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XOM Exxon Mobil

Filed: 6 Nov 19, 1:34pm

 

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 September 30, 2019

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

 

(I.R.S. Employer

incorporation or organization)

 

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:

 

 

 

 

 

 

Name of Each Exchange

Title of Each Class

 

Trading Symbol

 

on Which Registered

Common Stock, without par value

 

XOM

 

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 September 30, 2019

Common stock, without par value

 

4,231,106,066

 

 


 

EXXON MOBIL CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2019

 

TABLE OF CONTENTS

 

 

PART I. FINANCIAL INFORMATION

 

 

 

Item 1.Financial Statements

 

 

 

Condensed Consolidated Statement of Income

Three and nine months ended September 30, 2019 and 2018

3

 

 

Condensed Consolidated Statement of Comprehensive Income

Three and nine months ended September 30, 2019 and 2018

4

 

 

Condensed Consolidated Balance Sheet

As of September 30, 2019 and December 31, 2018

5

 

 

Condensed Consolidated Statement of Cash Flows

Nine months ended September 30, 2019 and 2018

6

 

 

Condensed Consolidated Statement of Changes in Equity

Three months ended September 30, 2019 and 2018

7

 

 

Condensed Consolidated Statement of Changes in Equity

Nine months ended September 30, 2019 and 2018

8

 

 

Notes to Condensed Consolidated Financial Statements

9

 

 

Item 2.Management's Discussion and Analysis of Financial

Condition and Results of Operations

20

 

 

Item 3.Quantitative and Qualitative Disclosures About Market Risk

28

 

 

Item 4.Controls and Procedures

28

 

 

 

 

PART II. OTHER INFORMATION

 

Item 1.Legal Proceedings

29

 

 

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

30

 

 

Item 6.Exhibits

30

 

 

Index to Exhibits

31

 

 

Signature

32

 

 

 

 


2


 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Item 1. Financial Statements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXXON MOBIL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF INCOME

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

 

 

September 30,

 

 

September 30,

 

 

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

Revenues and other income

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and other operating revenue

 

 

63,422

 

 

74,187

 

 

192,559

 

 

211,079

 

Income from equity affiliates

 

 

1,196

 

 

1,960

 

 

4,264

 

 

5,599

 

Other income

 

 

431

 

 

458

 

 

942

 

 

1,639

 

 

Total revenues and other income

 

 

65,049

 

 

76,605

 

 

197,765

 

 

218,317

Costs and other deductions

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude oil and product purchases

 

 

35,290

 

 

41,776

 

 

109,033

 

 

119,391

 

Production and manufacturing expenses

 

 

8,848

 

 

9,097

 

 

27,340

 

 

26,506

 

Selling, general and administrative expenses

 

 

2,753

 

 

2,892

 

 

8,350

 

 

8,632

 

Depreciation and depletion

 

 

4,873

 

 

4,658

 

 

14,075

 

 

13,717

 

Exploration expenses, including dry holes

 

 

299

 

 

292

 

 

912

 

 

911

 

Non-service pension and postretirement benefit expense

 

 

357

 

 

307

 

 

1,028

 

 

952

 

Interest expense

 

 

232

 

 

200

 

 

629

 

 

551

 

Other taxes and duties

 

 

7,676

 

 

8,303

 

 

22,756

 

 

24,825

 

 

Total costs and other deductions

 

 

60,328

 

 

67,525

 

 

184,123

 

 

195,485

Income before income taxes

 

 

4,721

 

 

9,080

 

 

13,642

 

 

22,832

 

Income taxes

 

 

1,474

 

 

2,634

 

 

4,598

 

 

7,617

Net income including noncontrolling interests

 

 

3,247

 

 

6,446

 

 

9,044

 

 

15,215

 

Net income attributable to noncontrolling interests

 

 

77

 

 

206

 

 

394

 

 

375

Net income attributable to ExxonMobil

 

 

3,170

 

 

6,240

 

 

8,650

 

 

14,840

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share (dollars)

 

 

0.75

 

 

1.46

 

 

2.03

 

 

3.47

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share - assuming dilution (dollars)

 

 

0.75

 

 

1.46

 

 

2.03

 

 

3.47



The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.


3


 

EXXON MOBIL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

 

 

 

September 30,

 

 

September 30,

 

 

 

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income including noncontrolling interests

 

 

3,247

 

 

6,446

 

 

9,044

 

 

15,215

Other comprehensive income (net of income taxes)

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange translation adjustment

 

 

(1,424)

 

 

124

 

 

(75)

 

 

(2,720)

 

Adjustment for foreign exchange translation (gain)/loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

included in net income

 

 

-

 

 

-

 

 

-

 

 

186

 

Postretirement benefits reserves adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(excluding amortization)

 

 

103

 

 

(3)

 

 

43

 

 

(394)

 

Amortization and settlement of postretirement benefits reserves

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

adjustment included in net periodic benefit costs

 

 

186

 

 

223

 

 

512

 

 

689

 

 

Total other comprehensive income

 

 

(1,135)

 

 

344

 

 

480

 

 

(2,239)

Comprehensive income including noncontrolling interests

 

 

2,112

 

 

6,790

 

 

9,524

 

 

12,976

 

Comprehensive income attributable to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

noncontrolling interests

 

 

14

 

 

311

 

 

587

 

 

205

Comprehensive income attributable to ExxonMobil

 

 

2,098

 

 

6,479

 

 

8,937

 

 

12,771



The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.


4


 

EXXON MOBIL CORPORATION

 

CONDENSED CONSOLIDATED BALANCE SHEET

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sept. 30,

 

 

Dec. 31,

 

 

 

 

 

 

 

2019

 

 

2018

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

5,351

 

 

3,042

 

 

 

Notes and accounts receivable – net

 

 

25,308

 

 

24,701

 

 

 

Inventories

 

 

 

 

 

 

 

 

 

 

Crude oil, products and merchandise

 

 

13,131

 

 

14,803

 

 

 

 

Materials and supplies

 

 

4,459

 

 

4,155

 

 

 

Other current assets

 

 

1,759

 

 

1,272

 

 

 

 

Total current assets

 

 

50,008

 

 

47,973

 

 

Investments, advances and long-term receivables

 

 

42,920

 

 

40,790

 

 

Property, plant and equipment – net

 

 

250,512

 

 

247,101

 

 

Other assets, including intangibles – net

 

 

15,921

 

 

10,332

 

 

 

 

Total assets

 

 

359,361

 

 

346,196

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Notes and loans payable

 

 

21,196

 

 

17,258

 

 

 

Accounts payable and accrued liabilities

 

 

40,541

 

 

37,268

 

 

 

Income taxes payable

 

 

2,458

 

 

2,612

 

 

 

 

Total current liabilities

 

 

64,195

 

 

57,138

 

 

Long-term debt

 

 

25,950

 

 

20,538

 

 

Postretirement benefits reserves

 

 

19,365

 

 

20,272

 

 

Deferred income tax liabilities

 

 

26,513

 

 

27,244

 

 

Long-term obligations to equity companies

 

 

4,232

 

 

4,382

 

 

Other long-term obligations

 

 

21,997

 

 

18,094

 

 

 

 

Total liabilities

 

 

162,252

 

 

147,668

 

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 3)

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Common stock without par value

 

 

 

 

 

 

 

 

 

(9,000 million shares authorized, 8,019 million shares issued)

 

 

15,795

 

 

15,258

 

 

Earnings reinvested

 

 

419,367

 

 

421,653

 

 

Accumulated other comprehensive income

 

 

(19,277)

 

 

(19,564)

 

 

Common stock held in treasury

 

 

 

 

 

 

 

 

 

(3,788 million shares at September 30, 2019 and

 

 

 

 

 

 

 

 

 

3,782 million shares at December 31, 2018)

 

 

(225,970)

 

 

(225,553)

 

 

 

 

ExxonMobil share of equity

 

 

189,915

 

 

191,794

 

 

Noncontrolling interests

 

 

7,194

 

 

6,734

 

 

 

 

Total equity

 

 

197,109

 

 

198,528

 

 

 

 

Total liabilities and equity

 

 

359,361

 

 

346,196

 



The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.


5


 

EXXON MOBIL CORPORATION

 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

 

 

 

 

 

September 30,

 

 

 

 

 

 

 

2019

 

 

2018

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net income including noncontrolling interests

 

 

9,044

 

 

15,215

 

 

Depreciation and depletion

 

 

14,075

 

 

13,717

 

 

Changes in operational working capital, excluding cash and debt

 

 

2,564

 

 

(25)

 

 

All other items – net

 

 

(2,319)

 

 

(1,500)

 

 

 

 

Net cash provided by operating activities

 

 

23,364

 

 

27,407

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Additions to property, plant and equipment

 

 

(17,657)

 

 

(13,480)

 

 

Proceeds associated with sales of subsidiaries, property, plant and

 

 

 

 

 

 

 

 

 

equipment, and sales and returns of investments

 

 

600

 

 

3,239

 

 

Additional investments and advances

 

 

(2,532)

 

 

(1,113)

 

 

Other investing activities including collection of advances

 

 

769

 

 

492

 

 

 

 

Net cash used in investing activities

 

 

(18,820)

 

 

(10,862)

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Additions to long-term debt

 

 

7,019

 

 

-

 

 

Reductions in short-term debt

 

 

(3,836)

 

 

(4,279)

 

 

Additions/(reductions) in commercial paper, and debt with three

 

 

 

 

 

 

 

 

 

months or less maturity (1)

 

 

6,139

 

 

1,626

 

 

Cash dividends to ExxonMobil shareholders

 

 

(10,936)

 

 

(10,296)

 

 

Cash dividends to noncontrolling interests

 

 

(157)

 

 

(192)

 

 

Changes in noncontrolling interests

 

 

30

 

 

(374)

 

 

Common stock acquired

 

 

(421)

 

 

(430)

 

 

 

 

Net cash used in financing activities

 

 

(2,162)

 

 

(13,945)

 

Effects of exchange rate changes on cash

 

 

(73)

 

 

(108)

 

Increase/(decrease) in cash and cash equivalents

 

 

2,309

 

 

2,492

 

Cash and cash equivalents at beginning of period

 

 

3,042

 

 

3,177

 

Cash and cash equivalents at end of period

 

 

5,351

 

 

5,669

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosures

 

 

 

 

 

 

 

 

Income taxes paid

 

 

5,259

 

 

6,740

 

 

Cash interest paid

 

 

 

 

 

 

 

 

 

Included in cash flows from operating activities

 

 

515

 

 

337

 

 

 

Capitalized, included in cash flows from investing activities

 

 

540

 

 

502

 

 

 

Total cash interest paid

 

 

1,055

 

 

839

 



(1) Includes a net addition of commercial paper with a maturity of over three months of $3.1 billion in 2019 and $0.3 billion in 2018. The gross amount of commercial paper with a maturity of over three months issued was $13.4 billion in 2019 and $3.1 billion in 2018, while the gross amount repaid was $10.3 billion in 2019 and $2.8 billion in 2018.

 

The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.

 


6


 

 

EXXON MOBIL CORPORATION

 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ExxonMobil Share of Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

Common

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compre-

 

Stock

 

ExxonMobil

 

Non-

 

 

 

 

 

 

 

 

Common

 

Earnings

 

hensive

 

Held in

 

Share of

 

controlling

 

Total

 

 

 

 

 

Stock

 

Reinvested

 

Income

 

Treasury

 

Equity

 

Interests

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of June 30, 2018

 

 

15,086

 

 

416,418

 

 

(18,609)

 

 

(225,673)

 

 

187,222

 

 

6,311

 

 

193,533

 

Amortization of stock-based awards

 

 

169

 

 

-

 

 

-

 

 

-

 

 

169

 

 

-

 

 

169

 

Other

 

 

(1)

 

 

-

 

 

-

 

 

-

 

 

(1)

 

 

(1)

 

 

(2)

 

Net income for the period

 

 

-

 

 

6,240

 

 

-

 

 

-

 

 

6,240

 

 

206

 

 

6,446

 

Dividends - common shares

 

 

-

 

 

(3,503)

 

 

-

 

 

-

 

 

(3,503)

 

 

(57)

 

 

(3,560)

 

Other comprehensive income

 

 

-

 

 

-

 

 

239

 

 

-

 

 

239

 

 

105

 

 

344

 

Acquisitions, at cost

 

 

-

 

 

-

 

 

-

 

 

(1)

 

 

(1)

 

 

(98)

 

 

(99)

Balance as of September 30, 2018

 

 

15,254

 

 

419,155

 

 

(18,370)

 

 

(225,674)

 

 

190,365

 

 

6,466

 

 

196,831

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of June 30, 2019

 

 

15,639

 

 

419,913

 

 

(18,205)

 

 

(225,970)

 

 

191,377

 

 

7,088

 

 

198,465

 

Amortization of stock-based awards

 

 

156

 

 

-

 

 

-

 

 

-

 

 

156

 

 

-

 

 

156

 

Other

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

275

 

 

275

 

Net income for the period

 

 

-

 

 

3,170

 

 

-

 

 

-

 

 

3,170

 

 

77

 

 

3,247

 

Dividends - common shares

 

 

-

 

 

(3,716)

 

 

-

 

 

-

 

 

(3,716)

 

 

(57)

 

 

(3,773)

 

Other comprehensive income

 

 

-

 

 

-

 

 

(1,072)

 

 

-

 

 

(1,072)

 

 

(63)

 

 

(1,135)

 

Acquisitions, at cost

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(79)

 

 

(79)

 

Dispositions

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(47)

 

 

(47)

Balance as of September 30, 2019

 

 

15,795

 

 

419,367

 

 

(19,277)

 

 

(225,970)

 

 

189,915

 

 

7,194

 

 

197,109

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2019

 

 

 

 

Three Months Ended September 30, 2018

 

 

 

 

 

 

 

 

Held in

 

 

 

 

 

 

 

 

 

 

Held in

 

 

 

 

Common Stock Share Activity

 

Issued

 

Treasury

 

Outstanding

 

 

 

 

Issued

 

Treasury

 

Outstanding

 

 

 

 

(millions of shares)

 

 

 

 

(millions of shares)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of June 30

 

 

8,019

 

 

(3,788)

 

 

4,231

 

 

 

 

 

8,019

 

 

(3,785)

 

 

4,234

 

 

 

Acquisitions

 

 

-

 

 

-

 

 

-

 

 

 

 

 

-

 

 

-

 

 

-

 

 

 

Dispositions

 

 

-

 

 

-

 

 

-

 

 

 

 

 

-

 

 

-

 

 

-

 

Balance as of September 30

 

 

8,019

 

 

(3,788)

 

 

4,231

 

 

 

 

 

8,019

 

 

(3,785)

 

 

4,234



The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.


7


 

 

EXXON MOBIL CORPORATION

 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ExxonMobil Share of Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

Common

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compre-

 

Stock

 

ExxonMobil

 

Non-

 

 

 

 

 

 

 

 

Common

 

Earnings

 

hensive

 

Held in

 

Share of

 

controlling

 

Total

 

 

 

 

 

Stock

 

Reinvested

 

Income

 

Treasury

 

Equity

 

Interests

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2017

 

 

14,656

 

 

414,540

 

 

(16,262)

 

 

(225,246)

 

 

187,688

 

 

6,812

 

 

194,500

 

Amortization of stock-based awards

 

 

605

 

 

-

 

 

-

 

 

-

 

 

605

 

 

-

 

 

605

 

Other

 

 

(7)

 

 

-

 

 

-

 

 

-

 

 

(7)

 

 

(8)

 

 

(15)

 

Net income for the period

 

 

-

 

 

14,840

 

 

-

 

 

-

 

 

14,840

 

 

375

 

 

15,215

 

Dividends - common shares

 

 

-

 

 

(10,296)

 

 

-

 

 

-

 

 

(10,296)

 

 

(192)

 

 

(10,488)

 

Cumulative effect of accounting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

change

 

 

-

 

 

71

 

 

(39)

 

 

-

 

 

32

 

 

15

 

 

47

 

Other comprehensive income

 

 

-

 

 

-

 

 

(2,069)

 

 

-

 

 

(2,069)

 

 

(170)

 

 

(2,239)

 

Acquisitions, at cost

 

 

-

 

 

-

 

 

-

 

 

(430)

 

 

(430)

 

 

(366)

 

 

(796)

 

Dispositions

 

 

-

 

 

-

 

 

-

 

 

2

 

 

2

 

 

-

 

 

2

Balance as of September 30, 2018

 

 

15,254

 

 

419,155

 

 

(18,370)

 

 

(225,674)

 

 

190,365

 

 

6,466

 

 

196,831

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 for the period

 

 

-

 

 

8,650

 

 

-

 

 

-

 

 

8,650

 

 

394

 

 

9,044

 

Dividends - common shares

 

 

-

 

 

(10,936)

 

 

-

 

 

-

 

 

(10,936)

 

 

(157)

 

 

(11,093)

 

Other comprehensive income

 

 

-

 

 

-

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2019

 

 

 

 

Nine Months Ended September 30, 2018

 

 

 

 

 

 

 

 

Held in

 

 

 

 

 

 

 

 

 

 

Held in

 

 

 

 

Common Stock Share Activity

 

Issued

 

Treasury

 

Outstanding

 

 

 

 

Issued

 

Treasury

 

Outstanding

 

 

 

 

(millions of shares)

 

 

 

 

(millions of shares)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31

 

 

8,019

 

 

(3,782)

 

 

4,237

 

 

 

 

 

8,019

 

 

(3,780)

 

 

4,239

 

 

 

Acquisitions

 

 

-

 

 

(6)

 

 

(6)

 

 

 

 

 

-

 

 

(5)

 

 

(5)

 

 

 

Dispositions

 

 

-

 

 

-

 

 

-

 

 

 

 

 

-

 

 

-

 

 

-

 

Balance as of September 30

 

 

8,019

 

 

(3,788)

 

 

4,231

 

 

 

 

 

8,019

 

 

(3,785)

 

 

4,234



The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.


8


 

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 2018 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.Accounting Changes

 

Effective January 1, 2019, the Corporation adopted the Financial Accounting Standards Board’s Standard, Leases (Topic 842), as amended. The standard requires all leases to be recorded on the balance sheet as a right of use asset and a lease liability. The Corporation used a transition method that applies the new lease standard at January 1, 2019. The Corporation applied a policy election to exclude short-term leases from balance sheet recognition and also elected certain practical expedients at adoption. As permitted, the Corporation did not reassess whether existing contracts are or contain leases, the lease classification for any existing leases, initial direct costs for any existing lease and whether existing land easements and rights of way, which were not previously accounted for as leases, are or contain a lease. At adoption on January 1, 2019, an operating lease liability of $3.3 billion was recorded and the operating lease right of use asset was $4.3 billion, including $1.0 billion of previously recorded prepaid leases. There was no cumulative earnings effect adjustment.

 

Effective January 1, 2020, ExxonMobil will adopt the Financial Accounting Standards Board’s update, Financial Instruments – Credit Losses (Topic 326), as amended. The standard requires a valuation allowance for credit losses be recognized for certain financial assets that reflects the current expected credit loss over the asset’s contractual life. The valuation allowance considers the risk of loss, even if remote, and considers past events, current conditions and expectations of the future. The Corporation does not expect a material change in the credit allowance for trade receivables and continues to evaluate the impact on other financial assets in scope of the standard.



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 September 30, 2019, 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.


9


 

 

 

 

 

 

 

As of September 30, 2019

 

 

 

 

 

 

 

 

Equity

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

Company

 

 

Third Party

 

 

 

 

 

 

 

 

 

 

 

Obligations (1)

 

 

Obligations

 

 

Total

 

 

 

 

 

 

 

 

(millions of dollars)

 

 

 

Guarantees

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt-related

 

 

737

 

 

93

 

 

830

 

 

 

 

Other

 

 

808

 

 

4,580

 

 

5,388

 

 

 

 

 

Total

 

 

1,545

 

 

4,673

 

 

6,218

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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.


10


 

4.Other Comprehensive Income Information

 

 

 

 

 

 

 

Cumulative

 

 

Post-

 

 

 

 

 

 

 

 

 

Foreign

 

 

retirement

 

 

 

 

 

 

 

 

 

Exchange

 

 

Benefits

 

 

 

 

ExxonMobil Share of Accumulated Other

 

 

Translation

 

 

Reserves

 

 

 

 

Comprehensive Income

 

 

Adjustment

 

 

Adjustment

 

 

Total

 

 

 

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2017

 

 

(9,482)

 

 

(6,780)

 

 

(16,262)

 

Current period change excluding amounts reclassified

 

 

 

 

 

 

 

 

 

 

 

from accumulated other comprehensive income

 

 

(2,551)

 

 

(406)

 

 

(2,957)

 

Amounts reclassified from accumulated other

 

 

 

 

 

 

 

 

 

 

 

comprehensive income

 

 

186

 

 

663

 

 

849

 

Total change in accumulated other comprehensive income

 

 

(2,365)

 

 

257

 

 

(2,108)

 

Balance as of September 30, 2018

 

 

(11,847)

 

 

(6,523)

 

 

(18,370)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2018

 

 

(13,881)

 

 

(5,683)

 

 

(19,564)

 

Current period change excluding amounts reclassified

 

 

 

 

 

 

 

 

 

 

 

from accumulated other comprehensive income

 

 

(252)

 

 

48

 

 

(204)

 

Amounts reclassified from accumulated other

 

 

 

 

 

 

 

 

 

 

 

comprehensive income

 

 

-

 

 

491

 

 

491

 

Total change in accumulated other comprehensive income

 

 

(252)

 

 

539

 

 

287

 

Balance as of September 30, 2019

 

 

(14,133)

 

 

(5,144)

 

 

(19,277)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

Amounts Reclassified Out of Accumulated Other

 

 

September 30,

 

 

September 30,

 

Comprehensive Income - Before-tax Income/(Expense)

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange translation gain/(loss) included in net income

 

 

 

 

 

 

 

 

 

 

 

 

(Statement of Income line: Other income)

-

 

 

-

 

 

-

 

 

(186)

 

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)

(236)

 

 

(287)

 

 

(664)

 

 

(897)



 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

Income Tax (Expense)/Credit For

 

 

September 30,

 

 

September 30,

 

Components of Other Comprehensive Income

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange translation adjustment

 

 

1

 

 

8

 

 

1

 

 

13

 

Postretirement benefits reserves adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(excluding amortization)

 

 

(56)

 

 

-

 

 

(36)

 

 

66

 

Amortization and settlement of postretirement benefits reserves

 

 

 

 

 

 

 

 

 

 

 

 

 

adjustment included in net periodic benefit costs

 

 

(50)

 

 

(64)

 

 

(152)

 

 

(208)

 

Total

 

 

(105)

 

 

(56)

 

 

(187)

 

 

(129)


11


 

5.Earnings Per Share

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

 

 

September 30,

 

 

September 30,

 

 

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to ExxonMobil (millions of dollars)

 

3,170

 

 

6,240

 

 

8,650

 

 

14,840

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares

 

 

 

 

 

 

 

 

 

 

 

 

 

outstanding (millions of shares)

 

4,271

 

 

4,271

 

 

4,270

 

 

4,271

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share (dollars) (1)

 

0.75

 

 

1.46

 

 

2.03

 

 

3.47

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends paid per common share (dollars)

 

0.87

 

 

0.82

 

 

2.56

 

 

2.41

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) The calculation of earnings per common share and earnings per common share – assuming dilution are the same in each period shown.

 

6.Pension and Other Postretirement Benefits

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

 

 

 

 

September 30,

 

 

September 30,

 

 

 

 

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

(millions of dollars)

 

Components of net benefit cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Benefits - U.S.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

 

 

208

 

 

203

 

 

563

 

 

616

 

 

 

Interest cost

 

 

192

 

 

179

 

 

574

 

 

540

 

 

 

Expected return on plan assets

 

 

(143)

 

 

(182)

 

 

(427)

 

 

(545)

 

 

 

Amortization of actuarial loss/(gain) and prior

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

service cost

 

 

77

 

 

93

 

 

233

 

 

276

 

 

 

Net pension enhancement and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

curtailment/settlement cost

 

 

54

 

 

63

 

 

161

 

 

189

 

 

 

Net benefit cost

 

 

388

 

 

356

 

 

1,104

 

 

1,076

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Benefits - Non-U.S.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

 

 

136

 

 

149

 

 

413

 

 

461

 

 

 

Interest cost

 

 

189

 

 

185

 

 

573

 

 

571

 

 

 

Expected return on plan assets

 

 

(192)

 

 

(233)

 

 

(581)

 

 

(722)

 

 

 

Amortization of actuarial loss/(gain) and prior

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

service cost

 

 

102

 

 

113

 

 

260

 

 

344

 

 

 

Net pension enhancement and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

curtailment/settlement cost

 

 

-

 

 

-

 

 

-

 

 

33

 

 

 

Net benefit cost

 

 

235

 

 

214

 

 

665

 

 

687

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Postretirement Benefits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

 

 

38

 

 

40

 

 

104

 

 

111

 

 

 

Interest cost

 

 

79

 

 

75

 

 

237

 

 

226

 

 

 

Expected return on plan assets

 

 

(4)

 

 

(5)

 

 

(12)

 

 

(17)

 

 

 

Amortization of actuarial loss/(gain) and prior

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

service cost

 

 

3

 

 

19

 

 

10

 

 

57

 

 

 

Net benefit cost

 

 

116

 

 

129

 

 

339

 

 

377


12


 

7.Financial Instruments and Derivatives

 

Financial Instruments. The estimated fair value of financial instruments at September 30, 2019 and December 31, 2018, and the related hierarchy level for the fair value measurement is as follows:

 

 

 

 

 

 

At September 30, 2019

 

 

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Difference

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Gross

 

Effect of

 

Effect of

 

in Carrying

 

Net

 

 

 

 

 

 

 

 

 

 

 

Assets

 

Counterparty

 

Collateral

 

Value and

 

Carrying

 

 

 

 

 

Level 1

 

Level 2

 

Level 3

 

& Liabilities

 

Netting

 

Netting

 

Fair Value

 

Value

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative assets (1)

 

483

 

80

 

-

 

563

 

(392)

 

(91)

 

-

 

80

 

Advances to/receivables

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

from equity companies (2)(7)

 

-

 

1,934

 

6,948

 

8,882

 

-

 

-

 

(149)

 

8,733

 

Other long-term

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

financial assets (3)

 

1,078

 

-

 

761

 

1,839

 

-

 

-

 

78

 

1,917

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities (4)

 

414

 

58

 

-

 

472

 

(392)

 

(22)

 

-

 

58

 

Long-term debt (5)

 

25,709

 

131

 

4

 

25,844

 

-

 

-

 

(1,175)

 

24,669

 

Long-term obligations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

to equity companies (7)

 

-

 

-

 

4,466

 

4,466

 

-

 

-

 

(234)

 

4,232

 

Other long-term

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

financial liabilities (6)

 

-

 

-

 

1,054

 

1,054

 

-

 

-

 

(9)

 

1,045

 

 

 

 

 

 

At December 31, 2018

 

 

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Difference

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Gross

 

Effect of

 

Effect of

 

in Carrying

 

Net

 

 

 

 

 

 

 

 

 

 

 

Assets

 

Counterparty

 

Collateral

 

Value and

 

Carrying

 

 

 

 

 

Level 1

 

Level 2

 

Level 3

 

& Liabilities

 

Netting

 

Netting

 

Fair Value

 

Value

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative assets (1)

 

297

 

-

 

-

 

297

 

(151)

 

(146)

 

-

 

-

 

Advances to/receivables

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

from equity companies (2)(7)

 

-

 

2,100

 

6,293

 

8,393

 

-

 

-

 

215

 

8,608

 

Other long-term

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

financial assets (3)

 

848

 

-

 

974

 

1,822

 

-

 

-

 

112

 

1,934

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities (4)

 

151

 

-

 

-

 

151

 

(151)

 

-

 

-

 

-

 

Long-term debt (5)

 

19,029

 

117

 

4

 

19,150

 

-

 

-

 

85

 

19,235

 

Long-term obligations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

to equity companies (7)

 

-

 

-

 

4,330

 

4,330

 

-

 

-

 

52

 

4,382

 

Other long-term

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

financial liabilities (6)

 

-

 

-

 

1,046

 

1,046

 

-

 

-

 

(3)

 

1,043

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Included in the Balance Sheet lines: Notes and accounts receivable, less estimated doubtful amounts 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 equity company.


13


 

The increase in the estimated fair value and book value of long-term debt reflects the Corporation’s issuance of $7.0 billion of long-term debt in the third quarter of 2019. The $7.0 billion of long-term debt is comprised of $750 million of floating-rate notes due in 2022, $750 million of 1.902% notes due in 2022, $1,000 million of 2.019% notes due in 2024, $1,000 million of 2.275% notes due in 2026, $1,250 million of 2.440% notes due in 2029, $750 million of 2.995% notes due in 2039, and $1,500 million of 3.095% notes due in 2049. Additionally, the Corporation replaced a $5.0 billion short-term committed line of credit with a $7.5 billion short-term committed line of credit in the third quarter of 2019.

 

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 September 30, 2019 and December 31, 2018, or results of operations for the periods ended September 30, 2019 and 2018.

 

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.

 

At September 30, 2019, the net notional long/(short) position of derivative instruments was 12 million barrels for crude oil, (50) million barrels for products, and (146) million MMBtus of natural gas. At December 31, 2018, the net notional long/(short) position of derivative instruments was (19) million barrels for crude oil and (9) million barrels for products.

 

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

 

 

Nine Months Ended

 

 

 

 

 

 

September 30,

 

 

September 30,

 

 

 

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and other operating revenue

 

 

144

 

 

(68)

 

 

(98)

 

 

(72)

Crude oil and product purchases

 

 

60

 

 

(107)

 

 

75

 

 

(380)

 

 

Total

 

 

204

 

 

(175)

 

 

(23)

 

 

(452)


14


 

8.Disclosures about Segments and Related Information

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

 

 

 

September 30,

 

 

September 30,

 

 

 

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Earnings After Income Tax

 

(millions of dollars)

 

 

Upstream

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

 

37

 

 

606

 

 

468

 

 

1,474

 

 

 

Non-U.S.

 

 

2,131

 

 

3,623

 

 

7,837

 

 

9,292

 

 

Downstream

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

 

673

 

 

961

 

 

822

 

 

1,975

 

 

 

Non-U.S.

 

 

557

 

 

681

 

 

603

 

 

1,331

 

 

Chemical

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

 

53

 

 

404

 

 

208

 

 

1,360

 

 

 

Non-U.S.

 

 

188

 

 

309

 

 

739

 

 

1,254

 

 

Corporate and financing

 

 

(469)

 

 

(344)

 

 

(2,027)

 

 

(1,846)

 

 

Corporate total

 

 

3,170

 

 

6,240

 

 

8,650

 

 

14,840

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and Other Operating Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Upstream

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

 

1,941

 

 

2,728

 

 

7,228

 

 

7,637

 

 

 

Non-U.S.

 

 

3,069

 

 

4,129

 

 

10,582

 

 

11,344

 

 

Downstream

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

 

18,358

 

 

19,963

 

 

52,721

 

 

56,616

 

 

 

Non-U.S.

 

 

33,391

 

 

39,077

 

 

100,994

 

 

110,855

 

 

Chemical

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

 

2,412

 

 

3,152

 

 

7,421

 

 

9,160

 

 

 

Non-U.S.

 

 

4,241

 

 

5,125

 

 

13,583

 

 

15,429

 

 

Corporate and financing

 

 

10

 

 

13

 

 

30

 

 

38

 

 

Corporate total

 

 

63,422

 

 

74,187

 

 

192,559

 

 

211,079

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intersegment Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Upstream

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

 

2,876

 

 

2,203

 

 

7,828

 

 

6,336

 

 

 

Non-U.S.

 

 

7,383

 

 

8,536

 

 

22,888

 

 

22,788

 

 

Downstream

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

 

5,439

 

 

5,834

 

 

16,942

 

 

16,527

 

 

 

Non-U.S.

 

 

5,826

 

 

8,275

 

 

18,563

 

 

22,975

 

 

Chemical

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

 

1,489

 

 

2,408

 

 

5,947

 

 

6,952

 

 

 

Non-U.S.

 

 

1,413

 

 

1,841

 

 

4,543

 

 

5,657

 

 

Corporate and financing

 

 

60

 

 

54

 

 

168

 

 

153


15


 

 

Geographic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

 

 

September 30,

 

 

September 30,

 

Sales and Other Operating Revenue

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

22,711

 

 

25,843

 

 

67,370

 

 

73,413

 

Non-U.S.

 

40,711

 

 

48,344

 

 

125,189

 

 

137,666

 

 

Total

 

63,422

 

 

74,187

 

 

192,559

 

 

211,079

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Significant Non-U.S. revenue sources include: (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

Canada

 

4,945

 

 

6,214

 

 

15,141

 

 

17,752

 

 

United Kingdom

 

4,042

 

 

4,797

 

 

13,244

 

 

14,240

 

 

France

 

3,266

 

 

3,588

 

 

9,597

 

 

10,405

 

 

Belgium

 

2,598

 

 

3,996

 

 

9,371

 

 

12,063

 

 

Singapore

 

2,942

 

 

3,502

 

 

9,197

 

 

10,387

 

 

Italy

 

2,691

 

 

3,316

 

 

7,830

 

 

9,684

 

 

Australia

 

2,100

 

 

2,348

 

 

5,948

 

 

6,464

 

 

Germany

 

1,964

 

 

2,518

 

 

5,879

 

 

7,184

 

(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.


16


 

9.Leases

The Corporation and its consolidated affiliates generally purchase the property, plant and equipment used in operations, but there are situations where assets are leased, primarily for drilling equipment, tankers, office buildings, railcars, and other moveable equipment. Right of use assets and lease liabilities are established on the balance sheet for leases with an expected term greater than one year, by discounting the amounts fixed in the lease agreement for the duration of the lease which is reasonably certain, considering the probability of exercising any early termination and extension options. The portion of the fixed payment related to service costs for drilling equipment and tankers is excluded from the calculation of right of use assets and lease liabilities. Generally assets are leased only for a portion of their useful lives, and are accounted for as operating leases. In limited situations assets are leased for nearly all of their useful lives, and are accounted for as finance leases.

 

Variable payments under these lease agreements are not significant. Residual value guarantees, restrictions, or covenants related to leases, and transactions with related parties are also not significant. In general, leases are capitalized using the incremental borrowing rate of the leasing affiliate. The Corporation’s activities as a lessor are not significant.

 

At adoption of the lease accounting change (see Note 2), on January 1, 2019, an operating lease liability of $3.3 billion was recorded and the operating lease right of use asset was $4.3 billion, including $1.0 billion of previously recorded prepaid leases. There was no cumulative earnings effect adjustment.

 

 

 

 

 

Operating Leases

 

 

 

 

 

 

 

Drilling Rigs

 

 

 

 

 

 

 

 

 

and Related

 

 

 

Finance

 

 

 

 

 

Equipment

Other

 

Total

 

Leases

 

 

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

Lease Cost

 

 

Three Months Ended September 30, 2019

Operating lease cost

 

 

65

 

310

 

375

 

 

Short-term and other (net of sublease rental income)

 

 

259

 

216

 

475

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of right of use assets

 

 

 

 

 

 

 

 

29

Interest on lease liabilities

 

 

 

 

 

 

 

 

35

 

Total

 

 

324

 

526

 

850

 

64

 

 

 

 

 

 

 

 

 

 

 

 

Lease Cost

 

 

Nine Months Ended September 30, 2019

Operating lease cost

 

 

162

 

878

 

1,040

 

 

Short-term and other (net of sublease rental income)

 

 

712

 

846

 

1,558

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of right of use assets

 

 

 

 

 

 

 

 

91

Interest on lease liabilities

 

 

 

 

 

 

 

 

102

 

Total

 

 

874

 

1,724

 

2,598

 

193

 

 

 

 

 

 

 

 

 

 

 

 


17


 

 

 

 

 

Operating Leases

 

 

 

 

 

 

 

Drilling Rigs

 

 

 

 

 

 

 

 

 

and Related

 

 

 

Finance

 

 

 

 

 

Equipment

Other

 

Total

 

Leases

 

 

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet

 

 

September 30, 2019

Right of use assets

 

 

 

 

 

 

 

 

 

 

Included in Other assets, including intangibles - net

 

 

634

 

5,919

 

6,553

 

 

 

Included in Property, plant and equipment - net

 

 

 

 

 

 

 

 

1,499

 

 

Total right of use assets

 

 

634

 

5,919

 

6,553

 

1,499

 

 

 

 

 

 

 

 

 

 

 

 

Lease liability due within one year

 

 

 

 

 

 

 

 

 

 

Included in Accounts payable and accrued liabilities

 

 

230

 

952

 

1,182

 

23

 

Included in Notes and loans payable

 

 

 

 

 

 

 

 

169

Long-term lease liability

 

 

 

 

 

 

 

 

 

 

Included in Other long-term obligations

 

 

383

 

4,014

 

4,397

 

 

 

Included in Long-term debt

 

 

 

 

 

 

 

 

1,281

 

Included in Long-term obligations to equity companies

 

 

 

 

 

 

 

 

139

 

 

Total lease liability

 

 

613

 

4,966

 

5,579

 

1,612

 

 

 

 

 

 

 

 

 

 

 

 

Maturity Analysis of Lease Liabilities

 

 

September 30, 2019

2019 remaining months

 

 

58

 

299

 

357

 

173

2020

 

 

234

 

1,026

 

1,260

 

205

2021

 

 

138

 

795

 

933

 

182

2022

 

 

79

 

557

 

636

 

174

2023

 

 

44

 

451

 

495

 

173

2024

 

 

29

 

406

 

435

 

172

2025 and beyond

 

 

71

 

2,390

 

2,461

 

2,427

 

Total lease payments

 

 

653

 

5,924

 

6,577

 

3,506

Discount to present value

 

 

(40)

 

(958)

 

(998)

 

(1,894)

 

Total lease liability

 

 

613

 

4,966

 

5,579

 

1,612

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average remaining lease term - years

 

 

4

 

10

 

10

 

25

Weighted average discount rate - percent

 

 

3.0%

 

3.2%

 

3.2%

 

9.8%

 

 

 

 

 

 

 

 

 

 

 

 

In addition to the lease liabilities in the table immediately above, at September 30, 2019, undiscounted commitments for leases not yet commenced totaled $0.7 billion for operating leases and $3.4 billion for finance leases. The finance leases relate to floating production storage and offloading vessels and a long-term hydrogen purchase agreement. The underlying assets for these finance leases were primarily designed by, and are being constructed by, the lessors.

 

 

 

 

 

Operating Leases

 

 

 

 

 

 

 

Drilling Rigs

 

 

 

 

 

 

 

 

 

and Related

 

 

 

Finance

 

 

 

 

 

Equipment

Other

 

Total

 

Leases

 

 

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

Other Information

 

 

Nine Months Ended September 30, 2019

Cash paid for amounts included in the measurement of lease liabilities

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

799

 

799

 

41

 

Cash flows from investing activities

 

 

192

 

 

 

192

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

48

 

 

 

 

 

 

 

 

 

 

 

 

Noncash right of use assets recorded for lease liabilities

 

 

 

 

 

 

 

 

 

 

For January 1 adoption of Topic 842

 

 

445

 

2,818

 

3,263

 

 

 

In exchange for new lease liabilities during the period

 

 

341

 

2,872

 

3,213

 

 

 

 

 

 

 

 

 

 

 

 

 

 


18


 

At December 31, 2018, the Corporation and its consolidated subsidiaries held noncancelable operating leases and charters covering drilling equipment, tankers and other assets with minimum undiscounted lease commitments totaling $6,112 million as indicated in the table. Estimated related sublease rental income from noncancelable subleases totals $22 million.

 

 

 

Lease Payments

 

 

Under Minimum Commitments

 

 

As of December 31, 2018

 

 

 

Drilling Rigs

 

 

 

 

 

and Related

 

 

 

 

 

Equipment

Other

 

Total

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

2019

 

 

222

 

934

 

1,156

2020

 

 

166

 

819

 

985

2021

 

 

107

 

658

 

765

2022

 

 

43

 

506

 

549

2023

 

 

32

 

422

 

454

2024 and beyond

 

 

53

 

2,150

 

2,203

Total

 

 

623

 

5,489

 

6,112

 

Net rental cost under both cancelable and noncancelable operating leases incurred during 2018, 2017 and 2016 were as follows:

 

 

 

 

 

For full year

 

 

 

 

2018

 

2017

 

2016

 

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

Rental cost

 

 

 

 

 

 

 

Drilling rigs and related equipment

 

723

 

792

 

1,274

 

Other (net of sublease rental income)

 

1,992

 

1,826

 

1,817

 

 

Total

 

2,715

 

2,618

 

3,091



10.Accounting for Suspended Exploratory Well Costs

 

For the category of exploratory well costs at year-end 2018 that were suspended more than one year, a total of $18 million was expensed in the first nine months of 2019.

 

11. Sale of Norway Assets

ExxonMobil signed an agreement with Vår Energi AS (Vår) for the sale of its non-operated upstream assets in Norway for $4.5 billion. The transaction is expected to close in the fourth quarter of 2019, subject to standard conditions precedent, including customary approvals from regulatory authorities. The agreed sales price of $4.5 billion is subject to interim period adjustments from the effective date of January 1, 2019, to the closing date, and obligations for income taxes from the effective date will transfer to Vår. Estimated total cash flow from the divestment is around $3.5 billion after closing adjustments, with expected 2019 cash proceeds of around $2.6 billion and estimated cash flow in future periods associated with deferred consideration of $0.3 billion and an estimated refund of income tax payments of $0.6 billion. The Corporation expects to recognize a gain of approximately $3.5 billion at closing. Estimated gain and net cash flow could change significantly due to market factors and timing of close.

 


19


 

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 (U.S. GAAP)

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

(millions of dollars)

Upstream

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

 

37

 

 

606

 

 

468

 

 

1,474

 

Non-U.S.

 

 

2,131

 

 

3,623

 

 

7,837

 

 

9,292

Downstream

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

 

673

 

 

961

 

 

822

 

 

1,975

 

Non-U.S.

 

 

557

 

 

681

 

 

603

 

 

1,331

Chemical

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

 

53

 

 

404

 

 

208

 

 

1,360

 

Non-U.S.

 

 

188

 

 

309

 

 

739

 

 

1,254

Corporate and financing

 

 

(469)

 

 

(344)

 

 

(2,027)

 

 

(1,846)

 

Net income attributable to ExxonMobil (U.S. GAAP)

 

 

3,170

 

 

6,240

 

 

8,650

 

 

14,840

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share (dollars)

 

 

0.75

 

 

1.46

 

 

2.03

 

 

3.47

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share - assuming dilution (dollars)

 

 

0.75

 

 

1.46

 

 

2.03

 

 

3.47

 

References in this discussion to Corporate earnings mean net income attributable to ExxonMobil (U.S. GAAP) from the consolidated income statement. Unless otherwise indicated, references to earnings, Upstream, Downstream, Chemical and Corporate and financing segment earnings, and earnings per share are ExxonMobil's share after excluding amounts attributable to noncontrolling interests.

 

 

REVIEW OF THIRD QUARTER 2019 RESULTS

 

ExxonMobil’s third quarter 2019 earnings were $3.2 billion, or $0.75 per diluted share, compared with $6.2 billion a year earlier. The decrease in earnings was primarily the result of lower Upstream realizations, weaker Downstream and Chemical margins, increased expenses, less favorable one-time tax items, and higher scheduled maintenance activity. These impacts were partly offset by Upstream volume growth.

 

 

 

 

Earnings of $8.7 billion for the first nine months of 2019 were down 42 percent from $14.8 billion in 2018.

 

Earnings per share assuming dilution were $2.03.

 

Capital and exploration expenditures were $22.7 billion, up 25 percent from 2018.

 

Oil-equivalent production was 3.9 million barrels per day, up 4 percent from the prior year. Excluding entitlement effects and divestments, oil-equivalent production was also up 4 percent.

 

The Corporation distributed $10.9 billion in dividends to shareholders.

 


20


 

 

 

 

 

 

Third Quarter

 

 

First Nine Months

 

 

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

(millions of dollars)

Upstream earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

 

37

 

 

606

 

 

468

 

 

1,474

 

Non-U.S.

 

 

2,131

 

 

3,623

 

 

7,837

 

 

9,292

 

 

Total

 

 

2,168

 

 

4,229

 

 

8,305

 

 

10,766

 

Upstream earnings were $2,168 million in the third quarter of 2019, down $2,061 million from the third quarter of 2018.

·

Realizations reduced earnings by $1,510 million, mainly due to lower liquids realizations.

 

·

Higher volume and mix effects increased earnings by $230 million due to higher liquids volumes of $190 million and increased gas volumes of $40 million.

 

·

All other items decreased earnings by $780 million, mainly due to higher expenses of $410 million and the absence of a favorable one-time tax item of $271 million in the prior year quarter.

 

·

U.S. Upstream earnings were $37 million, down $569 million from the prior year quarter.

 

·

Non-U.S. Upstream earnings were $2,131 million, down $1,492 million from the prior year quarter.

 

·

On an oil-equivalent basis, production increased 3 percent from the third quarter of 2018.

 

·

Liquids production totaled 2.4 million barrels per day, up 106,000 barrels per day mainly driven by growth.

 

·

Natural gas production was 9.0 billion cubic feet per day, up 44 million cubic feet per day driven by growth, partly offset by higher downtime and divestments.

 

 

 

 

 

Upstream earnings were $8,305 million in the first nine months of 2019, down $2,461 million from the first nine months of 2018.

·

Realizations reduced earnings by $2,280 million, mainly due to lower liquids realizations.

 

·

Higher volume and mix effects increased earnings by $1,030 million due to higher liquids volumes.

 

·

All other items decreased earnings by $1,210 million, as higher expenses of $970 million, impairment charges, and the absence of asset management gains and a favorable one-time tax item in the prior year were partly offset by a favorable one-time tax item in the current year.

 

·

U.S. Upstream earnings were $468 million, down $1,006 million from the prior year.

 

·

Non-U.S. Upstream earnings were $7,837 million, down $1,455 million from the prior year.

 

·

On an oil-equivalent basis, production increased 4 percent from the first nine months of 2018.

 

·

Liquids production totaled 2.4 million barrels per day, up 131,000 barrels per day due to growth and lower downtime.

 

·

Natural gas production was 9.4 billion cubic feet per day, up 147 million cubic feet per day driven by growth and lower downtime.

 


21


 

 

 

 

 

Third Quarter

 

 

First Nine Months

Upstream additional information

 

 

 

(thousands of barrels daily)

 

Volumes reconciliation (Oil-equivalent production)(1)

 

 

 

 

 

 

 

 

 

2018

 

 

 

3,786

 

 

 

 

3,774

 

 

Entitlements - Net Interest

 

 

 

-

 

 

 

 

-

 

 

Entitlements - Price / Spend / Other

 

 

 

23

 

 

 

 

19

 

 

Quotas

 

 

 

-

 

 

 

 

-

 

 

Divestments

 

 

 

(12)

 

 

 

 

(16)

 

 

Growth / Other

 

 

 

102

 

 

 

 

152

 

2019

 

 

 

3,899

 

 

 

 

3,929

 

 

 

 

 

 

 

 

 

 

 

 

 

(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.

 

Quotas are changes in ExxonMobil’s allowable production arising from production constraints imposed by countries which are members of the Organization of the Petroleum Exporting Countries (OPEC). Volumes reported in this category would have been readily producible in the absence of the quota.

 

Divestments are reductions in ExxonMobil’s production arising from commercial arrangements to fully or partially reduce equity in a field or asset in exchange for financial or other economic consideration.

 

Growth and Other factors comprise all other operational and non-operational factors not covered by the above definitions that may affect volumes attributable to ExxonMobil. Such factors include, but are not limited to, production enhancements from project and work program activities, acquisitions including additions from asset exchanges, downtime, market demand, natural field decline, and any fiscal or commercial terms that do not affect entitlements.

 


22


 

 

 

 

 

 

Third Quarter

 

 

First Nine Months

 

 

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

(millions of dollars)

Downstream earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

 

673

 

 

961

 

 

822

 

 

1,975

 

Non-U.S.

 

 

557

 

 

681

 

 

603

 

 

1,331

 

 

Total

 

 

1,230

 

 

1,642

 

 

1,425

 

 

3,306

 

Downstream earnings were $1,230 million in the third quarter of 2019, down $412 million from the third quarter of 2018.

·

Margins reduced earnings by $340 million, mainly due to lower U.S. margins.

 

·

Lower volume and mix effects decreased earnings by $20 million.

 

·

All other items reduced earnings by $50 million as higher expenses were partly offset by favorable foreign exchange and tax effects.

 

·

U.S. Downstream earnings were $673 million, down $288 million from the prior year quarter.

 

·

Non-U.S. Downstream earnings were $557 million, down $124 million from the prior year quarter.

 

·

Petroleum product sales of 5.5 million barrels per day were 112,000 barrels per day lower than the prior year quarter.

 

 

 

 

 

Downstream earnings were $1,425 million in the first nine months of 2019, down $1,881 million from the first nine months of 2018.

·

Margins reduced earnings by $1,430 million, reflecting lower U.S. and Non-U.S. margins.

 

·

Lower volume and mix effects decreased earnings by $80 million.

 

·

All other items reduced earnings by $370 million as higher expenses were partly offset by favorable foreign exchange effects.

 

·

U.S. Downstream earnings were $822 million, down $1,153 million from the prior year.

 

·

Non-U.S. Downstream earnings were $603 million, down $728 million from the prior year.

 

·

Petroleum product sales of 5.4 million barrels per day were 74,000 barrels per day lower than the prior year.

 


23


 

 

 

 

 

 

Third Quarter

 

 

First Nine Months

 

 

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

(millions of dollars)

Chemical earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

 

53

 

 

404

 

 

208

 

 

1,360

 

Non-U.S.

 

 

188

 

 

309

 

 

739

 

 

1,254

 

 

Total

 

 

241

 

 

713

 

 

947

 

 

2,614

 

Chemical earnings were $241 million in the third quarter of 2019, down $472 million from the third quarter of 2018.

·

Weaker margins reduced earnings by $350 million.

 

·

Volume and mix effects decreased earnings by $60 million.

 

·

All other items decreased earnings by $60 million, including the impact of higher expenses.

 

·

U.S. Chemical earnings were $53 million, down $351 million from the prior year quarter.

 

·

Non-U.S. Chemical earnings were $188 million, down $121 million from the prior year quarter.

 

·

Third quarter prime product sales of 6.5 million metric tons were 201,000 metric tons lower than the prior year quarter.

 

 

 

 

 

Chemical earnings were $947 million in the first nine months of 2019, down $1,667 million from the first nine months of 2018.

·

Weaker margins reduced earnings by $1,140 million.

 

·

Volume and mix effects were essentially flat.

 

·

All other items decreased earnings by $530 million due to higher expenses and unfavorable foreign exchange effects.

 

·

U.S. Chemical earnings were $208 million, down $1,152 million from the prior year.

 

·

Non-U.S. Chemical earnings were $739 million, down $515 million from the prior year.

 

·

Prime product sales of 19.9 million metric tons in the first nine months of 2019 were 250,000 metric tons lower than the first nine months of the prior year.

 

 

 

 

 

 

 

Third Quarter

 

 

First Nine Months

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate and financing earnings

 

 

(469)

 

 

(344)

 

 

(2,027)

 

 

(1,846)

 

Corporate and financing expenses were $469 million for the third quarter of 2019, up $125 million from the third quarter of 2018.

 

 

 

 

Corporate and financing expenses were $2,027 million for the first nine months of 2019, up $181 million from the first nine months of 2018.


24


 

LIQUIDITY AND CAPITAL RESOURCES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Third Quarter

 

 

First Nine Months

 

 

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

(millions of dollars)

Net cash provided by/(used in)

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating activities

 

 

 

 

 

 

 

 

23,364

 

 

27,407

 

Investing activities

 

 

 

 

 

 

 

 

(18,820)

 

 

(10,862)

 

Financing activities

 

 

 

 

 

 

 

 

(2,162)

 

 

(13,945)

Effect of exchange rate changes

 

 

 

 

 

 

 

 

(73)

 

 

(108)

Increase/(decrease) in cash and cash equivalents

 

 

 

 

 

 

 

 

2,309

 

 

2,492

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents (at end of period)

 

 

 

 

 

 

 

 

5,351

 

 

5,669

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow from operations and asset sales

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities (U.S. GAAP)

 

 

9,079

 

 

11,108

 

 

23,364

 

 

27,407

 

Proceeds associated with sales of subsidiaries, property,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

plant & equipment, and sales and returns of investments

 

 

460

 

 

1,491

 

 

600

 

 

3,239

 

Cash flow from operations and asset sales

 

 

9,539

 

 

12,599

 

 

23,964

 

 

30,646

 

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 third quarter of 2019 was $9.5 billion, including asset sales of $0.5 billion, a decrease of $3.1 billion from the comparable 2018 period primarily reflecting lower earnings and asset sale proceeds.

 

Cash provided by operating activities totaled $23.4 billion for the first nine months of 2019, $4.0 billion lower than 2018. The major source of funds was net income including noncontrolling interests of $9.0 billion, a decrease of $6.2 billion from the prior year period. The adjustment for the noncash provision of $14.1 billion for depreciation and depletion was up $0.4 billion from 2018. Changes in operational working capital contributed $2.6 billion, compared to a decrease of $25 million in the prior year period. All other items net decreased cash flows by $2.3 billion in 2019 versus a reduction of $1.5 billion in 2018. See the Condensed Consolidated Statement of Cash Flows for additional details.

 

Investing activities for the first nine months of 2019 used net cash of $18.8 billion, an increase of $8.0 billion compared to the prior year. Spending for additions to property, plant and equipment of $17.7 billion was $4.2 billion higher than 2018. Proceeds from asset sales of $0.6 billion decreased $2.6 billion. Investments and advances increased $1.4 billion to $2.5 billion.

 

Cash flow from operations and asset sales in the first nine months of 2019 was $24.0 billion, including asset sales of $0.6 billion, a decrease of $6.7 billion from the comparable 2018 period primarily reflecting lower earnings and asset sale proceeds.

 

During the third quarter of 2019, the Corporation issued $7.0 billion of long-term debt and used part of the proceeds to reduce short-term debt. Net cash used by financing activities was $2.2 billion in the first nine months of 2019, $11.8 billion lower than 2018 reflecting the 2019 debt issuance.

 

Total debt at the end of the third quarter of 2019 was $47.1 billion compared to $37.8 billion at year-end 2018. The Corporation's debt to total capital ratio was 19.3 percent at the end of the third quarter of 2019 compared to 16.0 percent at year-end 2018.

 

The Corporation has access to significant capacity of long-term and short-term liquidity. Internally generated funds are generally expected to cover financial requirements, supplemented by short-term and long-term debt as required. The Corporation replaced a $5.0 billion short-term committed line of credit with a $7.5 billion short-term committed line of credit in the third quarter of 2019.

 


25


 

During the first nine months of 2019, Exxon Mobil Corporation purchased 5 million shares of its common stock for the treasury at a gross cost of $0.4 billion. These purchases were made to offset shares or units settled in shares issued in conjunction with the company’s benefit plans and programs. Shares outstanding decreased from 4,237 million at year-end 2018 to 4,231 million at the end of the third quarter of 2019. Purchases may be made both in the open market and through negotiated transactions, and may be increased, decreased or discontinued at any time without prior notice.

 

The Corporation distributed a total of $10.9 billion to shareholders in the first nine months of 2019 through dividends.

 

Total cash and cash equivalents of $5.4 billion at the end of the third quarter of 2019 compared to $3.0 billion at year-end 2018.

 

The Corporation, as part of its ongoing asset management program, continues to evaluate its mix of assets for potential upgrade. Because of the ongoing nature of this program, dispositions will continue to be made from time to time which will result in either gains or losses. Additionally, the Corporation continues to evaluate opportunities to enhance its business portfolio through acquisitions of assets or companies, and enters into such transactions from time to time. Key criteria for evaluating acquisitions include potential for future growth and attractive current valuations. Acquisitions may be made with cash, shares of the Corporation’s common stock, or both.

 

Litigation and other contingencies are discussed in Note 3 to the unaudited condensed consolidated financial statements.

 

 

TAXES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Third Quarter

 

 

First Nine Months

 

 

 

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

 

1,474

 

 

2,634

 

 

4,598

 

 

7,617

 

 

Effective income tax rate

 

 

37

%

 

34

%

 

41

%

 

39

%

Total other taxes and duties (1)

 

 

8,317

 

 

8,939

 

 

24,770

 

 

26,757

 

 

 

Total

 

 

9,791

 

 

11,573

 

 

29,368

 

 

34,374

 

 

(1) Includes “Other taxes and duties” plus taxes that are included in “Production and manufacturing expenses” and “Selling, general and administrative expenses.”

 

Total taxes were $9.8 billion for the third quarter of 2019, a decrease of $1.8 billion from 2018. Income tax expense decreased by $1.2 billion to $1.5 billion reflecting lower pre-tax income. The effective income tax rate was 37 percent compared to 34 percent in the prior year period due to a higher share of earnings in higher tax jurisdictions. Total other taxes and duties decreased by $0.6 billion to $8.3 billion.

 

Total taxes were $29.4 billion for the first nine months of 2019, a decrease of $5.0 billion from 2018. Income tax expense decreased by $3.0 billion to $4.6 billion reflecting lower pre-tax income. The effective income tax rate was 41 percent compared to 39 percent in the prior year period due to a higher share of earnings in higher tax jurisdictions. Total other taxes and duties decreased by $2.0 billion to $24.8 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 IRS has asserted penalties associated with several of those positions. The Corporation has not recognized the penalties as an expense because the Corporation does not expect the penalties to be sustained under applicable law. The Corporation has filed a refund suit for tax years 2006-2009 in a U.S. federal district court with respect to the positions at issue for those years. The trial for those tax issues was completed at the end of June 2019 and the Corporation is awaiting a decision, which may be appealed by either side. 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.


26


 

CAPITAL AND EXPLORATION EXPENDITURES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Third Quarter

 

 

First Nine Months

 

 

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Upstream (including exploration expenses)

 

 

5,791

 

 

5,330

 

 

17,394

 

 

13,944

 

Downstream

 

 

1,069

 

 

719

 

 

3,011

 

 

2,563

 

Chemical

 

 

852

 

 

526

 

 

2,266

 

 

1,524

 

Other

 

 

7

 

 

11

 

 

17

 

 

49

 

 

Total

 

 

7,719

 

 

6,586

 

 

22,688

 

 

18,080

 

 

Capital and exploration expenditures in the third quarter of 2019 were $7.7 billion, up 17 percent from the third quarter of 2018.

 

 

 

 

Capital and exploration expenditures in the first nine months of 2019 were $22.7 billion, up 25 percent from the first nine months of 2018 due primarily to growth in the U.S. Permian Basin. The Corporation anticipates an investment level of approximately $30 billion in 2019. Actual spending could vary depending on the progress of individual projects and property acquisitions.



RECENTLY ISSUED ACCOUNTING STANDARDS

 

Effective January 1, 2020, ExxonMobil will adopt the Financial Accounting Standards Board’s update, Financial Instruments – Credit Losses (Topic 326), as amended. The standard requires a valuation allowance for credit losses be recognized for certain financial assets that reflects the current expected credit loss over the asset’s contractual life. The valuation allowance considers the risk of loss, even if remote, and considers past events, current conditions and expectations of the future. The Corporation does not expect a material change in the credit allowance for trade receivables and continues to evaluate the impact on other financial assets in scope of the standard.



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 business and project plans, capacities, costs, and timing; resource recoveries and production rates; and the impact of new technologies, including to increase capital efficiency and production and to reduce greenhouse gas emissions, could differ materially due to a number of factors. These include global or regional changes in supply and demand for oil, gas, and petrochemicals and other market conditions that impact prices and differentials; reservoir performance; the outcome of exploration projects and timely completion of development and construction projects; the impact of fiscal and commercial terms and the outcome of commercial negotiations or acquisitions; changes in law, taxes, or regulation including environmental regulations, and timely granting of governmental permits; war, trade relations, shipping blockades or harassment, and other political or security disturbances; opportunities for and regulatory approval of potential investments or divestments; the actions of competitors; the capture of efficiencies between business lines; unforeseen technical or operating difficulties; unexpected technological developments; the ability to bring new technologies to commercial scale on a cost-competitive basis, including large-scale hydraulic fracturing projects; general economic conditions including the occurrence and duration of economic recessions; the results of research programs; and other factors discussed under the heading Factors Affecting Future Results on the Investors page of our website at www.exxonmobil.com and in Item 1A of ExxonMobil’s 2018 Form 10-K. We assume no duty to update these statements as of any future date.

 

The term “project” as used in this report can refer to a variety of different activities and does not necessarily have the same meaning as in any government payment transparency reports.


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Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Information about market risks for the nine months ended September 30, 2019, does not differ materially from that discussed under Item 7A of the registrant's Annual Report on Form 10-K for 2018.



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 September 30, 2019. 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.


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PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings

 

On August 5, 2019, the State of Texas, acting by and through its Attorney General, on behalf of the Texas Commission on Environmental Quality (State), filed a lawsuit against the Corporation due to an alleged fire that occurred on July 31, 2019, at the Baytown Olefins Plant in Texas. The State alleges that ExxonMobil violated, and continues to violate, the Texas Water Code, the Texas Clean Air Act, ExxonMobil’s permits and promulgated regulations for alleged unauthorized air pollution, unauthorized outdoor burning, nuisance, unauthorized visible emissions, and unauthorized discharge of firefighting wastewater at the plant. The State is seeking civil penalties in an undisclosed amount but likely in excess of $100,000 and injunctive relief against ExxonMobil. The State is also seeking to recover its fees and costs of litigation.

 

As reported in the Corporation’s Form 10-Q for the first and second quarters of 2019, on March 20, 2019, the State of California Air Resources Board (CARB) informed ExxonMobil Oil Corporation (EMOC) of its intention to attempt to settle an enforcement matter involving the formerly owned Torrance Refinery in California under the California Health and Safety Code. Specifically, CARB contended that the refinery failed to timely calibrate and inspect a greenhouse gas reporting meter as required by the applicable regulations and to accurately report greenhouse gas emissions from refinery operations in 2014 and 2015 in a manner consistent with applicable regulations. The alleged violations have been corrected. On or about June 7, 2019, CARB and EMOC agreed on a penalty of $493,500 to resolve the matter. The settlement agreement was fully executed by all parties on July 15, 2019, and the final settlement payment to CARB pursuant to the settlement agreement was paid on or about August 6, 2019.

 

As last reported in the Corporation’s Form 10-Q for the second quarter of 2019, on July 20, 2017, the United States Department of Treasury, Office of Foreign Assets Control (OFAC) assessed a civil penalty against Exxon Mobil Corporation, ExxonMobil Development Company and ExxonMobil Oil Corporation for violating the Ukraine-Related Sanctions Regulations, 31 C.F.R. part 589. The assessed civil penalty is in the amount of $2,000,000. ExxonMobil and its affiliates have been and continue to be in compliance with all sanctions and disagree that any violation has occurred. ExxonMobil and its affiliates filed a complaint on July 20, 2017, in the United States Federal District Court, Northern District of Texas seeking judicial review of, and to enjoin, the civil penalty under the Administrative Procedures Act and the United States Constitution, including on the basis that it represents an arbitrary and capricious action by OFAC and a violation of the Company’s due process rights.

 

Refer to the relevant portions of Note 3 of this Quarterly Report on Form 10-Q for further information on legal proceedings.


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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

 

 

 

 

 

 

 

 

 

 

Issuer Purchase of Equity Securities for Quarter Ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Number of

 

Maximum Number

 

 

 

 

 

 

 

 

Shares Purchased

 

of Shares that May

 

 

 

 

Total Number

 

Average

 

as Part of Publicly

 

Yet Be Purchased

 

 

 

 

of Shares

 

Price Paid

 

Announced Plans

 

Under the Plans or

Period

 

 

Purchased

 

per Share

 

or Programs

 

Programs

 

 

 

 

 

 

 

 

 

 

 

July 2019

 

-

 

-

 

-

 

 

August 2019

 

-

 

-

 

-

 

 

September 2019

 

-

 

-

 

-

 

 

 

Total

 

 

-

 

 

 

-

 

(See Note 1)

 

Note 1 - On August 1, 2000, the Corporation announced its intention to resume purchases of shares of its common stock for the treasury both to offset shares issued in conjunction with company benefit plans and programs and to gradually reduce the number of shares outstanding. The announcement did not specify an amount or expiration date. The Corporation has continued to purchase shares since this announcement and to report purchased volumes in its quarterly earnings releases. In its earnings release dated February 2, 2016, the Corporation stated it will continue to acquire shares to offset dilution in conjunction with benefit plans and programs, but had suspended making purchases to reduce shares outstanding effective beginning the first quarter of 2016.



Item 6. Exhibits

 

See Index to Exhibits of this report.


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INDEX TO EXHIBITS

 

 

Exhibit

 

Description

 

 

 

31.1

 

Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by Chief Executive Officer.

31.2

 

Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by Principal Financial Officer.

31.3

 

Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by Principal Accounting Officer.

32.1

 

Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Chief Executive Officer.

32.2

 

Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal Financial Officer.

32.3

 

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).

 

 

 


31


 

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: November 6, 2019

By:

/s/ DAVID S. ROSENTHAL

 

 

David S. Rosenthal

 

 

Vice President, Controller and

 

 

Principal Accounting Officer

 

 

 

 


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