | — | | | (6) | | | (6) | | Acquisitions | — | | | — | | | — | | | — | | | (6) | | | (6) | |
Dispositions | Dispositions | — | | | — | | | — | | | — | | | — | | | — | | Dispositions | — | | | 1 | | | 1 | | | — | | | — | | | — | |
Balance as of September 30 | 8,019 | | | (3,791) | | | 4,228 | | | 8,019 | | | (3,788) | | | 4,231 | | |
Balance as of June 30 | | Balance as of June 30 | 8,019 | | | (3,785) | | | 4,234 | | | 8,019 | | | (3,791) | | | 4,228 | |
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 20192020 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. Miscellaneous Financial Information
During the first quarter of 2020, the balance of supply and demand for petroleum and petrochemical products experienced two significant disruptive effects. On the demand side, the COVID-19 pandemic spread rapidly through most areas of the world resulting in substantial reductions in consumer and business activity and significantly reduced demand for crude oil, natural gas, and petroleum products. This reduction in demand coincided with announcements of increased production in certain key oil-producing countries which led to increases in inventory levels and sharp declines in prices for crude oil and petrochemical products. During the second and third quarters, the effects of COVID-19 continued to have a negative impact on the world’s major economies and demand for our products. Market conditions continue to reflect considerable uncertainty as consumer and business activity has exhibited some degree of recovery, but remains lower when compared to prior periods as a result of the pandemic.
Crude oil, products and merchandise inventories are carried at the lower of current market value or cost, generally determined under the last-in first-out method (LIFO). The Corporation's results for the thirdsecond quarter of 2020 included a before-tax credit of $153$2,624 million, included in "Crude oil and product purchases" on the Statement of Income, as rising commodity prices resulted in the reversal ofreduced the charge against the book value of inventories asfrom $2,777 million in the first quarter 2020 to $153 million for the first half of the second quarter.2020. This adjustment, which is included in "Crude oil and product purchases", together with a market adjustment to inventory for equity companies included in "Income from equity affiliates,"affiliates", resulted in a $113$1,922 million after-tax credit to earnings (excluding noncontrolling interests) in the third quarter. At year-end, any required adjustment to write downsecond quarter of 2020.
In the book valuefirst half of inventories to their market value is considered permanent and is incorporated into the LIFO carrying value of the inventory.
Primarily2020, mainly as a result of declines in prices for crude oil, natural gas and other petrochemicalpetroleum products in 2020 and a significant decline in itsthe Corporation's market capitalization at the end of the first quarter, the Corporation recognized after-taxbefore-tax goodwill impairment charges of $884$611 million in the nine months ended September 30, 2020. These charges included goodwill impairments of $562 million in Upstream, Downstream, and Chemical reporting units and other impairment charges of $322$363 million mainly in the Upstream segment. Fair value of the goodwill reporting units primarily reflected market-based estimates of historical EBITDA multiples at the end of the first quarter. Other impairmentwere recognized. The charges mainly related to the Corporation’s investment in an Upstream equity company, reflect a write down to estimated fair value based on third party price outlooks, internal estimates of future volumes and costs, and estimates of discount rates for similar properties. Charges related to goodwill and asset impairments arewere included in “Depreciation and depletion” on the Statement of Income andwhile the charges related to equity method investments areother impairments were largely included in “Income from equity affiliates.”
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, 2020,2021, 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, 2020 |
| | | Equity Company Obligations (1) | | Other Third-Party Obligations | | Total |
| | | (millions of dollars) |
Guarantees | | | | | |
| | Debt-related | 968 | | | 120 | | | 1,088 | |
| | Other | 690 | | | 4,806 | | | 5,496 | |
| | Total | 1,658 | | | 4,926 | | | 6,584 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | As of June 30, 2021 |
| | | Equity Company Obligations (1) | | Other Third-Party Obligations | | Total |
| | | (millions of dollars) |
Guarantees | | | | | |
| | Debt-related | 1,026 | | | 131 | | | 1,157 | |
| | Other | 865 | | | 4,933 | | | 5,798 | |
| | Total | 1,891 | | | 5,064 | | | 6,955 | |
(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 Venezuelan nationalization decree issued in February 2007, a subsidiary of the Venezuelan National Oil Company (PdVSA) assumed the operatorship of the Cerro Negro Heavy Oil 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. 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.
ExxonMobil collected awards of $908 million in an arbitration against PdVSA under the rules of the International Chamber of Commerce in respect of an indemnity related to the Cerro Negro Project and $260 million in an arbitration for compensation due for the La Ceiba Project and for export curtailments at the Cerro Negro Project under rules of International Centre for Settlement of Investment Disputes (ICSID). An ICSID arbitration award relating to the Cerro Negro Project’s expropriation ($1.4 billion) was annulled based on a determination that a 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. ExxonMobil filed a new claim seeking to restore the original award of damages for the Cerro Negro Project with ICSID on September 26, 2018.
The net impact of this matter 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 (SDNY) to enforce, if necessary, the arbitration award against NNPC assets residing within that jurisdiction. NNPC moved to dismiss the lawsuit. On September 4, 2019, the SDNY dismissed the Contractors’ petition to recognize and enforce the Erha arbitration award. The Contractors filed a notice of appeal in the Second Circuit on October 2, 2019. 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
| ExxonMobil Share of Accumulated Other Comprehensive Income | ExxonMobil Share of Accumulated Other Comprehensive Income | Cumulative Foreign Exchange Translation Adjustment | | Post-retirement Benefits Reserves Adjustment | | Total | ExxonMobil Share of Accumulated Other Comprehensive Income | Cumulative Foreign Exchange Translation Adjustment | | Postretirement Benefits Reserves Adjustment | | Total |
| | (millions of dollars) | | (millions of dollars) |
| Balance as of December 31, 2018 | (13,881) | | | (5,683) | | | (19,564) | | |
Current period change excluding amounts reclassified from accumulated other comprehensive income(1) | (252) | | | 48 | | | (204) | | |
Amounts reclassified from accumulated other comprehensive income | 0 | | | 491 | | | 491 | | |
Total change in accumulated other comprehensive income | (252) | | | 539 | | | 287 | | |
Balance as of September 30, 2019 | (14,133) | | | (5,144) | | | (19,277) | | |
| Balance as of December 31, 2019 | Balance as of December 31, 2019 | (12,446) | | | (7,047) | | | (19,493) | | Balance as of December 31, 2019 | (12,446) | | | (7,047) | | | (19,493) | |
Current period change excluding amounts reclassified from accumulated other comprehensive income (1) | Current period change excluding amounts reclassified from accumulated other comprehensive income (1) | (1,125) | | | (172) | | | (1,297) | | Current period change excluding amounts reclassified from accumulated other comprehensive income(1) | (2,469) | | | (45) | | | (2,514) | |
Amounts reclassified from accumulated other comprehensive income | Amounts reclassified from accumulated other comprehensive income | 14 | | | 587 | | | 601 | | Amounts reclassified from accumulated other comprehensive income | 0 | | | 390 | | | 390 | |
Total change in accumulated other comprehensive income | Total change in accumulated other comprehensive income | (1,111) | | | 415 | | | (696) | | Total change in accumulated other comprehensive income | (2,469) | | | 345 | | | (2,124) | |
Balance as of September 30, 2020 | (13,557) | | | (6,632) | | | (20,189) | | |
Balance as of June 30, 2020 | | Balance as of June 30, 2020 | (14,915) | | | (6,702) | | | (21,617) | |
| Balance as of December 31, 2020 | | Balance as of December 31, 2020 | (10,614) | | | (6,091) | | | (16,705) | |
Current period change excluding amounts reclassified from accumulated other comprehensive income (1) | | Current period change excluding amounts reclassified from accumulated other comprehensive income (1) | 425 | | | 119 | | | 544 | |
Amounts reclassified from accumulated other comprehensive income | | Amounts reclassified from accumulated other comprehensive income | 0 | | | 575 | | | 575 | |
Total change in accumulated other comprehensive income | | Total change in accumulated other comprehensive income | 425 | | | 694 | | | 1,119 | |
Balance as of June 30, 2021 | | Balance as of June 30, 2021 | (10,189) | | | (5,397) | | | (15,586) | |
(1)Cumulative Foreign Exchange Translation Adjustment includes net investment hedge gain/(loss) of $(159) million, net of taxes.taxes of $135 million and $5 million in 2021 and 2020, respectively.
| Amounts Reclassified Out of Accumulated Other Comprehensive Income - Before-tax Income/(Expense) | | Three Months Ended September 30, | | Nine Months Ended September 30, | |
Amounts Reclassified Out of Accumulated Other | | Amounts Reclassified Out of Accumulated Other | | Three Months Ended June 30, | | Six Months Ended June 30, |
Comprehensive Income - Before-tax Income/(Expense) | | Comprehensive Income - Before-tax Income/(Expense) | | 2021 | | 2020 | | 2021 | | 2020 |
| | | 2020 | | 2019 | | 2020 | | 2019 | | | (millions of dollars) | | (millions of dollars) |
| | | (millions of dollars) | | (millions of dollars) | |
Foreign exchange translation gain/(loss) included in net income (Statement of Income line: Other income) | | (14) | | | 0 | | | (14) | | | 0 | | |
Amortization and settlement of postretirement benefits reserves adjustment included in net periodic benefit costs | Amortization and settlement of postretirement benefits reserves adjustment included in net periodic benefit costs | | | | | | 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) | (Statement of Income line: Non-service pension and postretirement benefit expense) | | (268) | | | (236) | | | (790) | | | (664) | | (Statement of Income line: Non-service pension and postretirement benefit expense) | | (280) | | | (260) | | | (764) | | | (522) | |
| Income Tax (Expense)/Credit For Components of Other Comprehensive Income | | Three Months Ended September 30, | | Nine Months Ended September 30, | |
| | 2020 | | 2019 | | 2020 | | 2019 | |
Income Tax (Expense)/Credit For | | Income Tax (Expense)/Credit For | | Three Months Ended June 30, | | Six Months Ended June 30, |
Components of Other Comprehensive Income | | Components of Other Comprehensive Income | | 2021 | | 2020 | | 2021 | | 2020 |
| | | (millions of dollars) | | (millions of dollars) | | | (millions of dollars) | | (millions of dollars) |
Foreign exchange translation adjustment | Foreign exchange translation adjustment | | 57 | | | 1 | | | 72 | | | 1 | | Foreign exchange translation adjustment | | 19 | | | 8 | | | (34) | | | 15 | |
Postretirement benefits reserves adjustment (excluding amortization) | Postretirement benefits reserves adjustment (excluding amortization) | | 74 | | | (56) | | | 64 | | | (36) | | Postretirement benefits reserves adjustment (excluding amortization) | | 25 | | | 52 | | | (33) | | | (10) | |
Amortization and settlement of postretirement benefits reserves adjustment included in net periodic benefit costs | Amortization and settlement of postretirement benefits reserves adjustment included in net periodic benefit costs | | (62) | | | (50) | | | (177) | | | (152) | | Amortization and settlement of postretirement benefits reserves adjustment included in net periodic benefit costs | | (65) | | | (57) | | | (171) | | | (115) | |
Total | Total | | 69 | | | (105) | | | (41) | | | (187) | | Total | | (21) | | | 3 | | | (238) | | | (110) | |
5. Earnings Per Share
| | | | Three Months Ended September 30, | | Nine Months Ended September 30, | | | Three Months Ended June 30, | | Six Months Ended June 30, |
| | | 2020 | | 2019 | | 2020 | | 2019 | | | 2021 | | 2020 | | 2021 | | 2020 |
Earnings per common share | Earnings per common share | | | | | | | Earnings per common share | | | | | | |
Net income (loss) attributable to ExxonMobil (millions of dollars) | Net income (loss) attributable to ExxonMobil (millions of dollars) | | (680) | | | 3,170 | | | (2,370) | | | 8,650 | | Net income (loss) attributable to ExxonMobil (millions of dollars) | | 4,690 | | | (1,080) | | | 7,420 | | | (1,690) | |
Weighted average number of common shares outstanding (millions of shares) | Weighted average number of common shares outstanding (millions of shares) | | 4,271 | | | 4,271 | | | 4,270 | | | 4,270 | | Weighted average number of common shares outstanding (millions of shares) | | 4,276 | | | 4,271 | | | 4,274 | | | 4,270 | |
Earnings (Loss) per common share (dollars) (1) | Earnings (Loss) per common share (dollars) (1) | | (0.15) | | | 0.75 | | | (0.55) | | | 2.03 | | Earnings (Loss) per common share (dollars) (1) | | 1.10 | | | (0.26) | | | 1.74 | | | (0.40) | |
Dividends paid per common share (dollars) | Dividends paid per common share (dollars) | | 0.87 | | | 0.87 | | | 2.61 | | | 2.56 | | Dividends paid per common share (dollars) | | 0.87 | | | 0.87 | | | 1.74 | | | 1.74 | |
(1)The calculation of earnings (loss) per common share and earnings (loss) per common share – assuming dilution are the same in each period shown.
6. Pension and Other Postretirement Benefits
| | | | Three Months Ended September 30, | | Nine Months Ended September 30, | | | Three Months Ended June 30, | | Six Months Ended June 30, |
| | | 2020 | | 2019 | | 2020 | | 2019 | | | 2021 | | 2020 | | 2021 | | 2020 |
| | | (millions of dollars) | | (millions of dollars) | | | (millions of dollars) | | (millions of dollars) |
Components of net benefit cost | Components of net benefit cost | | | | | | Components of net benefit cost | | | | | |
Pension Benefits - U.S. | Pension Benefits - U.S. | | | | | | Pension Benefits - U.S. | | | | | |
Service cost | Service cost | | 245 | | | 208 | | | 712 | | | 563 | | Service cost | | 208 | | | 232 | | | 433 | | | 467 | |
Interest cost | Interest cost | | 177 | | | 192 | | | 531 | | | 574 | | Interest cost | | 140 | | | 177 | | | 279 | | | 354 | |
Expected return on plan assets | Expected return on plan assets | | (178) | | | (143) | | | (528) | | | (427) | | Expected return on plan assets | | (181) | | | (175) | | | (361) | | | (350) | |
Amortization of actuarial loss/(gain) and prior service cost | Amortization of actuarial loss/(gain) and prior service cost | | 79 | | | 77 | | | 237 | | | 233 | | Amortization of actuarial loss/(gain) and prior service cost | | 55 | | | 79 | | | 110 | | | 158 | |
Net pension enhancement and curtailment/settlement cost | Net pension enhancement and curtailment/settlement cost | | 52 | | | 54 | | | 156 | | | 161 | | Net pension enhancement and curtailment/settlement cost | | 95 | | | 52 | | | 393 | | | 104 | |
Net benefit cost | Net benefit cost | | 375 | | | 388 | | | 1,108 | | | 1,104 | | Net benefit cost | | 317 | | | 365 | | | 854 | | | 733 | |
| Pension Benefits - Non-U.S. | Pension Benefits - Non-U.S. | | | Pension Benefits - Non-U.S. | | |
Service cost | Service cost | | 178 | | | 136 | | | 524 | | | 413 | | Service cost | | 198 | | | 171 | | | 393 | | | 346 | |
Interest cost | Interest cost | | 165 | | | 189 | | | 488 | | | 573 | | Interest cost | | 135 | | | 162 | | | 265 | | | 323 | |
Expected return on plan assets | Expected return on plan assets | | (226) | | | (192) | | | (664) | | | (581) | | Expected return on plan assets | | (263) | | | (216) | | | (521) | | | (438) | |
Amortization of actuarial loss/(gain) and prior service cost | Amortization of actuarial loss/(gain) and prior service cost | | 124 | | | 102 | | | 358 | | | 260 | | Amortization of actuarial loss/(gain) and prior service cost | | 121 | | | 115 | | | 244 | | | 234 | |
Net pension enhancement and curtailment/settlement cost | | Net pension enhancement and curtailment/settlement cost | | 0 | | | 0 | | | 12 | | | 0 | |
Net benefit cost | Net benefit cost | | 241 | | | 235 | | | 706 | | | 665 | | Net benefit cost | | 191 | | | 232 | | | 393 | | | 465 | |
| Other Postretirement Benefits | Other Postretirement Benefits | | | Other Postretirement Benefits | | |
Service cost | Service cost | | 45 | | | 38 | | | 134 | | | 104 | | Service cost | | 46 | | | 44 | | | 95 | | | 89 | |
Interest cost | Interest cost | | 70 | | | 79 | | | 208 | | | 237 | | Interest cost | | 55 | | | 68 | | | 111 | | | 138 | |
Expected return on plan assets | Expected return on plan assets | | (4) | | | (4) | | | (13) | | | (12) | | Expected return on plan assets | | (4) | | | (5) | | | (9) | | | (9) | |
Amortization of actuarial loss/(gain) and prior service cost | Amortization of actuarial loss/(gain) and prior service cost | | 13 | | | 3 | | | 39 | | | 10 | | Amortization of actuarial loss/(gain) and prior service cost | | 9 | | | 14 | | | 17 | | | 26 | |
Net benefit cost | Net benefit cost | | 124 | | | 116 | | | 368 | | | 339 | | Net benefit cost | | 106 | | | 121 | | | 214 | | | 244 | |
7. Financial Instruments and Derivatives
Financial Instruments. The estimated fair value of financial instruments at SeptemberJune 30, 2020,2021, and December 31, 2019,2020, and the related hierarchy level for the fair value measurement iswas as follows:
| | | | At September 30, 2020 | | | At June 30, 2021 |
| | | (millions of dollars) | | | (millions of dollars) |
| | | Fair Value | | | | | | | | | | | Fair Value | | | | | | | | |
| | | Level 1 | | Level 2 | | Level 3 | | Total Gross Assets & Liabilities | | Effect of Counterparty Netting | | Effect of Collateral Netting | | Difference in Carrying Value and Fair Value | | Net Carrying Value | | | Level 1 | | Level 2 | | Level 3 | | Total Gross Assets & Liabilities | | Effect of Counterparty Netting | | Effect of Collateral Netting | | Difference in Carrying Value and Fair Value | | Net Carrying Value |
Assets | Assets | | | | | | | | | | | | | | | | | Assets | | | | | | | | | | | | | | | | |
| | Derivative assets (1) | 637 | | | 121 | | | — | | | 758 | | | (571) | | | (80) | | | — | | | 107 | | | Derivative assets (1) | 2,156 | | | 594 | | | — | | | 2,750 | | | (2,357) | | | 0 | | | — | | | 393 | |
| | Advances to/receivables | | | Advances to/receivables | |
| | from equity companies (2)(7) | — | | | 3,152 | | | 6,081 | | | 9,233 | | | — | | | — | | | (193) | | | 9,040 | | | from equity companies (2)(6) | — | | | 3,167 | | | 5,727 | | | 8,894 | | | — | | | — | | | (291) | | | 8,603 | |
| | Other long-term | | | Other long-term | |
| | financial assets (3) | 1,197 | | | — | | | 915 | | | 2,112 | | | — | | — | | | 130 | | | 2,242 | | | financial assets (3) | 1,104 | | | — | | | 1,303 | | | 2,407 | | | — | | | — | | | 190 | | | 2,597 | |
Liabilities | Liabilities | | Liabilities | |
| | Derivative liabilities (4) | 817 | | | 91 | | | — | | | 908 | | | (571) | | | (259) | | | — | | | 78 | | | Derivative liabilities (4) | 2,806 | | | 759 | | | — | | | 3,565 | | | (2,357) | | | (650) | | | — | | | 558 | |
| | Long-term debt (5) | 49,153 | | | 149 | | | 4 | | | 49,306 | | | — | | | — | | | (4,031) | | | 45,275 | | | Long-term debt (5) | 46,787 | | | 100 | | | 4 | | | 46,891 | | | — | | | — | | | (3,376) | | | 43,515 | |
| | Long-term obligations | | | Long-term obligations | |
| | to equity companies (7) | — | | | — | | | 3,685 | | | 3,685 | | | — | | | — | | | (199) | | | 3,486 | | | to equity companies (6) | — | | | — | | | 3,337 | | | 3,337 | | | — | | | — | | | (299) | | | 3,038 | |
| | Other long-term | | | Other long-term | |
| | financial liabilities (6) | — | | | — | | | 1,073 | | | 1,073 | | | — | | | — | | | 11 | | | 1,084 | | | financial liabilities (7) | — | | | — | | | 972 | | | 972 | | | — | | | — | | | 57 | | | 1,029 | |
| | | | At December 31, 2019 | | | At December 31, 2020 |
| | | (millions of dollars) | | | (millions of dollars) |
| | | Fair Value | | | | | | | | | | | Fair Value | | | | | | | | |
| | | Level 1 | | Level 2 | | Level 3 | | Total Gross Assets & Liabilities | | Effect of Counterparty Netting | | Effect of Collateral Netting | | Difference in Carrying Value and Fair Value | | Net Carrying Value | | | Level 1 | | Level 2 | | Level 3 | | Total Gross Assets & Liabilities | | Effect of Counterparty Netting | | Effect of Collateral Netting | | Difference in Carrying Value and Fair Value | | Net Carrying Value |
Assets | Assets | | | | | | | | | | | | | | | | | Assets | | | | | | | | | | | | | | | | |
| | Derivative assets (1) | 533 | | | 102 | | | — | | | 635 | | | (463) | | | (70) | | | — | | | 102 | | | Derivative assets (1) | 1,247 | | | 194 | | | — | | | 1,441 | | | (1,282) | | | (6) | | | — | | | 153 | |
| | Advances to/receivables | | | Advances to/receivables | |
| | from equity companies (2)(7) | — | | | 1,941 | | | 6,729 | | | 8,670 | | | — | | | — | | | (128) | | | 8,542 | | | from equity companies (2)(6) | — | | | 3,275 | | | 5,904 | | | 9,179 | | | — | | | — | | | (367) | | | 8,812 | |
| | Other long-term | | | Other long-term | |
| | financial assets (3) | 1,145 | | | — | | | 974 | | | 2,119 | | | — | | | — | | | 44 | | | 2,163 | | | financial assets (3) | 1,235 | | | — | | | 944 | | | 2,179 | | | — | | | — | | | 125 | | | 2,304 | |
Liabilities | Liabilities | | Liabilities | |
| | Derivative liabilities (4) | 568 | | | 70 | | | — | | | 638 | | | (463) | | | (105) | | | — | | | 70 | | | Derivative liabilities (4) | 1,443 | | | 254 | | | — | | | 1,697 | | | (1,282) | | | (202) | | | — | | | 213 | |
| | Long-term debt (5) | 25,652 | | | 134 | | | 3 | | | 25,789 | | | — | | | — | | | (1,117) | | | 24,672 | | | Long-term debt (5) | 50,263 | | | 125 | | | 4 | | | 50,392 | | | — | | | — | | | (4,890) | | | 45,502 | |
| | Long-term obligations | | | Long-term obligations | |
| | to equity companies (7) | — | | | — | | | 4,245 | | | 4,245 | | | — | | | — | | | (257) | | | 3,988 | | | to equity companies (6) | — | | | — | | | 3,530 | | | 3,530 | | | — | | | — | | | (277) | | | 3,253 | |
| | Other long-term | | | Other long-term | |
| | financial liabilities (6) | — | | | — | | | 1,042 | | | 1,042 | | | — | | | — | | | 16 | | | 1,058 | | | financial liabilities (7) | — | | | — | | | 964 | | | 964 | | | — | | | — | | | 44 | | | 1,008 | |
(1)Included in the Balance Sheet lines: Notes and accounts receivable - net and Other assets, including intangibles - net
(2)Included in the Balance Sheet line: Investments, advances and long-term receivables
(3)Included in the Balance Sheet lines: Investments, advances and long-term receivables and Other assets, including intangibles - net
(4)Included in the Balance Sheet lines: Accounts payable and accrued liabilities and Other long-term obligations
(5)Excluding finance lease obligations
(6) Included in the Balance Sheet line: Other long-term obligations
(7) Advances to/receivables from equity companies and long-term obligations to equity companies are mainly designated as hierarchy level 3 inputs. The fair value is calculated by discounting the remaining obligations by a rate consistent with the credit quality and industry of the company.
(7)Included in the Balance Sheet line: Other long-term obligations. Includes contingent consideration related to a prior year acquisition where fair value is based on expected drilling activities and discount rates.
At SeptemberJune 30, 2021, and December 31, 2020, respectively, the Corporation had $462$495 million and $504 million of collateral under master netting arrangements not offset against the derivatives on the Consolidated Balance Sheet, primarily related to initial margin requirements.
Long-term debt. The increase in the estimated fair value and book value of long-term debt reflects the Corporation's issuance of new debt securities during 2020. The carrying value of these debt securities as of September 30, 2020, is below:
| | | | | | | | | | | |
Issuance Date | | Description of Notes | Carrying Value |
(millions of dollars) |
March 2020 | | | |
| | 2.992% Notes due 2025 | 1,500 | |
| | 3.294% Notes due 2027 | 1,000 | |
| | 3.482% Notes due 2030 | 2,000 | |
| | 4.227% Notes due 2040 | 1,250 | |
| | 4.327% Notes due 2050 | 2,750 | |
April 2020 | | | |
| | 1.571% Notes due 2023 | 2,750 | |
| | 2.992% Notes due 2025 (1)
| 1,310 | |
| | 2.610% Notes due 2030 | 2,000 | |
| | 4.227% Notes due 2040 (1)
| 842 | |
| | 3.452% Notes due 2051 | 2,750 | |
June 2020 (2)
| | | |
| | 0.142% Notes due 2024 | 1,756 | |
| | 0.524% Notes due 2028 | 1,171 | |
| | 0.835% Notes due 2032 | 1,171 | |
| | 1.408% Notes due 2039 | 1,171 | |
| | | |
| | Total | 23,421 | |
(1) Includes premiums of $152 million.
(2) Euro-denominated.
The Corporation may use non-derivative financial instruments, such as its foreign currency-denominated debt, as hedges of its net investments in certain foreign subsidiaries. Under this method, the change in the carrying value of the financial instruments due to foreign exchange fluctuations is reported in accumulated other comprehensive income. As of SeptemberJune 30, 2020,2021, the Corporation has designated $5.3 billion of its Euro-denominated long-term debt and related accrued interest as a net investment hedge of its European business. The net investment hedge is deemed to be perfectly effective.
The Corporation had undrawn short-term committed lines of credit of $11.0$10.7 billion and an undrawn long-term committed linelines of credit of $0.2$0.6 billion as of thirdsecond quarter 2020. In the third quarter, the Corporation increased its 364-day facility from $7.5 billion to $10.0 billion and terminated the supplemental $7.0 billion facility that was established in the first quarter of 2020.2021.
Derivative Instruments. The Corporation’s size, strong capital structure, geographic diversity and the complementary nature of the Upstream, Downstream and Chemical businesses reduce the Corporation’s enterprise-wide risk from changes in commodity prices, currency rates and interest rates. In addition, the Corporation uses commodity-based contracts, including derivatives, to manage commodity price risk and for trading purposes. Commodity contracts held for trading purposes are presented in the Consolidated Statement of Income on a net basis in the line “Sales and other operating revenue.” The Corporation’s commodity derivatives are not accounted for under hedge accounting. At times, the Corporation also enters into currency and interest rate derivatives, none of which are material to the Corporation’s financial position as of SeptemberJune 30, 2020,2021, and December 31, 2019,2020, or results of operations for the periods ended SeptemberJune 30, 2020,2021, and 2019.2020.
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 maintains a system of controls that includes the authorization, reporting and monitoring of derivative activity.
The net notional long/(short) position of derivative instruments at SeptemberJune 30, 2020,2021, and December 31, 2019,2020, was as follows:
| | | September 30, | | December 31, | | June 30, | | December 31, |
| | 2020 | | 2019 | | 2021 | | 2020 |
| | (millions) | | (millions) |
Crude oil (barrels) | Crude oil (barrels) | 50 | | | 57 | | Crude oil (barrels) | 30 | | | 40 | |
Petroleum products (barrels) | Petroleum products (barrels) | (50) | | | (38) | | Petroleum products (barrels) | (69) | | | (46) | |
Natural Gas (MMBTUs) | (438) | | | (165) | | |
Natural gas (MMBTUs) | | Natural gas (MMBTUs) | (461) | | | (500) | |
|
Realized and unrealized 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 September 30, | | Nine Months Ended September 30, | | | Three Months Ended June 30, | | Six Months Ended June 30, |
| | | 2020 | | 2019 | | 2020 | | 2019 | | | 2021 | | 2020 | | 2021 | | 2020 |
| | | (millions of dollars) | | (millions of dollars) | | | (millions of dollars) | | (millions of dollars) |
Sales and other operating revenue | Sales and other operating revenue | | (297) | | | 144 | | | 688 | | | (98) | | Sales and other operating revenue | | (1,088) | | | (251) | | | (1,600) | | | 985 | |
Crude oil and product purchases | Crude oil and product purchases | | 134 | | | 60 | | | (396) | | | 75 | | Crude oil and product purchases | | (20) | | | (178) | | | (19) | | | (530) | |
Total | Total | | (163) | | | 204 | | | 292 | | | (23) | | Total | | (1,108) | | | (429) | | | (1,619) | | | 455 | |
8. Disclosures about Segments and Related Information
| | | | Three Months Ended September 30, | | Nine Months Ended September 30, | | | Three Months Ended June 30, | | Six Months Ended June 30, |
| | | 2020 | | 2019 | | 2020 | | 2019 | | | 2021 | | 2020 | | 2021 | | 2020 |
Earnings (Loss) After Income Tax | Earnings (Loss) After Income Tax | | (millions of dollars) | | (millions of dollars) | Earnings (Loss) After Income Tax | | (millions of dollars) | | (millions of dollars) |
Upstream | Upstream | | | | | | Upstream | | | | | |
United States | United States | | (681) | | | 37 | | | (2,582) | | | 468 | | United States | | 663 | | | (1,197) | | | 1,026 | | | (1,901) | |
Non-U.S. | Non-U.S. | | 298 | | | 2,131 | | | 1,084 | | | 7,837 | | Non-U.S. | | 2,522 | | | (454) | | | 4,713 | | | 786 | |
Downstream | Downstream | | | Downstream | | |
United States | United States | | (136) | | | 673 | | | (338) | | | 822 | | United States | | (149) | | | (101) | | | (262) | | | (202) | |
Non-U.S. | Non-U.S. | | (95) | | | 557 | | | 472 | | | 603 | | Non-U.S. | | (78) | | | 1,077 | | | (355) | | | 567 | |
Chemical | Chemical | | | Chemical | | |
United States | United States | | 357 | | | 53 | | | 816 | | | 208 | | United States | | 1,282 | | | 171 | | | 1,997 | | | 459 | |
Non-U.S. | Non-U.S. | | 304 | | | 188 | | | 456 | | | 739 | | Non-U.S. | | 1,038 | | | 296 | | | 1,738 | | | 152 | |
Corporate and financing | Corporate and financing | | (727) | | | (469) | | | (2,278) | | | (2,027) | | Corporate and financing | | (588) | | | (872) | | | (1,437) | | | (1,551) | |
Corporate total | Corporate total | | (680) | | | 3,170 | | | (2,370) | | | 8,650 | | Corporate total | | 4,690 | | | (1,080) | | | 7,420 | | | (1,690) | |
| Sales and Other Operating Revenue | Sales and Other Operating Revenue | | | Sales and Other Operating Revenue | | |
Upstream | Upstream | | | Upstream | | |
United States | United States | | 1,422 | | | 1,941 | | | 4,280 | | | 7,228 | | United States | | 1,726 | | | 1,081 | | | 3,611 | | | 2,858 | |
Non-U.S. | Non-U.S. | | 2,015 | | | 3,069 | | | 6,604 | | | 10,582 | | Non-U.S. | | 3,792 | | | 2,022 | | | 6,886 | | | 4,589 | |
Downstream | Downstream | | | Downstream | | |
United States | United States | | 12,267 | | | 18,358 | | | 35,854 | | | 52,721 | | United States | | 19,040 | | | 8,203 | | | 35,118 | | | 23,587 | |
Non-U.S. | Non-U.S. | | 23,862 | | | 33,391 | | | 69,468 | | | 100,994 | | Non-U.S. | | 31,899 | | | 16,302 | | | 60,512 | | | 45,606 | |
Chemical | Chemical | | | Chemical | | |
United States | United States | | 2,162 | | | 2,412 | | | 6,028 | | | 7,421 | | United States | | 4,007 | | | 1,570 | | | 7,098 | | | 3,866 | |
Non-U.S. | Non-U.S. | | 3,684 | | | 4,241 | | | 10,574 | | | 13,583 | | Non-U.S. | | 5,474 | | | 3,090 | | | 10,361 | | | 6,890 | |
Corporate and financing | Corporate and financing | | 13 | | | 10 | | | 28 | | | 30 | | Corporate and financing | | 5 | | | 9 | | | (91) | | | 15 | |
Corporate total | Corporate total | | 45,425 | | | 63,422 | | | 132,836 | | | 192,559 | | Corporate total | | 65,943 | | | 32,277 | | | 123,495 | | | 87,411 | |
| Intersegment Revenue | Intersegment Revenue | | | Intersegment Revenue | | |
Upstream | Upstream | | | Upstream | | |
United States | United States | | 2,348 | | | 2,876 | | | 5,999 | | | 7,828 | | United States | | 3,827 | | | 1,378 | | | 7,150 | | | 3,651 | |
Non-U.S. | Non-U.S. | | 5,132 | | | 7,383 | | | 14,371 | | | 22,888 | | Non-U.S. | | 7,747 | | | 2,852 | | | 14,564 | | | 9,239 | |
Downstream | Downstream | | | Downstream | | |
United States | United States | | 2,812 | | | 5,439 | | | 8,820 | | | 16,942 | | United States | | 5,438 | | | 2,056 | | | 9,391 | | | 6,008 | |
Non-U.S. | Non-U.S. | | 3,334 | | | 5,826 | | | 11,210 | | | 18,563 | | Non-U.S. | | 5,505 | | | 2,752 | | | 10,886 | | | 7,876 | |
Chemical | Chemical | | | Chemical | | |
United States | United States | | 1,480 | | | 1,489 | | | 4,466 | | | 5,947 | | United States | | 2,488 | | | 1,220 | | | 4,438 | | | 2,986 | |
Non-U.S. | Non-U.S. | | 895 | | | 1,413 | | | 2,866 | | | 4,543 | | Non-U.S. | | 1,342 | | | 708 | | | 2,573 | | | 1,971 | |
Corporate and financing | Corporate and financing | | 55 | | | 60 | | | 166 | | | 168 | | Corporate and financing | | 52 | | | 56 | | | 109 | | | 111 | |
| Geographic | Geographic | | | | | | Geographic | | | | | |
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | | Three Months Ended June 30, | | Six Months Ended June 30, |
Sales and Other Operating Revenue | Sales and Other Operating Revenue | | 2020 | | 2019 | | 2020 | | 2019 | Sales and Other Operating Revenue | | 2021 | | 2020 | | 2021 | | 2020 |
| | | (millions of dollars) | | (millions of dollars) | | | (millions of dollars) | | (millions of dollars) |
United States | United States | | 15,851 | | | 22,711 | | | 46,162 | | | 67,370 | | United States | | 24,773 | | | 10,854 | | | 45,827 | | | 30,311 | |
Non-U.S. | Non-U.S. | | 29,574 | | | 40,711 | | | 86,674 | | | 125,189 | | Non-U.S. | | 41,170 | | | 21,423 | | | 77,668 | | | 57,100 | |
Total | Total | | 45,425 | | | 63,422 | | | 132,836 | | | 192,559 | | Total | | 65,943 | | | 32,277 | | | 123,495 | | | 87,411 | |
| Significant Non-U.S. revenue sources include: (1) | Significant Non-U.S. revenue sources include: (1) | | | Significant Non-U.S. revenue sources include: (1) | | |
Canada | Canada | | 3,566 | | | 4,945 | | | 9,537 | | | 15,141 | | Canada | | 5,282 | | | 2,148 | | | 9,541 | | | 5,971 | |
United Kingdom | United Kingdom | | 2,827 | | | 4,042 | | | 8,424 | | | 13,244 | | United Kingdom | | 3,815 | | | 1,906 | | | 6,758 | | | 5,597 | |
Singapore | Singapore | | 2,400 | | | 2,942 | | | 6,883 | | | 9,197 | | Singapore | | 3,515 | | | 1,867 | | | 6,950 | | | 4,483 | |
France | France | | 2,273 | | | 3,266 | | | 6,446 | | | 9,597 | | France | | 3,247 | | | 1,583 | | | 6,029 | | | 4,172 | |
Italy | Italy | | 2,055 | | | 2,691 | | | 5,241 | | | 7,830 | | Italy | | 2,466 | | | 1,228 | | | 4,331 | | | 3,186 | |
Belgium | Belgium | | 1,504 | | | 2,598 | | | 4,639 | | | 9,371 | | Belgium | | 2,192 | | | 1,247 | | | 4,181 | | | 3,136 | |
Australia | | Australia | | 2,019 | | | 1,372 | | | 3,748 | | | 3,025 | |
(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. LeasesDivestment Activities
A previously recorded operating lease was renegotiatedExxonMobil signed an agreement in the first quarter of 20202021 with HitecVision, through its wholly-owned portfolio company NEO Energy, for the sale of most of its non-operated upstream assets in the United Kingdom central and northern North Sea for more than $1 billion. The transaction is expected to close by year-end 2021, subject to standard conditions precedent, including regulatory and third-party approvals. The agreed sales price is subject to interim period adjustments from the effective date of January 1, 2021, to the closing date, and has an additional upside potential of approximately $0.3 billion in contingent payments, based on production levels and commodity prices. Estimated total cash flow from the divestment will range from $0.7 billion to $1.2 billion, of which $0.7 billion to $0.8 billion is expected in 2021 and the newremainder in future years.
In the second quarter of 2021, ExxonMobil signed an agreement no longer meetswith Celanese for the definitionsale of a lease. At year-end 2019, this agreement had been reported as a right of use asset of $1.3its global Santoprene business for $1.15 billion, subject to working capital and a lease liability of $1.3 billionother adjustments. The sale includes 2 thermoplastic elastomers manufacturing sites in Pensacola, Florida and Newport, Wales along with associated assets. The transaction is expected to close in the “Other” operating lease category. fourth quarter of 2021, subject to standard conditions precedent including regulatory approvals. Estimated total cash flow from the divestment is approximately $0.9 billion.
The new agreement will be reported asCorporation expects to recognize a take-or-pay obligation.gain at closing for each of these transactions. Estimated gain and net cash flow could change due to market factors, working capital adjustments, tax impacts, and closing dates.
10. Allowance for Current Expected Credit Loss (CECL)
Effective January 1,10.Restructuring Activities
During 2020, ExxonMobil conducted an extensive global review of staffing levels and subsequently commenced targeted workforce reductions within a number of countries to improve efficiency and reduce costs. The programs, which are expected to be substantially completed by the end of 2021, include both voluntary and involuntary employee separations and reductions in contractors.
During the second quarter of 2021, the Corporation adoptedrecorded before-tax charges of $10 million, consisting primarily of employee separation costs, from workforce reductions in Singapore and Europe associated with the Financial Accounting Standards Board’s update, Financial Instruments – Credit Losses (Topic 326), as amended. global review of staffing levels. These costs are captured in “Selling, general and administrative expenses” on the Statement of Income.
For the first six months of the year, the recorded before-tax charges associated with the global review of staffing levels were $49 million.
For the full year, the Corporation estimates charges of less than $100 million related to planned workforce reduction programs associated with the global review of staffing levels. This does not include charges related to employee reductions associated with any portfolio changes or other projects.
The standard requires a valuation allowance for credit losses be recognized for certain financial assets that reflectsfollowing tables summarize the current expected credit loss over the asset’s contractual life. The valuation allowance considers the risk of loss, even if remote,reserves and considers past events, current conditions and reasonable and supportable forecasts. The standard requires this expected loss methodology for trade receivables, certain other financial assets and off-balance sheet credit exposures. The cumulative effect adjustmentcharges related to the adoption of this standard reduced equity by $93 million.
The Corporation is exposed to credit losses primarily through sales of petroleum products, crude oil, NGLs and natural gas, as well as loans to equity companies and joint venture receivables. A counterparty’s ability to pay is assessed through a credit review process that considers payment terms, the counterparty’s established credit rating or the Corporation’s assessment of the counterparty’s credit worthiness, contract terms, country of operation, and other risks. The Corporation can require prepayment or collateral to mitigate certain credit risks.
The Corporation groups financial assets into portfolios that share similar risk characteristics for purposes of determining the allowance for credit losses. Each reporting period, the Corporation assesses whether a significant change in the risk of credit loss has occurred. Among the quantitative and qualitative factors considered are historical financial data, current conditions, industry and country risk, current credit ratings and the quality of third-party guarantees secured from the counterparty. Financial assets are written off in whole, or in part, when practical recovery efforts have been exhausted and no reasonable expectation of recovery exists. Subsequent recoveries of amounts previously written off are recognized in earnings. The Corporation manages receivable portfolios using past due balances as a key credit quality indicator.
The Corporation recognizes a credit allowance for off-balance sheet credit exposures as a liability on the balance sheet, separate from the allowance for credit losses related to recognized financial assets. Among these exposures are unfunded loans to equity companies and financial guarantees that cannot be cancelled unilaterally by the Corporation.
In the first nine months of 2020, the COVID-19 pandemic spread through most areas of the world resulting in economic uncertainty, global financial market volatility, and negative effects in the credit markets. The Corporation has considered these effects, alongworkforce reduction programs associated with the significantly lower balancesglobal review of trade receivables at the end of the quarter,staffing levels, which are recorded in its estimate of credit losses“Accounts payable and concluded no material adjustment to credit allowances in the quarter was required. At September 30, 2020, the Corporation’s evaluation of financial assets under Financial Instruments – Credit Losses (Topic 326), as amended, included $16,450 million of notes and accounts receivable, net of allowances of $148 million, and $9,668 million of loans and long-term receivables, net of allowances of $436 million, and certain other financial assets where there is immaterial risk of loss.accrued liabilities.”
| | | | | | | | | | | | | | | | | | | | | | | |
| Reserve for Notes and Other Receivables and Loans | | Liabilities for Off- Balance Sheet Assets | | |
| Trade | | Other | | | | Total |
| (millions of dollars) |
Balance at December 31, 2019 | 34 | | | 469 | | | 0 | | | 503 | |
Cumulative effect of accounting change | 52 | | | 45 | | | 12 | | | 109 | |
Current period provision | 0 | | | (4) | | | (1) | | | (5) | |
Write-offs charged against the allowance | (1) | | | (1) | | | — | | | (2) | |
Other | 0 | | | (10) | | | 0 | | | (10) | |
Balance at September 30, 2020 | 85 | | | 499 | | | 11 | | | 595 | |
| | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2021 | | 2021 |
| (millions of dollars) | | (millions of dollars) |
Beginning Balance | 312 | | | 403 | |
Additions/adjustments | 10 | | | 49 | |
Payments made | (94) | | | (224) | |
Ending Balance | 228 | | | 228 | |
EXXON MOBIL CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
FUNCTIONAL EARNINGS SUMMARY
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Third Quarter | | First Nine Months |
Earnings (Loss) (U.S. GAAP) | | 2020 | | 2019 | | 2020 | | 2019 |
| | (millions of dollars) | | (millions of dollars) |
Upstream | | | | | | | | |
United States | | (681) | | | 37 | | | (2,582) | | | 468 | |
Non-U.S. | | 298 | | | 2,131 | | | 1,084 | | | 7,837 | |
Downstream | | | | | | | | |
United States | | (136) | | | 673 | | | (338) | | | 822 | |
Non-U.S. | | (95) | | | 557 | | | 472 | | | 603 | |
Chemical | | | | | | | | |
United States | | 357 | | | 53 | | | 816 | | | 208 | |
Non-U.S. | | 304 | | | 188 | | | 456 | | | 739 | |
Corporate and financing | | (727) | | | (469) | | | (2,278) | | | (2,027) | |
Net income (loss) attributable to ExxonMobil (U.S. GAAP) | | (680) | | | 3,170 | | | (2,370) | | | 8,650 | |
| | | | | | | | |
Earnings (Loss) per common share (dollars) | | (0.15) | | | 0.75 | | | (0.55) | | | 2.03 | |
| | | | | | | | |
Earnings (Loss) per common share - assuming dilution (dollars) | | (0.15) | | | 0.75 | | | (0.55) | | | 2.03 | |
References in this discussion to Corporate earnings (loss) mean net income (loss) attributable to ExxonMobil (U.S. GAAP) from the consolidated income statement. Unless otherwise indicated, references to earnings (loss), Upstream, Downstream, Chemical and Corporate and financing segment earnings (loss), and earnings (loss) per share are ExxonMobil's share after excluding amounts attributable to noncontrolling interests.
CURRENT ECONOMIC CONDITIONS
During the first quarter ofIn early 2020, the balance of supply and demand for petroleum and petrochemical products experienced two significant disruptive effects. On the demand side, the COVID-19 pandemic spread rapidly through most areas of the world resulting in substantial reductions in consumer and business activity and significantly reduced demand for crude oil, natural gas, and petroleum products. This reduction in demand coincided with announcements of increased production in certain key oil-producing countries which led to increases in inventory levels and sharp declines in prices for crude oil, natural gas, and petroleum products.
Demand for petroleum and petrochemical products. During the second and third quarters, the effects of COVID-19products has continued to have a negative impact onrecover through 2021 with the world’s major economiesCorporation's second quarter 2021 financial results benefiting from stronger prices and demand for our products.
Industry conditions seen thus far in 2020 have led to lower realized prices for the Corporation’s products and have resulted in substantially lower earnings and operating cash flow throughout 2020 in comparison to 2019. Market conditions continue to reflect considerable uncertainty as consumer and business activity has exhibited some degree of recovery, but remains lowermargins when compared to prior periods as a result of the pandemic. As long as such conditions persist, negative effects on earnings and cash flow will continue, and project deferrals and idling of capacity will result in lower volumes across one or more business segments relative to 2019 levels. Despite actions taken by key oil-producing countries to reduce oversupply in the near term, and improved credit market conditions providing sufficient liquidity to credit-worthy companies, the unfavorable economic impacts appear increasingly likely to persist to some extent well into 2021.
The Corporation has taken several actions in response to these conditions. In April 2020 the Corporation announced significant reductions in 2020 capital spending and operating expenses. Capital and exploration expenditures for 2020 are expected to be no more than $23 billion, down from the previously announced $33 billion. The Corporation took steps to strengthen its liquidity including issuing $8.5 billion of long-term U.S. debt securities in the first quarter of 20202021. The rate and issuing a further $9.5 billionpace of long-term U.S. debt securitiesrecovery, however, has varied across geographies and $5.0 billion of long-term Euro-denominated debt securities inbusiness lines, with Downstream margins remaining low compared to historical levels over the second quarter of 2020. The Corporation is developing plans consistent with near-term demand uncertainties and does not plan on increasing gross debt above second quarter levels. The Corporation had undrawn short-term committed lines of credit of $11.0 billion and an undrawn long-term committed line of credit of $0.2 billion as of third quarter 2020. In the third quarter, the Corporation increased its 364-day facility from $7.5 billion to $10 billion and terminated the supplemental $7.0 billion facility that was established in the first quarter of 2020.
last decade. The Corporation continues to manage through this period of unprecedented challenge while preserving opportunities with upside potential when recovery occurs. It is prioritizing opportunities to hold 2021 capital spending in a range of $16 billion to $19 billion and achieve operating expense savings through enhancing organizational focus, eliminating work, reducing discretionary activities and driving efficiencies. Current or future capital spending reductions will result in lower near-term production volumes in the Upstream and delays in previously anticipated volume increases in future years.
In addition, in light of the current low commodity price environment, and depending on the extent and pace of recovery, the Corporation’s planned divestment program could be adversely affected by fewer financially suitable buyers. This could result in a slowing of the pace of divestments, certain assets being sold at a price below current book value, or impairment charges if the likelihood of divesting certain assets increases.
The Corporation has reviewed its near-term spending reductions and resulting near-term production impacts to determine whether they put its long-lived assets at risk for impairment. In large part due to expectations for lower prices in the near term, the Corporation has recorded impairments thus far in 2020 for certain assets that were, in aggregate, insignificant. Despite the challenging near-term environment, the Corporation’s view of long-term supply and demand fundamentals has not changed significantly. However, the Corporation continues to assess its strategic plans and longer-term price views, taking into account current and developingclosely monitor industry and economic conditions amid the uneven global recovery from the COVID-19 pandemic.
FUNCTIONAL EARNINGS SUMMARY
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Second Quarter | | First Six Months |
Earnings (Loss) (U.S. GAAP) | | 2021 | | 2020 | | 2021 | | 2020 |
| | (millions of dollars) | | (millions of dollars) |
Upstream | | | | | | | | |
United States | | 663 | | | (1,197) | | | 1,026 | | | (1,901) | |
Non-U.S. | | 2,522 | | | (454) | | | 4,713 | | | 786 | |
Downstream | | | | | | | | |
United States | | (149) | | | (101) | | | (262) | | | (202) | |
Non-U.S. | | (78) | | | 1,077 | | | (355) | | | 567 | |
Chemical | | | | | | | | |
United States | | 1,282 | | | 171 | | | 1,997 | | | 459 | |
Non-U.S. | | 1,038 | | | 296 | | | 1,738 | | | 152 | |
Corporate and financing | | (588) | | | (872) | | | (1,437) | | | (1,551) | |
Net income (loss) attributable to ExxonMobil (U.S. GAAP) | | 4,690 | | | (1,080) | | | 7,420 | | | (1,690) | |
| | | | | | | | |
Earnings (Loss) per common share (dollars) | | 1.10 | | | (0.26) | | | 1.74 | | | (0.40) | |
| | | | | | | | |
Earnings (Loss) per common share - assuming dilution (dollars) | | 1.10 | | | (0.26) | | | 1.74 | | | (0.40) | |
References in this discussion to Corporate earnings (loss) mean net income (loss) attributable to ExxonMobil (U.S. GAAP) from the consolidated income statement. Unless otherwise indicated, references to earnings (loss), Upstream, Downstream, Chemical and continued market uncertainty, as part of its annual planning process.Corporate and financing segment earnings (loss), and earnings (loss) per share are ExxonMobil's share after excluding amounts attributable to noncontrolling interests.
As part of this process, the Corporation is assessing its full portfolio to prioritize assets with the highest future value potential within its broad range of available opportunities in order to optimize resources within current levels of debt and operating cash flow while identifying potential asset divestment candidates. This effort includes an ongoing re-assessment of North American dry gas assets currently included in the Corporation’s development plan, as well as assessments of its long-term price views and project execution plans. Depending on the outcome of the planning process, including in particular any significant future changes to the Corporation’s current development plans for its dry gas portfolio, long-lived assets with carrying values of approximately $25 billion to $30 billion could be at risk for significant impairment. However, the Corporation’s planning process may result in development plans for these assets that are reasonably similar to previous years, in which case it is unlikely these assets will be subject to material impairment. This planning process is expected to be completed with required review by the Board of Directors in the fourth quarter. If needed, assessments on an asset-level basis will be completed following this Board review.
As disclosed in ExxonMobil’s 2019 Form 10-K, low crude oil and natural gas prices can impact the Corporation’s estimates of proved reserves as reported under Securities and Exchange Commission (SEC) rules. Among other factors, proved reserves estimates are affected by the level of capital spending, timing, completion, and optimization of development projects, reservoir performance, market prices and differentials, costs, fiscal and commercial terms, government policies, regulatory approvals and partner considerations. The Corporation’s near-term reduction in capital expenditures resulted in a downward revision to estimates of proved reserves reported in the 2019 Form 10-K of approximately 1 billion oil-equivalent barrels, mainly related to unconventional drilling in the United States. Consequently, unit-of-production depreciation and depletion rates for Upstream assets increased beginning in the first quarter, which continued through the third quarter. Average year-to-date crude oil and natural gas prices have been significantly affected by the low prices experienced since the end of the first quarter. Should prices remain near current levels for the remainder of the year, under the SEC definition of proved reserves, certain quantities of crude oil, bitumen and natural gas will not qualify as proved reserves at year-end 2020. Based on available price information for 2020 and the effects of expected reductions in capital spending mentioned above, it is possible that reductions to proved reserves could amount to approximately 25 percent of the Corporation’s 22.4 billion oil-equivalent barrels reported at year-end 2019.
The Corporation has taken steps, in line with government guidelines and restrictions, to limit the spread of COVID-19 among employees, contractors and the broader community, while also maintaining operations to ensure reliable supply of products to customers. The Corporation maintains robust business continuity plans, but should these efforts not be successful the Corporation could experience declines in workforce productivity that exacerbate some of the adverse operating and financial effects noted above.
REVIEW OF THIRDSECOND QUARTER 20202021 RESULTS
ExxonMobil’s thirdsecond quarter 2020 results2021 earnings were a loss of $0.7$4.7 billion, or $0.15$1.10 per diluted share, compared with earningsa loss of $3.2$1.1 billion a year earlier. The decreaseincrease in earnings was primarily the result ofdriven by higher Upstream realizations; higher Chemical and Downstream margins; higher volumes; and lower Upstream realizations, reduced Downstream margins, and unfavorable non-operational impacts, including less favorable one-time tax items.expenses. These impacts were partly offset by lower expenses across all business segmentsthe absence of prior year favorable non-operational inventory adjustments and higher Downstream volume and mix effects.scheduled maintenance activity.
ResultsEarnings for the first ninesix months of 20202021 were a loss of $2.4$7.4 billion, or $0.55$1.74 per diluted share, compared with earningsa loss of $8.7$1.7 billion a year earlier.
Capital and exploration expenditures were $16.6$6.9 billion, down $6.1$5.5 billion from 2019.2020.
Oil-equivalent production was 3.83.7 million barrels per day, down 4 percent from the prior year. Excluding entitlement effects, divestments, and government mandates, oil-equivalent production was essentially flat withup 1 percent from the prior year.
The Corporation distributed $11.2$7.4 billion in dividends to shareholders.
| | | | Third Quarter | | First Nine Months | | | Second Quarter | | First Six Months |
| | | 2020 | | 2019 | | 2020 | | 2019 | | | 2021 | | 2020 | | 2021 | | 2020 |
| | | (millions of dollars) | | (millions of dollars) | | | (millions of dollars) | | (millions of dollars) |
Upstream results | Upstream results | | | | | | Upstream results | | | | | |
United States | United States | | (681) | | | 37 | | | (2,582) | | | 468 | | United States | | 663 | | | (1,197) | | | 1,026 | | | (1,901) | |
Non-U.S. | Non-U.S. | | 298 | | | 2,131 | | | 1,084 | | | 7,837 | | Non-U.S. | | 2,522 | | | (454) | | | 4,713 | | | 786 | |
Total | Total | | (383) | | | 2,168 | | | (1,498) | | | 8,305 | | Total | | 3,185 | | | (1,651) | | | 5,739 | | | (1,115) | |
Upstream resultsearnings were $3,185 million in the second quarter of 2021, compared with a loss of $383$1,651 million in the thirdsecond quarter of 2020, compared with earnings of $2,168 million in the third quarter of 2019.2020.
•Realizations reducedincreased earnings by $2,630$4,320 million, with lowerdriven by higher liquids realizations of $1,830$4,060 million and lowerhigher gas realizations of $800$260 million.
•Volume and mix effects reducedincreased earnings by $60$40 million due to lowerfavorable liquids sales mix of $30 million and higher gas volumes of $90 million partly offset by higher liquids sales volumes of $30$10 million.
•All other items increased earnings by $140$470 million, includingas lower expenses of $500$280 million and favorable other earnings impacts of $270 million were partly offset by unfavorable non-operationalforeign exchange impacts of $310 million, mainly from current and prior year tax items, and other unfavorable earnings impacts of $50$80 million.
•U.S. Upstream resultsearnings were a loss of $681$663 million, down $718up $1,860 million from the prior year quarter.
•Non-U.S. Upstream earnings were $298$2,522 million, down $1,833up $2,976 million from the prior year quarter.
•On an oil-equivalent basis, production decreased 62 percent from the thirdsecond quarter of 2019.2020.
•Liquids production totaled 2.32.2 million barrels per day, down 106,000 barrels per day, withas higher entitlements, lower downtime and growthdemand was more than offset by government mandates, divestments,lower entitlements and lower demand.increased maintenance activity.
•Natural gas production was 8.3 billion cubic feet per day, down 729up 304 million cubic feet per day, asreflecting the impacts of higher entitlements were more thandemand partly offset by divestments, higher downtime,increased maintenance activity and decline.divestments.
Upstream resultsearnings were a loss of $1,498$5,739 million in the first ninesix months of 2020,2021, compared with earningsa loss of $8,305$1,115 million in the first ninesix months of 2019.2020.
•Realizations reducedincreased earnings by $9,050$5,610 million, with lowerhigher liquids realizations of $6,990$5,450 million and lowerhigher gas realizations of $2,060$160 million.
•Volume and mix effects reduced earnings by $320 million, including $100reflecting lower liquid sales volumes of $370 million for liquids and $220 million for gas.partly offset by higher gas volumes of $50 million.
•All other items decreasedincreased earnings by $430$1,560 million, as lower expenses of $990 million and the absence of prior year unfavorable non-operational impacts of $1,080 million, reflecting impairments of $410million and a prior year non-U.S. tax item of $490 million and other unfavorablefavorable earnings impacts of $140$460 million were partly offset by lower expenses of $630 million and favorableunfavorable foreign exchange effects of $160$300 million.
•U.S. Upstream resultsearnings were $1,026 million, compared with a loss of $2,582 million, compared with earnings of $468$1,901 million in the prior year.
•Non-U.S. Upstream earnings were $1,084$4,713 million, down $6,753up $3,927 million from the prior year.
•On an oil-equivalent basis, production decreased 4 percent from the first ninesix months of 2019.2020.
•Liquids production totaled 2.42.2 million barrels per day, down 12,000164,000 barrels per day, with growth, higher entitlements,demand and lower downtimeproject growth more than offset by divestments,lower entitlements, government mandates, decline and lower demand.increased maintenance activity.
•Natural gas production was 8.68.7 billion cubic feet per day, down 794up 38 million cubic feet per day, as higher entitlements and growth were more thandemand was largely offset by divestmentsincreased maintenance activity, the Groningen production limit, and lower demand.divestments.
| | | | Third Quarter | | First Nine Months | | | Second Quarter | | First Six Months |
Upstream additional information | Upstream additional information | | (thousands of barrels daily) | | (thousands of barrels daily) | Upstream additional information | | (thousands of barrels daily) | | (thousands of barrels daily) |
Volumes reconciliation (Oil-equivalent production) (1) | Volumes reconciliation (Oil-equivalent production) (1) | | | | Volumes reconciliation (Oil-equivalent production) (1) | | | |
2019 | | 3,899 | | 3,929 | |
2020 | | 2020 | | 3,638 | | 3,842 |
Entitlements - Net Interest | Entitlements - Net Interest | | (9) | | (8) | Entitlements - Net Interest | | 4 | | (1) |
Entitlements - Price / Spend / Other | Entitlements - Price / Spend / Other | | 159 | | 108 | Entitlements - Price / Spend / Other | | (147) | | (94) |
Government Mandates | Government Mandates | | (139) | | (82) | Government Mandates | | (6) | | (65) |
Divestments | Divestments | | (154) | | (163) | Divestments | | (23) | | (20) |
Growth / Other | Growth / Other | | (84) | | 1 | Growth / Other | | 116 | | 22 |
2020 | | 3,672 | | 3,785 | |
2021 | | 2021 | | 3,582 | | 3,684 |
(1)Natural gas is converted to an oil-equivalent basis at six million cubic feet per one 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.
Government Mandates are changes to ExxonMobil's sustainable production levels due to temporary non-operational production limits imposed by governments, generally upon a sector, type or method of production.
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 | | | Second Quarter | | First Six Months |
| | | 2020 | | 2019 | | 2020 | | 2019 | | | 2021 | | 2020 | | 2021 | | 2020 |
| | | (millions of dollars) | | (millions of dollars) | | | (millions of dollars) | | (millions of dollars) |
Downstream results | Downstream results | | | | | | Downstream results | | | | | |
United States | United States | | (136) | | | 673 | | | (338) | | | 822 | | United States | | (149) | | | (101) | | | (262) | | | (202) | |
Non-U.S. | Non-U.S. | | (95) | | | 557 | | | 472 | | | 603 | | Non-U.S. | | (78) | | | 1,077 | | | (355) | | | 567 | |
Total | Total | | (231) | | | 1,230 | | | 134 | | | 1,425 | | Total | | (227) | | | 976 | | | (617) | | | 365 | |
Downstream results were a loss of $231$227 million in the thirdsecond quarter of 2020,2021, down $1,461$1,203 million from the thirdsecond quarter of 2019.2020.
•Margins decreasedincreased earnings by $1,880$430 million, mainly reflecting lowerstronger industry refining margins.conditions.
•Volume and mix effects increased earnings by $120$220 million.
•All other items increaseddecreased earnings by $300$1,860 million, mainly due to lowerreflecting the absence of a prior year favorable inventory adjustment of $1,590 million, unfavorable foreign exchange impacts of $90 million, higher expenses of $360$60 million, partly offset byand other unfavorable non-operationalearnings impacts of $90$120 million.
•U.S. Downstream results were a loss of $136$149 million, compared with earningsa loss of $673$101 million in the prior year quarter.
•Non-U.S. Downstream results were a loss of $95$78 million, down $652$1,155 million from the prior year quarter.
•Petroleum product sales of 5.0 million barrels per day were 481,000604,000 barrels per day lowerhigher than the prior year quarter.
Downstream results were $134a loss of $617 million in the first ninesix months of 2020,2021, down $1,291$982 million from the first ninesix months of 2019.2020.
•Margins decreased earnings by $2,260$1,340 million, as weaker industry refining margins were partly offsetdriven by favorable mark-to-market derivatives.
•Volume and mix effects increased earnings by $400 million.
•All other items increased earnings by $560 million, as lower expenses of $860 million were partly offset by unfavorable non-operational impacts associated with impairments of $350 million.
•U.S. Downstream results were a loss of $338 million, compared with earnings of $822 million in the prior year.
•Non-U.S. Downstream results were $472 million, down $131 million from the prior year.
•Petroleum product sales of 4.9 million barrels per day were 527,000 barrels per day lower than the prior year.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Third Quarter | | First Nine Months |
| | 2020 | | 2019 | | 2020 | | 2019 |
| | (millions of dollars) | | (millions of dollars) |
Chemical results | | | | | | | | |
United States | | 357 | | | 53 | | | 816 | | | 208 | |
Non-U.S. | | 304 | | | 188 | | | 456 | | | 739 | |
Total | | 661 | | | 241 | | | 1,272 | | | 947 | |
Chemical earnings were $661 million in the third quarter of 2020, up $420 million from the third quarter of 2019.
•Higher margins increased earnings by $70 million.realized fuels margins.
•Volume and mix effects increased earnings by $30 million.
•All other items increased earnings by $320$330 million, as lower expenses of $350 million and the absence of prior year unfavorable non-operational impacts of $350 million were partly offset by unfavorable foreign exchange and other earnings impacts of $370 million.
•U.S. Downstream results were a loss of $262 million, compared with a loss of $202 million in the prior year.
•Non-U.S. Downstream results were a loss of $355 million, down $922 million from the prior year.
•Petroleum product sales of 5.0 million barrels per day were 99,000 barrels per day higher than the prior year.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Second Quarter | | First Six Months |
| | 2021 | | 2020 | | 2021 | | 2020 |
| | (millions of dollars) | | (millions of dollars) |
Chemical results | | | | | | | | |
United States | | 1,282 | | | 171 | | | 1,997 | | | 459 | |
Non-U.S. | | 1,038 | | | 296 | | | 1,738 | | | 152 | |
Total | | 2,320 | | | 467 | | | 3,735 | | | 611 | |
Chemical earnings were $2,320 million in the second quarter of 2021, up $1,853 million from the second quarter of 2020.
•Higher margins increased earnings by $1,680 million.
•Volume and mix effects increased earnings by $210 million.
•All other items decreased earnings by $40 million, mainly due to lower expensesthe absence of $170 million andprior year favorable non-operational impacts associated with an inventory adjustment of $120 million.million, partly offset by favorable foreign exchange impacts of $70 million and other favorable earnings impacts.
•U.S. Chemical earnings were $357$1,282 million, up $304$1,111 million compared with earnings of $53 million infrom the prior year quarter.
•Non-U.S. Chemical resultsearnings were $304$1,038 million, up $116$742 million from the prior year quarter.
•ThirdSecond quarter prime product sales of 6.66.5 million metric tons were 148,000568,000 metric tons higher than the prior year quarter.
Chemical earnings were $1,272$3,735 million in the first ninesix months of 2020,2021, up $325$3,124 million from the first ninesix months of 2019.2020.
•Higher margins increased earnings by $190$2,300 million.
•Volume and mix effects decreasedincreased earnings by $220$240 million.
•All other items increased earnings by $350$580 million, asdriven by lower expenses of $380$220 million, the absence of prior year unfavorable non-operational impacts of $210 million, favorable foreign exchange impacts of $120 million and other favorable earnings impacts of $30 million were partly offset by unfavorable non-operational impacts, including impairments of $130 million.
•U.S. Chemical earnings were $816$1,997 million, up $608$1,538 million from the prior year.
•Non-U.S. Chemical earnings were $456$1,738 million, down $283up $1,586 million from the prior year.
•First ninesix months prime product sales of 18.813.0 million metric tons were 1.1 million777,000 metric tons lowerhigher than the prior year.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Third Quarter | | First Nine Months |
| | 2020 | | 2019 | | 2020 | | 2019 |
| | (millions of dollars) | | (millions of dollars) |
Corporate and financing results | | (727) | | | (469) | | | (2,278) | | | (2,027) | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Second Quarter | | First Six Months |
| | 2021 | | 2020 | | 2021 | | 2020 |
| | (millions of dollars) | | (millions of dollars) |
Corporate and financing results | | (588) | | | (872) | | | (1,437) | | | (1,551) | |
Corporate and financing expenses were $727$588 million for the thirdsecond quarter of 2021, down $284 million from the second quarter of 2020, up $258 million from the third quarter of 2019, reflecting the absence of a prior yearlower financing costs and net favorable one-time tax item.
impacts.
Corporate and financing expenses were $2,278$1,437 million for the first ninesix months of 2020, up $2512021, down $114 million from 2019,2020, reflecting the absence of prior yearlower financing costs and net favorable one-time tax items and higher financing costsimpacts, partly offset by lower corporate costs.higher retirement related expenses.
LIQUIDITY AND CAPITAL RESOURCES
| | | | Third Quarter | | First Nine Months | | | Second Quarter | | First Six Months |
| | | 2020 | | 2019 | | 2020 | | 2019 | | | 2021 | | 2020 | | 2021 | | 2020 |
| | | (millions of dollars) | | (millions of dollars) | | | (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 | Operating activities | | | 10,663 | | | 23,364 | | Operating activities | | | 18,914 | | | 6,274 | |
Investing activities | Investing activities | | | (15,157) | | | (18,820) | | Investing activities | | | (5,071) | | | (11,448) | |
Financing activities | Financing activities | | | 10,568 | | | (2,162) | | Financing activities | | | (14,807) | | | 15,062 | |
Effect of exchange rate changes | Effect of exchange rate changes | | | (331) | | | (73) | | Effect of exchange rate changes | | | 65 | | | (401) | |
Increase/(decrease) in cash and cash equivalents | Increase/(decrease) in cash and cash equivalents | | | 5,743 | | | 2,309 | | Increase/(decrease) in cash and cash equivalents | | | (899) | | | 9,487 | |
| Cash and cash equivalents (at end of period) | Cash and cash equivalents (at end of period) | | | 8,832 | | | 5,351 | | Cash and cash equivalents (at end of period) | | | 3,465 | | | 12,576 | |
| 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) | Net cash provided by operating activities (U.S. GAAP) | | 4,389 | | | 9,079 | | | 10,663 | | | 23,364 | | Net cash provided by operating activities (U.S. GAAP) | | 9,650 | | | — | | | 18,914 | | | 6,274 | |
Proceeds associated with sales of subsidiaries, property, plant & equipment, and sales and returns of investments | Proceeds associated with sales of subsidiaries, property, plant & equipment, and sales and returns of investments | | 100 | | | 460 | | | 229 | | | 600 | | Proceeds associated with sales of subsidiaries, property, plant & equipment, and sales and returns of investments | | 250 | | | 43 | | | 557 | | | 129 | |
Cash flow from operations and asset sales | Cash flow from operations and asset sales | | 4,489 | | | 9,539 | | | 10,892 | | | 23,964 | | Cash flow from operations and asset sales | | 9,900 | | | 43 | | | 19,471 | | | 6,403 | |
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 20202021 was $4.5$9.9 billion, a decreasean increase of $5.1$9.9 billion from the comparable 20192020 period primarily reflecting lowerhigher earnings and unfavorablemore favorable working capital impacts. Current market conditions and the ability of counterparties to secure financing may negatively affect the pace of asset sales in 2020.
Cash provided by operating activities totaled $10.7$18.9 billion for the first ninesix months of 2020, $12.72021, $12.6 billion lowerhigher than 2019.2020. Net income including noncontrolling interests was a loss$7.6 billion, an increase of $2.6 billion, a decrease of $11.7$9.5 billion from the prior year period. The adjustments for the noncash provisions were $15.7provision of $10.0 billion for depreciation and depletion and $0.1was down $0.8 billion for the lower of cost or market inventory adjustment.from 2020. Changes in operational working capital were a reductioncontribution of $1.5$1.6 billion, compared to a contributionreduction of $2.6$2.2 billion in the prior year period. All other items net decreased cash flows by $0.9$0.2 billion in 20202021 versus a reduction of $2.3$0.3 billion in 2019.2020. See the Condensed Consolidated Statement of Cash Flows for additional details.
Investing activities for the first ninesix months of 20202021 used net cash of $15.2$5.1 billion, a decrease of $3.7$6.4 billion compared to the prior year. Spending for additions to property, plant and equipment of $13.7$5.1 billion was $4.0$5.2 billion lower than 2019.2020. Proceeds from asset sales of $0.2$0.6 billion were $0.4 billion lowerhigher than the prior year. Net investments and advances were comparabledecreased $0.7 billion to the prior year at $1.7$0.5 billion.
DuringNet cash used by financing activities was $14.8 billion in the first ninesix months of 2020, the Corporation issued $23.22021, including $7.0 billion of long-term debt. Netdebt repayments.This compares to net cash provided by financing activities was $10.6of $15.1 billion in the prior year, due to long-term debt issuances in the first ninesix months of 2020, $12.7 billion higher than 2019 reflecting the 2020 debt issuances.
2020.
Total debt at the end of the thirdsecond quarter of 20202021 was $68.8$60.6 billion compared to $46.9$67.6 billion at year-end 2019.2020. The Corporation's debt to total capital ratio was 27.126.8 percent at the end of the thirdsecond quarter of 20202021 compared to 19.129.2 percent at year-end 2019.
During2020. The Corporation's capital allocation priorities continue to be investing in advantaged projects, strengthening the first nine months of 2020, Exxon Mobil Corporation purchased 6 million shares of its common stock for the treasury atbalance sheet and paying a gross cost of $0.3 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 decreased from 4,234 million at year-end to 4,228 million at the end of the third quarter of 2020. 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.
reliable dividend.
The Corporation has access to significant capacity of long-term and short-term liquidity. Commercial paper continues to provide short-term liquidity, and is reflected in "Notes and loans payable" on the balance of commercial paper outstanding was $18.8 billion as of September 30, 2020.Consolidated Balance Sheet. Cash and cash equivalents was $8.8$3.5 billion at the end of the thirdsecond quarter of 2020.2021. The Corporation had undrawn short-term committed lines of credit of $11.0$10.7 billion and an undrawn long-term committed linelines of credit of $0.2$0.6 billion as of third quarter 2020. In the third quarter, the Corporation increased its 364-day facility from $7.5 billion to $10.0 billion and terminated the supplemental $7.0 billion facility that was established in the first quarter of 2020.
Internally generated funds and available cash are generally expected to cover financial requirements, supplemented by short-term and long-term debt as required. The Corporation is developing plans consistent with near-term demand uncertainties and does not plan on increasing gross debt above second quarter levels.
2021.
The Corporation distributed a total of $11.2$7.4 billion to shareholders in the first ninesix months of 20202021 through dividends.
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.
The termination of certain transportation service agreements in the first quarter reduced commitments previously reported at year-end in Form 10-K under “Take-or-pay and unconditional purchase obligations” by approximately $2.3 billion. The majority of those commitments related to the years 2026 and beyond.
Litigation and other contingencies are discussed in Note 3 to the unaudited condensed consolidated financial statements.
TAXES
| | | | Third Quarter | | First Nine Months | | | Second Quarter | | First Six Months |
| | | 2020 | | 2019 | | 2020 | | 2019 | | | 2021 | | 2020 | | 2021 | | 2020 |
| | | (millions of dollars) | | (millions of dollars) | | | (millions of dollars) | | (millions of dollars) |
Income taxes | Income taxes | | 337 | | | 1,474 | | | 378 | | | 4,598 | | Income taxes | | 1,526 | | | (471) | | | 2,322 | | | 41 | |
Effective income tax rate | Effective income tax rate | | -198 | % | | 37 | % | | -56 | % | | 41 | % | Effective income tax rate | | 30 | % | | 29 | % | | 31 | % | | -33 | % |
Total other taxes and duties (1) | Total other taxes and duties (1) | | 7,901 | | | 8,317 | | | 21,081 | | | 24,770 | | Total other taxes and duties (1) | | 8,441 | | | 5,683 | | | 15,724 | | | 13,180 | |
Total | Total | | 8,238 | | | 9,791 | | | 21,459 | | | 29,368 | | Total | | 9,967 | | | 5,212 | | | 18,046 | | | 13,221 | |
(1)Includes “Other taxes and duties” plus taxes that are included in “Production and manufacturing expenses” and “Selling,“Selling, general and administrative expenses.”
Total taxes were $8.2$10.0 billion for the thirdsecond quarter of 2020, a decrease2021, an increase of $1.6$4.8 billion from 2019.2020. Income tax expense was $0.3$1.5 billion compared to $1.5a $0.5 billion income tax credit in the prior year reflecting operating losses driven by lowerhigher commodity prices. The effective income tax rate of -19830 percent compared to 3729 percent in the prior year period primarily due to a change in mix of results in jurisdictions with varying tax rates. Total other taxes and duties decreasedincreased by $0.4$2.8 billion to $7.9$8.4 billion.
Total taxes were $21.5$18.0 billion for the first ninesix months of 2020, a decrease2021, an increase of $7.9$4.8 billion from 2019.2020. Income tax expense decreasedincreased by $4.2$2.3 billion to $0.4$2.3 billion reflecting lower pre-tax income.higher commodity prices. The effective income tax rate of -5631 percent compared to 41-33 percent in the prior year period primarily due to a change in mix of results in jurisdictions with varying tax rates. Total other taxes and duties decreasedincreased by $3.7$2.5 billion to $21.1$15.7 billion.
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 Corporation filed a refund suit for tax years 2006-2009 in U.S. federal district court (District Court) with respect to the positions at issue for those years. On February 24, 2020, the Corporation received an adverse ruling on this suit. Proceedings in the District Court are continuing. 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. 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. On January 13, 2021, the District Court ruled that no penalties apply to the Corporation's positions in this suit. The Corporation filed a notice of appeal regarding the substantive issues to the Fifth Circuit Court of Appeals on April 9, 2021. The government filed a notice of appeal regarding the penalty issue to the same court on April 19, 2021. Proceedings in the Fifth Circuit Court of Appeals are continuing. Unfavorable resolution of all positions at issue with the IRS would not have a material adverse effect on the Corporation’s operations or financial condition.
RESTRUCTURING ACTIVITIES
During 2020, ExxonMobil conducted an extensive global review of staffing levels and subsequently commenced targeted workforce reductions within a number of countries to improve efficiency and reduce costs. The programs, which are expected to be substantially complete by the end of 2021, include both voluntary and involuntary employee separations and reductions in contractors.
In the first half of 2021, the Corporation recorded after-tax charges of $43 million, consisting primarily of employee separation costs, from workforce reduction programs in Singapore and Europe associated with the global review of staffing levels. The cash outflows in the first half of 2021 associated with these activities were $224 million.
The Corporation estimates total charges of less than $100 million in 2021 related to planned workforce reduction programs with cash outflows ranging between $400 million and $500 million. This does not include charges related to employee reductions associated with any portfolio changes or other projects. Before-tax workforce reduction savings, including employees and contractors, are estimated to range between $1 billion and $2 billion per year after program completion when compared to 2019 levels.
CAPITAL AND EXPLORATION EXPENDITURES
| | | | Third Quarter | | First Nine Months | | | Second Quarter | | First Six Months |
| | | 2020 | | 2019 | | 2020 | | 2019 | | | 2021 | | 2020 | | 2021 | | 2020 |
| | | (millions of dollars) | | (millions of dollars) | | | (millions of dollars) | | (millions of dollars) |
Upstream (including exploration expenses) | Upstream (including exploration expenses) | | 2,794 | | | 5,791 | | | 11,497 | | | 17,394 | | Upstream (including exploration expenses) | | 2,817 | | | 3,577 | | | 5,174 | | | 8,703 | |
Downstream | Downstream | | 772 | | | 1,069 | | | 3,059 | | | 3,011 | | Downstream | | 455 | | | 1,053 | | | 925 | | | 2,287 | |
Chemical | Chemical | | 564 | | | 852 | | | 2,041 | | | 2,266 | | Chemical | | 530 | | | 695 | | | 836 | | | 1,477 | |
Other | Other | | 3 | | | 7 | | | 6 | | | 17 | | Other | | 1 | | | 2 | | | 1 | | | 3 | |
Total | Total | | 4,133 | | | 7,719 | | | 16,603 | | | 22,688 | | Total | | 3,803 | | | 5,327 | | | 6,936 | | | 12,470 | |
Capital and exploration expenditures in the thirdsecond quarter of 20202021 were $4.1$3.8 billion, down 4629 percent from the thirdsecond quarter of 2019.2020.
CapitalCapital and exploration expenditures in the first ninesix months of 20202021 were $16.6$6.9 billion, down 2744 percent from the first ninesix months of 2019 in response to market conditions.2020. The Corporation anticipates an investment levelexpects 2021 capital spending to be toward the lower end of no more than $23the guidance range of $16 billion in 2020, down from the previously announced $33to $19 billion. Actual spending could vary depending on the progress of individual projects and property acquisitions. If market conditions continue above the Corporation's planning basis, additional cash will not be used to increase capital investment above this range, but will instead be used to accelerate deleveraging.
FORWARD-LOOKING STATEMENTS
Statements related to outlooks, projections, goals, targets, descriptions of strategic plans and objectives, and other statements of future events or conditions are forward-looking statements. Actual future results, including financial and operating performance; the impact of the COVID-19 pandemic on results; planned capital and cash operating expense reductions and ability to meet or exceed announced reduction objectives; total capital expenditures and mix; earnings;cost and expense reductions; emissions intensity and absolute emission reductions; cash flow; capital allocation andflow, dividends, debt levels; dividendlevels, and shareholder returns; business and project plans, timing, costs, capacities, and capacities; resource recoveriesreturns; asset management activities; results from settlement of outstanding derivatives; workforce reductions; the outcome of litigation, tax, and production rates;other contingencies; and future accounting and financial reporting effects resulting from market developments and ExxonMobil’s responsive actions, including potential impairment charges resulting from any significant changes in current development plan strategy or divestment plans;of the pace and outcome of divestments; and the impact of new technologies, including to increase capital efficiency and production and to reduce greenhouse gas emissions and intensity,foregoing could differ materially due to a number of factors. These include global or regional changes in the supply and demand for oil, natural gas, petrochemicals, and feedstocks and other market conditions that impact prices and differentials; the outcome of government policies and actions, including actions taken to address COVID-19 and to maintain the functioning of national and global economies and markets; the impact of company actions to protect the health and safety of employees, vendors, customers, and communities; actions of competitors and commercial counterparties; the ability to access short- and long-term debt markets on a timely and affordable basis; the severity, lengthultimate impacts of COVID-19, including the extent and ultimate impactnature of COVID-19further outbreaks and the effects of government responses on people and economies, including the nature and pace of economic recovery as well as the ability of ExxonMobil and its vendors and contractors to maintain operations while taking appropriate health protective measures for employees and others;economies; reservoir performance; the outcome of exploration projects andprojects; timely completion of development and other construction projects; changes in law, taxes, or regulation including environmental regulations, trade sanctions, and timely granting of governmental permits; war, trade agreementsgovernment policies and patterns, shipping blockades or harassment,support and market demand for low carbon technologies like carbon capture; war, and other political or security disturbances; opportunities for and regulatory approval of potential investments or divestments; the actionsdivestments and satisfaction of competitors;applicable conditions to closing, including regulatory approvals; the capture of efficiencies within and between business lines and the ability to maintain near-term cost reductions as ongoing efficiencies while maintaining future competitive positioning; unforeseen technical or operating difficulties;difficulties and unplanned maintenance; the development and competitiveness of alternative energy and emission reduction technologies; the results of research programs;programs and the ability to bring new technologies to commercial scale on a cost-competitive basis, including emission reduction technologies and large-scale hydraulic fracturing projects; general economic conditions including the occurrence and duration of economic recessions;basis; and other factors discussed in this report and under the headingItem 1A. Risk Factors Affecting Future Results on the Investors page of our website at www.exxonmobil.com and in Item 1A of ExxonMobil’s 20192020 Form 10-K and subsequent Forms 10-Q for the quarters ended March 31, 2020, June 30, 2020, and September 30, 2020. Statements regarding plans or potential outcomes for the fourth quarter 2020 and 2021 also remain subject to completion of ExxonMobil’s annual corporate planning process and approval of the resulting company plan by the Board of Directors, expected in November 2020.10-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 anyany government payment transparency reports.reports.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Information about market risks for the ninesix months ended SeptemberJune 30, 2020,2021, does not differ materially from that discussed under Item 7A of the registrant's Annual Report on Form 10-K for 2019.2020.
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, 2020.2021. 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 reported in the Corporation’s Form 10-QExxonMobil has elected to use a $1 million threshold for the third quarter of 2017, ExxonMobil appealed to the U.S. Court of Appeals for the Fifth Circuit a judgment of the United States District Court for the Southern District of Texas entered on April 26, 2017, in a citizen suit captioned Environment Texas Citizen Lobby, Inc. et al. v. Exxon Mobil Corporation. The U.S. District Court had awarded 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, sought 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. On July 29, 2020, the Fifth Circuit vacated the District Court’s penalty award and remanded the case back to the District Court for furtherdisclosing environmental proceedings. A revised decision in the District Court could occur as early as the fourth quarter of 2020.
The State of Texas filed a lawsuit against ExxonMobil Oil Corporation (EMOC) on August 19, 2020, seeking penalties and injunctive relief for 13 alleged unauthorized emissions events at EMOC’s Beaumont Refinery in Texas from 2017 to 2020. The State alleged violations under the Texas Clean Air Act, including the alleged failure of EMOC to timely notify the Texas Commission on Environmental Quality of reportable emissions events and alleged failure to submit a proper certification in its October 26, 2018 permit compliance certification. The lawsuit, captioned State of Texas v. ExxonMobil Oil Corporation, was filed in the 98th Judicial District Court of Travis County, Texas. The State has not quantified the amount of the penalty sought.
Refer to the relevant portions of Note 3 of this Quarterly Report on Form 10-Q for further information on legal proceedings.
Item 1A. Risk Factors
The risk factors that are discussed in Item 1A of the registrant’s Annual Report on Form 10-K for 2019, including those risk factors in respect of commodity supply and demand and public health, encompass, among other things, current market conditions of production oversupply as well as demand reduction due to the COVID-19 pandemic which has led to a significant decrease in commodity prices. Our future business results, including cash flows and financing needs, will be affected by the extent and duration of these conditions and the effectiveness of responsive actions that we and others take, including our actions to reduce capital and operating expenses and government actions to address the COVID-19 pandemic, as well as any resulting impact on national and global economies and markets. At this time, it is difficult to predict the timing of any resolution of the current supply imbalances and the ultimate impact of COVID-19, and we continue to monitor market developments and evaluate the impacts of decreased demand on our production levels, as well as impacts on project development and future production.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Issuer Purchase of Equity Securities for Quarter Ended SeptemberJune 30, 20202021 |
Period | | Total Number of Shares Purchased | | Average Price Paid per Share | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs |
July 2020April 2021 | | — | | | $ | — | | | — | | | |
August 2020May 2021 | | — | | | $ | — | | | — | | | |
September 2020June 2021 | | — | | | $ | — | | | — | | | |
Total | | — | | | | | — | | | (See Note 1) |
Note 1 - On August 1, 2000,During the second quarter, the Corporation announced its intention to resume purchases ofdid not purchase any 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 amountissue or expiration date. The Corporation has continued to purchase shares since this announcement and to report purchased volumes in its quarterly earnings releases.sell any unregistered equity securities.
Note 1 - In its earnings release dated February 2, 2016,2021, the Corporation stated that 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 theits first quarter of 2016.2021 anti-dilutive share repurchase program due to market uncertainty and intends to resume this program in the future as market conditions improve.
Item 6. Exhibits
See Index to Exhibits of this report.
INDEX TO EXHIBITS
| | | | | | | | |
Exhibit | | Description |
| | |
| | |
| | |
| | By-Laws, as amended effective March 1, 2020ExxonMobil Supplemental Savings Plan. (incorporated by reference to Exhibit 3(ii) to the Registrant’s Report on Form 8-K of March 3, 2020). |
| | Standing resolution for non-employee director cash fees dated March 1, 2020 (incorporated by reference to Exhibit 10(iii)(f.4)(c.1) to the Registrant's report on Form 10-Q for the quarter ended March 31, 2020)2021). |
| | ExxonMobil Supplemental Pension Plan. (incorporated by reference to Exhibit 10(iii)(c.2) to the Registrant's report on Form 10-Q for the quarter ended March 31, 2021). |
| | ExxonMobil Additional Payments Plan. (incorporated by reference to Exhibit 10(iii)(c.3) to the Registrant's report on Form 10-Q for the quarter ended March 31, 2021). |
| | Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by Chief Executive Officer. |
| | Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by Principal Financial Officer. |
| | Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by Principal Accounting Officer. |
| | Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Chief Executive Officer. |
| | Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal Financial Officer. |
| | Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal Accounting Officer. |
101 | | Interactive Data Files (formatted as Inline XBRL). |
104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
EXXON MOBIL CORPORATION
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | | | | | | |
| EXXON MOBIL CORPORATION |
Date: NovemberAugust 4, 20202021 | By: | /s/ DAVID S. ROSENTHALLEN M. FOX |
| | David S. RosenthalLen M. Fox |
| | Vice President, Controller and |
| | Principal Accounting Officer |