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
June 30, 2017
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) 444-1000
(Registrant's
telephone number, including area code)
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 and posted on its
corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T 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 June 30, 2017
|
Common stock,
without par value
|
|
4,237,105,828
|
PART I. FINANCIAL INFORMATION
|
|
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Item 1. Financial Statements
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|
EXXON MOBIL
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENT OF INCOME
|
(millions
of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Three
Months Ended
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|
Six
Months Ended
|
|
|
|
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|
June 30,
|
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|
June 30,
|
|
|
|
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|
2017
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|
|
2016
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|
2017
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|
|
2016
|
Revenues and other income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and other operating revenue
(1)
|
|
|
60,825
|
|
|
56,360
|
|
|
121,915
|
|
|
103,465
|
|
Income from equity affiliates
|
|
|
1,525
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|
|
1,124
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|
|
3,235
|
|
|
2,375
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|
Other income
|
|
|
526
|
|
|
210
|
|
|
1,013
|
|
|
561
|
|
|
Total revenues and other income
|
|
|
62,876
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|
|
57,694
|
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126,163
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106,401
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Costs and other deductions
|
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Crude oil and product purchases
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30,194
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27,130
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60,553
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47,837
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|
Production and manufacturing expenses
|
|
|
8,407
|
|
|
8,076
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|
16,252
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|
15,637
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|
Selling, general and administrative expenses
|
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|
2,628
|
|
|
2,646
|
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|
5,227
|
|
|
5,239
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|
Depreciation and depletion
|
|
|
4,652
|
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|
4,821
|
|
|
9,171
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|
9,586
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|
Exploration expenses, including dry holes
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514
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|
445
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803
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|
800
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Interest expense
|
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|
158
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|
75
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|
304
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|
152
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|
Sales-based taxes
(1)
|
|
|
5,589
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|
|
5,435
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|
10,931
|
|
|
10,250
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|
Other taxes and duties
|
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|
6,578
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|
6,670
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12,848
|
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|
12,774
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|
Total costs and other deductions
|
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58,720
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55,298
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116,089
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102,275
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Income before income taxes
|
|
|
4,156
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|
2,396
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10,074
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4,126
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Income taxes
|
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|
892
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|
715
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2,720
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|
664
|
Net income including noncontrolling interests
|
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|
3,264
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|
1,681
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7,354
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|
3,462
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Net income attributable to noncontrolling interests
|
|
|
(86)
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|
|
(19)
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|
(6)
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|
(48)
|
Net income attributable to ExxonMobil
|
|
|
3,350
|
|
|
1,700
|
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|
7,360
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|
3,510
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|
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|
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Earnings per common share
(dollars)
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0.78
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0.41
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1.73
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|
0.84
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Earnings per common share - assuming dilution
(dollars)
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0.78
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0.41
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1.73
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0.84
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Dividends per common share
(dollars)
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0.77
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0.75
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1.52
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1.48
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(1) Sales-based taxes included in sales and other
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operating revenue
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5,589
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|
5,435
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10,931
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10,250
|
The information in the Notes to Condensed Consolidated Financial
Statements is an integral part of these statements.
EXXON MOBIL CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
|
(millions
of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Three
Months Ended
|
|
|
Six
Months Ended
|
|
|
|
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|
June 30,
|
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|
June 30,
|
|
|
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|
2017
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|
2016
|
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2017
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|
2016
|
|
|
|
|
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|
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Net income including noncontrolling interests
|
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|
3,264
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1,681
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7,354
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3,462
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Other comprehensive income (net of income taxes)
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|
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|
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Foreign exchange translation adjustment
|
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|
1,674
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(727)
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3,082
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|
2,613
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Adjustment for foreign exchange translation (gain)/loss
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included in net income
|
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234
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-
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234
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-
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Postretirement benefits reserves adjustment
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(excluding amortization)
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(159)
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110
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(184)
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(9)
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Amortization and settlement of postretirement benefits reserves
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adjustment included in net periodic benefit costs
|
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|
283
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|
292
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|
|
539
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|
581
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|
Total other comprehensive income
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2,032
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(325)
|
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|
3,671
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|
|
3,185
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Comprehensive income including noncontrolling interests
|
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|
5,296
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|
1,356
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11,025
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6,647
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Comprehensive income attributable to
|
|
|
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noncontrolling interests
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169
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16
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328
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|
|
370
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Comprehensive income attributable to ExxonMobil
|
|
|
5,127
|
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|
1,340
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|
10,697
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|
|
6,277
|
The information in the Notes to Condensed Consolidated Financial
Statements is an integral part of these statements.
EXXON MOBIL CORPORATION
|
|
CONDENSED
CONSOLIDATED BALANCE SHEET
|
|
(millions
of dollars)
|
|
|
|
|
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June
30,
|
|
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Dec.
31,
|
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2017
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|
2016
|
|
Assets
|
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Current assets
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Cash and cash equivalents
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4,042
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3,657
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Notes and accounts receivable – net
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|
21,289
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21,394
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Inventories
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Crude oil, products and merchandise
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11,135
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10,877
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Materials and supplies
|
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4,170
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|
4,203
|
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Other current assets
|
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|
1,544
|
|
|
1,285
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|
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Total current assets
|
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|
42,180
|
|
|
41,416
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Investments, advances and long-term receivables
|
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37,719
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35,102
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Property, plant and equipment – net
|
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|
252,987
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244,224
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|
Other assets, including intangibles – net
|
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|
10,126
|
|
|
9,572
|
|
|
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|
Total assets
|
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|
343,012
|
|
|
330,314
|
|
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Liabilities
|
|
|
|
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|
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Current liabilities
|
|
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|
|
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Notes and loans payable
|
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|
17,185
|
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|
13,830
|
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Accounts payable and accrued liabilities
|
|
|
31,100
|
|
|
31,193
|
|
|
|
Income taxes payable
|
|
|
2,664
|
|
|
2,615
|
|
|
|
|
Total current liabilities
|
|
|
50,949
|
|
|
47,638
|
|
|
Long-term debt
|
|
|
24,750
|
|
|
28,932
|
|
|
Postretirement benefits reserves
|
|
|
20,778
|
|
|
20,680
|
|
|
Deferred income tax liabilities
|
|
|
34,585
|
|
|
34,041
|
|
|
Long-term obligations to equity companies
|
|
|
4,954
|
|
|
5,124
|
|
|
Other long-term obligations
|
|
|
21,158
|
|
|
20,069
|
|
|
|
|
Total liabilities
|
|
|
157,174
|
|
|
156,484
|
|
|
|
|
|
|
|
|
|
|
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|
Commitments and contingencies (Note 3)
|
|
|
|
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Equity
|
|
|
|
|
|
|
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Common stock without par value
|
|
|
|
|
|
|
|
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|
(9,000 million shares authorized, 8,019 million shares issued)
|
|
|
14,617
|
|
|
12,157
|
|
|
Earnings reinvested
|
|
|
408,768
|
|
|
407,831
|
|
|
Accumulated other comprehensive income
|
|
|
(18,902)
|
|
|
(22,239)
|
|
|
Common stock held in treasury
|
|
|
|
|
|
|
|
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(3,782 million shares at June 30, 2017 and
|
|
|
|
|
|
|
|
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3,871 million shares at December 31, 2016)
|
|
|
(225,305)
|
|
|
(230,424)
|
|
|
|
|
ExxonMobil share of equity
|
|
|
179,178
|
|
|
167,325
|
|
|
Noncontrolling interests
|
|
|
6,660
|
|
|
6,505
|
|
|
|
|
Total equity
|
|
|
185,838
|
|
|
173,830
|
|
|
|
|
Total liabilities and equity
|
|
|
343,012
|
|
|
330,314
|
|
The information in the Notes to Condensed Consolidated Financial
Statements is an integral part of these statements.
EXXON MOBIL CORPORATION
|
|
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
|
|
(millions
of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six
Months Ended
|
|
|
|
|
|
|
|
June 30,
|
|
|
|
|
|
|
|
2017
|
|
|
2016
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
Net income including noncontrolling interests
|
|
|
7,354
|
|
|
3,462
|
|
|
Depreciation and depletion
|
|
|
9,171
|
|
|
9,586
|
|
|
Changes in operational working capital, excluding cash and debt
|
|
|
(228)
|
|
|
(1,725)
|
|
|
All other items – net
|
|
|
(1,177)
|
|
|
(1,992)
|
|
|
|
|
Net cash provided by operating activities
|
|
|
15,120
|
|
|
9,331
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment
|
|
|
(5,988)
|
|
|
(8,872)
|
|
|
Proceeds associated with sales of subsidiaries, property, plant
and
|
|
|
|
|
|
|
|
|
|
equipment, and sales and returns of investments
|
|
|
841
|
|
|
1,206
|
|
|
Additional investments and advances
|
|
|
(1,793)
|
|
|
(311)
|
|
|
Other investing activities – net
|
|
|
301
|
|
|
481
|
|
|
|
|
Net cash used in investing activities
|
|
|
(6,639)
|
|
|
(7,496)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
Additions to long-term debt
|
|
|
60
|
|
|
11,964
|
|
|
Additions to short-term debt
|
|
|
1,735
|
|
|
-
|
|
|
Reductions in short-term debt
|
|
|
(2,722)
|
|
|
(257)
|
|
|
Additions/(reductions) in commercial paper, and debt with three
|
|
|
|
|
|
|
|
|
|
|
months or less maturity
(1)
|
|
|
(321)
|
|
|
(5,966)
|
|
|
Cash dividends to ExxonMobil shareholders
|
|
|
(6,423)
|
|
|
(6,187)
|
|
|
Cash dividends to noncontrolling interests
|
|
|
(91)
|
|
|
(85)
|
|
|
Changes in noncontrolling interests
|
|
|
(29)
|
|
|
-
|
|
|
Common stock acquired
|
|
|
(514)
|
|
|
(727)
|
|
|
Common stock sold
|
|
|
-
|
|
|
7
|
|
|
|
|
Net cash used in financing activities
|
|
|
(8,305)
|
|
|
(1,251)
|
|
Effects of exchange rate changes on cash
|
|
|
209
|
|
|
69
|
|
Increase/(decrease) in cash and cash equivalents
|
|
|
385
|
|
|
653
|
|
Cash and cash equivalents at beginning of period
|
|
|
3,657
|
|
|
3,705
|
|
Cash and cash equivalents at end of period
|
|
|
4,042
|
|
|
4,358
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures
|
|
|
|
|
|
|
|
|
Income taxes paid
|
|
|
3,247
|
|
|
2,144
|
|
|
Cash interest paid
|
|
|
587
|
|
|
334
|
|
2017 Non-Cash
Transactions
In the first six
months of 2017, the Corporation completed the acquisitions of InterOil
Corporation and of companies that own certain oil and gas properties in the
Permian Basin and other assets. These transactions included a significant
non-cash component. Additional information is provided in Note 9.
(1) Includes a net addition of commercial paper with a maturity
of over three months of $0.2 billion in 2017 and $0.1 billion in 2016. The
gross amount of commercial paper with a maturity of over three months issued
was $2.2 billion in 2017 and $1.5 billion in 2016, while the gross amount
repaid was $2.0 billion in 2017 and $1.4 billion in 2016.
The information in
the Notes to Condensed Consolidated Financial Statements is an integral part of
these statements.
|
EXXON MOBIL
CORPORATION
|
|
CONDENSED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
|
|
(millions
of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ExxonMobil
Share of Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
Common
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compre-
|
|
Stock
|
|
ExxonMobil
|
|
Non-
|
|
|
|
|
|
|
|
|
Common
|
|
Earnings
|
|
hensive
|
|
Held
in
|
|
Share
of
|
|
controlling
|
|
Total
|
|
|
|
|
|
Stock
|
|
Reinvested
|
|
Income
|
|
Treasury
|
|
Equity
|
|
Interests
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2015
|
|
|
11,612
|
|
|
412,444
|
|
|
(23,511)
|
|
|
(229,734)
|
|
|
170,811
|
|
|
5,999
|
|
|
176,810
|
|
Amortization of stock-based awards
|
|
|
403
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
403
|
|
|
-
|
|
|
403
|
|
Tax benefits related to stock-based
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
awards
|
|
|
8
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
8
|
|
|
-
|
|
|
8
|
|
Other
|
|
|
(4)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(4)
|
|
|
-
|
|
|
(4)
|
|
Net income for the period
|
|
|
-
|
|
|
3,510
|
|
|
-
|
|
|
-
|
|
|
3,510
|
|
|
(48)
|
|
|
3,462
|
|
Dividends – common shares
|
|
|
-
|
|
|
(6,187)
|
|
|
-
|
|
|
-
|
|
|
(6,187)
|
|
|
(85)
|
|
|
(6,272)
|
|
Other comprehensive income
|
|
|
-
|
|
|
-
|
|
|
2,767
|
|
|
-
|
|
|
2,767
|
|
|
418
|
|
|
3,185
|
|
Acquisitions, at cost
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(727)
|
|
|
(727)
|
|
|
-
|
|
|
(727)
|
|
Dispositions
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
10
|
|
|
10
|
|
|
-
|
|
|
10
|
Balance as of June 30, 2016
|
|
|
12,019
|
|
|
409,767
|
|
|
(20,744)
|
|
|
(230,451)
|
|
|
170,591
|
|
|
6,284
|
|
|
176,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2016
|
|
|
12,157
|
|
|
407,831
|
|
|
(22,239)
|
|
|
(230,424)
|
|
|
167,325
|
|
|
6,505
|
|
|
173,830
|
|
Amortization of stock-based awards
|
|
|
467
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
467
|
|
|
-
|
|
|
467
|
|
Other
|
|
|
(85)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(85)
|
|
|
(53)
|
|
|
(138)
|
|
Net income for the period
|
|
|
-
|
|
|
7,360
|
|
|
-
|
|
|
-
|
|
|
7,360
|
|
|
(6)
|
|
|
7,354
|
|
Dividends – common shares
|
|
|
-
|
|
|
(6,423)
|
|
|
-
|
|
|
-
|
|
|
(6,423)
|
|
|
(91)
|
|
|
(6,514)
|
|
Other comprehensive income
|
|
|
-
|
|
|
-
|
|
|
3,337
|
|
|
-
|
|
|
3,337
|
|
|
334
|
|
|
3,671
|
|
Acquisitions, at cost
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(595)
|
|
|
(595)
|
|
|
(29)
|
|
|
(624)
|
|
Issued for acquisitions
|
|
|
2,078
|
|
|
-
|
|
|
-
|
|
|
5,711
|
|
|
7,789
|
|
|
-
|
|
|
7,789
|
|
Dispositions
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3
|
|
|
3
|
|
|
-
|
|
|
3
|
Balance as of June 30, 2017
|
|
|
14,617
|
|
|
408,768
|
|
|
(18,902)
|
|
|
(225,305)
|
|
|
179,178
|
|
|
6,660
|
|
|
185,838
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six
Months Ended June 30, 2017
|
|
|
|
|
Six
Months Ended June 30, 2016
|
|
|
|
|
|
|
|
|
Held
in
|
|
|
|
|
|
|
|
|
|
|
Held
in
|
|
|
|
|
Common Stock Share Activity
|
|
Issued
|
|
Treasury
|
|
Outstanding
|
|
|
|
|
Issued
|
|
Treasury
|
|
Outstanding
|
|
|
|
|
(millions
of shares)
|
|
|
|
|
(millions
of shares)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31
|
|
|
8,019
|
|
|
(3,871)
|
|
|
4,148
|
|
|
|
|
|
8,019
|
|
|
(3,863)
|
|
|
4,156
|
|
|
|
Acquisitions
|
|
|
-
|
|
|
(7)
|
|
|
(7)
|
|
|
|
|
|
-
|
|
|
(9)
|
|
|
(9)
|
|
|
|
Issued for acquisitions
|
|
|
-
|
|
|
96
|
|
|
96
|
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
Dispositions
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Balance as of June 30
|
|
|
8,019
|
|
|
(3,782)
|
|
|
4,237
|
|
|
|
|
|
8,019
|
|
|
(3,872)
|
|
|
4,147
|
The information in the Notes to Condensed Consolidated Financial
Statements is an integral part of these statements.
EXXON MOBIL
CORPORATION
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
1.
Basis of Financial Statement Preparation
These unaudited condensed consolidated
financial statements should be read in the context of the consolidated
financial statements and notes thereto filed with the Securities and Exchange
Commission in the Corporation's 2016 Annual Report on Form 10-K. In the opinion
of the Corporation, the information furnished herein reflects all known
accruals and adjustments necessary for a fair statement of the results for the
periods reported herein. All such adjustments are of a normal recurring nature.
Prior data has been reclassified in certain cases to conform to the current
presentation basis.
The Corporation's exploration and
production activities are accounted for under the "successful
efforts" method.
2. Recently Issued Accounting Standards
In May 2014, the Financial Accounting Standards Board
issued a new standard,
Revenue from Contracts with Customers
. The
standard establishes a single revenue recognition model for all contracts with
customers, eliminates industry specific requirements, and expands disclosure
requirements. The standard is required to be adopted beginning January 1, 2018.
“Sales and Other Operating Revenue” on the Consolidated Statement of Income
includes sales, excise and value-added taxes on sales transactions. When the
Corporation adopts the standard, revenue will exclude sales-based taxes
collected on behalf of third parties. This change in reporting will not impact
earnings. The Corporation expects to adopt the standard using the Modified
Retrospective method, under which prior years’ results are not restated, but
supplemental information on the impact of the new standard is provided for 2018
results. The Corporation continues to evaluate other areas of the standard,
which are not expected to have a material effect on the Corporation’s financial
statements.
In
February 2016, the Financial Accounting Standards Board issued a new standard,
Leases
.
The standard requires all leases with an initial term greater than one year be
recorded on the balance sheet as an asset and a lease liability. ExxonMobil is
evaluating the standard and its effect on the Corporation’s financial
statements and plans to adopt it in 2019.
In March 2017, the Financial Accounting
Standards Board issued an Accounting Standards Update,
Compensation –
Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic
Pension Cost and Net Periodic Postretirement Benefit Cost
. The update
requires that the service cost component of net benefit costs be reported in
the same line in the income statement as other compensation costs and that the
other components of net benefit costs be presented separately from the service
cost component. Additionally, only the service cost component of net benefit
costs will be eligible for capitalization. The update is required to be adopted
beginning January 1, 2018. ExxonMobil is evaluating the standard and its effect
on the Corporation’s financial statements.
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
June 30, 2017, for guarantees relating to notes, loans and performance
under contracts. Where guarantees for environmental remediation and other
similar matters do not include a stated cap, the amounts reflect management’s
estimate of the maximum potential exposure. These guarantees are not reasonably
likely to have a material effect on the Corporation’s financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources.
|
|
|
|
|
|
As
of June 30, 2017
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
Company
|
|
|
Third
Party
|
|
|
|
|
|
|
|
|
|
|
|
Obligations
(1)
|
|
|
Obligations
|
|
|
Total
|
|
|
|
|
|
|
|
|
(millions
of dollars)
|
|
|
|
Guarantees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt-related
|
|
|
108
|
|
|
30
|
|
|
138
|
|
|
|
|
Other
|
|
|
2,976
|
|
|
4,131
|
|
|
7,107
|
|
|
|
|
|
Total
|
|
|
3,084
|
|
|
4,161
|
|
|
7,245
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) ExxonMobil share
|
|
|
|
|
|
|
|
|
|
|
|
Additionally, the Corporation and its affiliates have numerous
long-term sales and purchase commitments in their various business activities,
all of which are expected to be fulfilled with no adverse consequences material
to the Corporation’s operations or financial condition.
The
operations and earnings of the Corporation and its affiliates throughout the
world have been, and may in the future be, affected from time to time in
varying degree by political developments and laws and regulations, such as
forced divestiture of assets; restrictions on production, imports and exports;
price controls; tax increases and retroactive tax claims; expropriation of
property; cancellation of contract rights and environmental regulations. Both
the likelihood of such occurrences and their overall effect upon the
Corporation vary greatly from country to country and are not predictable.
In accordance with a
nationalization decree issued by Venezuela’s president in February 2007, by May
1, 2007, a subsidiary of the Venezuelan National Oil Company (PdVSA) assumed
the operatorship of the Cerro Negro Heavy Oil Project. This Project had been
operated and owned by ExxonMobil affiliates holding a 41.67 percent ownership
interest in the Project. The decree also required conversion of the Cerro Negro
Project into a “mixed enterprise” and an increase in PdVSA’s or one of its
affiliate’s ownership interest in the Project, with the stipulation that if
ExxonMobil refused to accept the terms for the formation of the mixed
enterprise within a specified period of time, the government would “directly
assume the activities” carried out by the joint venture. ExxonMobil refused to
accede to the terms proffered by the government, and on June 27, 2007, the
government expropriated ExxonMobil’s 41.67 percent interest in the Cerro Negro
Project.
On September 6, 2007,
affiliates of ExxonMobil filed a Request for Arbitration with the International
Centre for Settlement of Investment Disputes (ICSID). The ICSID Tribunal issued
a decision on June 10, 2010, finding that it had jurisdiction to proceed on the
basis of the Netherlands-Venezuela Bilateral Investment Treaty. On October 9,
2014, the ICSID Tribunal issued its final award finding in favor of the
ExxonMobil affiliates and awarding $1.6 billion as of the date of
expropriation, June 27, 2007, and interest from that date at 3.25% compounded
annually until the date of payment in full. The Tribunal also noted that one of
the Cerro Negro Project agreements provides a mechanism to prevent double
recovery between the ICSID award and all or part of an earlier award of $908
million to an ExxonMobil affiliate, Mobil Cerro Negro, Ltd., against PdVSA and
a PdVSA affiliate, PdVSA CN, in an arbitration under the rules of the
International Chamber of Commerce.
On February 2, 2015,
Venezuela filed a Request for Annulment of the ICSID award. On March 9, 2017,
the ICSID Committee hearing the Request for Annulment issued a decision
partially annulling the award of the Tribunal issued on October 9, 2014. The
Committee affirmed the compensation due for the La Ceiba project and for export
curtailments at the Cerro Negro project, but annulled the portion of the award
relating to the Cerro Negro Project’s expropriation ($1.4 billion) based on its
determination that the prior Tribunal failed to adequately explain why the cap
on damages in the indemnity owed by PdVSA did not affect or limit the amount
owed for the expropriation of the Cerro Negro project. As a result, ExxonMobil
retains an award for $260 million (including accrued interest). ExxonMobil
reached an agreement with Venezuela for full payment of the $260 million.
The agreement does not impact ExxonMobil’s ability to re-arbitrate the issue
that was the basis for the annulment in a new ICSID arbitration proceeding.
The United States
District Court for the Southern District of New York entered judgment on the
ICSID award on October 10, 2014. Motions filed by Venezuela to vacate that
judgment on procedural grounds and to modify the judgment by reducing the rate
of interest to be paid on the ICSID award from the entry of the court’s judgment,
until the date of payment, were denied on February 13, 2015, and March 4,
2015, respectively. On March 9, 2015, Venezuela filed a notice of appeal of the
court’s actions on the two motions. On July 11, 2017, the United States Court
of Appeals for the Second Circuit rendered its opinion overturning the District
Court’s decision and vacating the judgment on the grounds that a different
procedure should have been used to reduce the award to judgment. The
Corporation is evaluating next steps.
A stay of the
District Court’s judgment has continued pending the completion of the Second
Circuit appeal. The net impact of these matters on the Corporation’s
consolidated financial results cannot be reasonably estimated. Regardless, the
Corporation does not expect the resolution to have a material effect upon the
Corporation’s operations or financial condition.
An
affiliate of ExxonMobil is one of the Contractors under a Production Sharing
Contract (PSC) with the Nigerian National Petroleum Corporation (NNPC) covering
the Erha block located in the offshore waters of Nigeria. ExxonMobil's
affiliate is the operator of the block and owns a 56.25 percent interest under
the PSC. The Contractors are in dispute with NNPC regarding NNPC's lifting of
crude oil in excess of its entitlement under the terms of the PSC. In
accordance with the terms of the PSC, the Contractors initiated arbitration in
Abuja, Nigeria, under the Nigerian Arbitration and Conciliation Act. On
October 24, 2011, a three-member arbitral Tribunal issued an award
upholding the Contractors' position in all material respects and awarding
damages to the Contractors jointly in an amount of approximately $1.8 billion
plus $234 million in accrued interest. The Contractors petitioned a Nigerian
federal court for enforcement of the award, and NNPC petitioned the same court to
have the award set aside. On May 22, 2012, the court set aside the award. The
Contractors appealed that judgment to the Court of Appeal, Abuja Judicial
Division. On July 22, 2016, the Court of Appeal upheld the decision of the
lower court setting aside the award.
On October 21, 2016, the Contractors appealed the decision to the
Supreme Court of Nigeria. In June 2013, the Contractors filed a lawsuit against
NNPC in the Nige
rian federal high court in order to
preserve their ability to seek enforcement of the PSC in the courts if
necessary. Following dismissal by this court, the Contractors appealed to the
Nigerian Court of Appeal in June 2016. In October 2014, the Contractors filed
suit in the United States District Court for the Southern District of New York
to enforce, if necessary, the arbitration award against NNPC assets residing
within that jurisdiction. NNPC has moved to dismiss the lawsuit. The stay in
the proceedings in the Southern District of New York has been lifted. At this
time, the net impact of this matter on the Corporation's consolidated financial
results cannot be reasonably estimated. However, regardless of the outcome of
enforcement proceedings, the Corporation does not expect the proceedings to
have a material effect upon the Corporation's operations or financial
condition.
4.
Other Comprehensive
Income Information
|
|
|
|
|
|
Cumulative
|
|
|
Post-
|
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
retirement
|
|
|
|
|
|
|
|
|
|
Exchange
|
|
|
Benefits
|
|
|
|
|
ExxonMobil Share of Accumulated Other
|
|
|
Translation
|
|
|
Reserves
|
|
|
|
|
Comprehensive Income
|
|
|
Adjustment
|
|
|
Adjustment
|
|
|
Total
|
|
|
|
|
|
|
(millions
of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2015
|
|
|
(14,170)
|
|
|
(9,341)
|
|
|
(23,511)
|
|
Current period change excluding amounts reclassified
|
|
|
|
|
|
|
|
|
|
|
|
from accumulated other comprehensive income
|
|
|
2,209
|
|
|
(6)
|
|
|
2,203
|
|
Amounts reclassified from accumulated other
|
|
|
|
|
|
|
|
|
|
|
|
comprehensive income
|
|
|
-
|
|
|
564
|
|
|
564
|
|
Total change in accumulated other comprehensive income
|
|
|
2,209
|
|
|
558
|
|
|
2,767
|
|
Balance as of June 30, 2016
|
|
|
(11,961)
|
|
|
(8,783)
|
|
|
(20,744)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2016
|
|
|
(14,501)
|
|
|
(7,738)
|
|
|
(22,239)
|
|
Current period change excluding amounts reclassified
|
|
|
|
|
|
|
|
|
|
|
|
from accumulated other comprehensive income
|
|
|
2,849
|
|
|
(172)
|
|
|
2,677
|
|
Amounts reclassified from accumulated other
|
|
|
|
|
|
|
|
|
|
|
|
comprehensive income
|
|
|
140
|
|
|
520
|
|
|
660
|
|
Total change in accumulated other comprehensive income
|
|
|
2,989
|
|
|
348
|
|
|
3,337
|
|
Balance as of June 30, 2017
|
|
|
(11,512)
|
|
|
(7,390)
|
|
|
(18,902)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
|
Six
Months Ended
|
|
Amounts Reclassified Out of Accumulated Other
|
|
|
June 30,
|
|
|
June 30,
|
|
Comprehensive Income - Before-tax Income/(Expense)
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
(millions
of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange translation gain/(loss) included in net income
|
|
|
|
|
|
|
|
|
|
|
|
|
(Statement of Income line: Other income)
|
(234)
|
|
|
-
|
|
|
(234)
|
|
|
-
|
|
Amortization and settlement of postretirement benefits reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
adjustment included in net periodic benefit costs
(1)
|
(406)
|
|
|
(419)
|
|
|
(765)
|
|
|
(833)
|
(1) These accumulated other comprehensive income components are
included in the computation of net periodic pension cost. (See Note 6 – Pension
and Other Postretirement Benefits for additional details.)
|
|
|
|
|
|
Three
Months Ended
|
|
|
Six
Months Ended
|
|
Income Tax (Expense)/Credit For
|
|
|
June 30,
|
|
|
June 30,
|
|
Components of Other Comprehensive Income
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
(millions
of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange translation adjustment
|
|
|
(8)
|
|
|
14
|
|
|
(26)
|
|
|
3
|
|
Postretirement benefits reserves adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(excluding amortization)
|
|
|
75
|
|
|
(49)
|
|
|
80
|
|
|
31
|
|
Amortization and settlement of postretirement benefits reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
adjustment included in net periodic benefit costs
|
|
|
(123)
|
|
|
(127)
|
|
|
(226)
|
|
|
(252)
|
|
Total
|
|
|
(56)
|
|
|
(162)
|
|
|
(172)
|
|
|
(218)
|
5. Earnings Per
Share
|
|
|
|
|
Three
Months Ended
|
|
|
Six
Months Ended
|
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to ExxonMobil
(millions of dollars)
|
|
3,350
|
|
|
1,700
|
|
|
7,360
|
|
|
3,510
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
outstanding
(millions of shares)
|
|
4,271
|
|
|
4,178
|
|
|
4,244
|
|
|
4,178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share
(dollars)
(1)
|
|
0.78
|
|
|
0.41
|
|
|
1.73
|
|
|
0.84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
|
Six
Months Ended
|
|
|
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions
of dollars)
|
|
Components of net benefit cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits - U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
|
186
|
|
|
204
|
|
|
383
|
|
|
406
|
|
|
|
Interest cost
|
|
|
200
|
|
|
198
|
|
|
399
|
|
|
396
|
|
|
|
Expected return on plan assets
|
|
|
(194)
|
|
|
(181)
|
|
|
(388)
|
|
|
(363)
|
|
|
|
Amortization of actuarial loss/(gain) and prior
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
service cost
|
|
|
112
|
|
|
125
|
|
|
222
|
|
|
249
|
|
|
|
Net pension enhancement and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
curtailment/settlement cost
|
|
|
158
|
|
|
111
|
|
|
263
|
|
|
222
|
|
|
|
Net benefit cost
|
|
|
462
|
|
|
457
|
|
|
879
|
|
|
910
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits - Non-U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
|
145
|
|
|
150
|
|
|
290
|
|
|
299
|
|
|
|
Interest cost
|
|
|
189
|
|
|
217
|
|
|
376
|
|
|
430
|
|
|
|
Expected return on plan assets
|
|
|
(244)
|
|
|
(239)
|
|
|
(483)
|
|
|
(474)
|
|
|
|
Amortization of actuarial loss/(gain) and prior
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
service cost
|
|
|
126
|
|
|
153
|
|
|
253
|
|
|
301
|
|
|
|
Net pension enhancement and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
curtailment/settlement cost
|
|
|
-
|
|
|
-
|
|
|
(5)
|
|
|
-
|
|
|
|
Net benefit cost
|
|
|
216
|
|
|
281
|
|
|
431
|
|
|
556
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Postretirement Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
|
30
|
|
|
42
|
|
|
56
|
|
|
77
|
|
|
|
Interest cost
|
|
|
67
|
|
|
84
|
|
|
139
|
|
|
173
|
|
|
|
Expected return on plan assets
|
|
|
(5)
|
|
|
(6)
|
|
|
(11)
|
|
|
(12)
|
|
|
|
Amortization of actuarial loss/(gain) and prior
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
service cost
|
|
|
10
|
|
|
30
|
|
|
27
|
|
|
61
|
|
|
|
Net benefit cost
|
|
|
102
|
|
|
150
|
|
|
211
|
|
|
299
|
7. Financial
Instruments
The fair value of financial instruments is
determined by reference to observable market data and other valuation
techniques as appropriate. The only category of financial instruments where the
difference between fair value and recorded book value is notable is long-term
debt. The estimated fair value of total long-term debt, excluding capitalized
lease obligations, was $24,010 million at June 30, 2017, and $27,968 million
at December 31, 2016, as compared to recorded book values of $23,531 million
at June 30, 2017, and $27,707 million at December 31, 2016.
The fair value of long-term debt by
hierarchy level at June 30, 2017, is: Level 1 $23,825 million;
Level 2 $179 million; and Level 3 $6 million. Level 1 represents
quoted prices in active markets. Level 2 includes debt whose fair value is
based upon a publicly available index. Level 3 involves using internal data
augmented by relevant market indicators if available.
8. Disclosures
about Segments and Related Information
|
|
|
|
|
|
Three
Months Ended
|
|
|
Six
Months Ended
|
|
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Earnings After Income Tax
|
|
(millions
of dollars)
|
|
|
Upstream
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
(183)
|
|
|
(514)
|
|
|
(201)
|
|
|
(1,346)
|
|
|
|
Non-U.S.
|
|
|
1,367
|
|
|
808
|
|
|
3,637
|
|
|
1,564
|
|
|
Downstream
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
347
|
|
|
412
|
|
|
639
|
|
|
599
|
|
|
|
Non-U.S.
|
|
|
1,038
|
|
|
413
|
|
|
1,862
|
|
|
1,132
|
|
|
Chemical
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
481
|
|
|
509
|
|
|
1,010
|
|
|
1,090
|
|
|
|
Non-U.S.
|
|
|
504
|
|
|
708
|
|
|
1,146
|
|
|
1,482
|
|
|
All other
|
|
|
(204)
|
|
|
(636)
|
|
|
(733)
|
|
|
(1,011)
|
|
|
Corporate total
|
|
|
3,350
|
|
|
1,700
|
|
|
7,360
|
|
|
3,510
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and Other Operating Revenue
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Upstream
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
2,349
|
|
|
1,771
|
|
|
4,673
|
|
|
3,221
|
|
|
|
Non-U.S.
|
|
|
3,536
|
|
|
3,175
|
|
|
7,129
|
|
|
6,194
|
|
|
Downstream
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
15,382
|
|
|
14,538
|
|
|
30,747
|
|
|
26,051
|
|
|
|
Non-U.S.
|
|
|
32,524
|
|
|
30,229
|
|
|
65,141
|
|
|
55,166
|
|
|
Chemical
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
2,747
|
|
|
2,518
|
|
|
5,530
|
|
|
4,903
|
|
|
|
Non-U.S.
|
|
|
4,273
|
|
|
4,122
|
|
|
8,667
|
|
|
7,921
|
|
|
All other
|
|
|
14
|
|
|
7
|
|
|
28
|
|
|
9
|
|
|
Corporate total
|
|
|
60,825
|
|
|
56,360
|
|
|
121,915
|
|
|
103,465
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes sales-based taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intersegment Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Upstream
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
1,282
|
|
|
917
|
|
|
2,572
|
|
|
1,723
|
|
|
|
Non-U.S.
|
|
|
4,723
|
|
|
4,989
|
|
|
10,622
|
|
|
8,442
|
|
|
Downstream
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
3,841
|
|
|
2,892
|
|
|
7,487
|
|
|
5,282
|
|
|
|
Non-U.S.
|
|
|
4,968
|
|
|
4,541
|
|
|
10,182
|
|
|
8,611
|
|
|
Chemical
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
1,845
|
|
|
1,786
|
|
|
3,615
|
|
|
3,190
|
|
|
|
Non-U.S.
|
|
|
1,104
|
|
|
1,078
|
|
|
2,294
|
|
|
2,030
|
|
|
All other
|
|
|
47
|
|
|
56
|
|
|
103
|
|
|
114
|
9. InterOil Corporation and Permian
Basin Properties Acquisitions
InterOil Corporation
On February 22, 2017,
the Corporation completed the acquisition of InterOil Corporation (IOC) for
$2.7 billion. The IOC acquisition was unproved properties in Papua New Guinea.
Consideration included 28 million shares of Exxon Mobil Corporation common
stock having a value on the acquisition date of $2.2 billion, a Contingent
Resource Payment (CRP) with a fair value of $0.3 billion and cash of $0.2
billion. The CRP provides IOC shareholders $7.07 per share in cash for each
incremental independently certified Trillion Cubic Feet Equivalent (TCFE) of
resources above 6.2 TCFE, up to 11.0 TCFE. IOC’s assets include a contingent receivable
related to the same resource base for volumes in excess of 3.5 TCFE at amounts
ranging from $0.24 - $0.40 per thousand cubic feet equivalent. The fair value
of the contingent receivable was $1.1 billion at the acquisition date. Fair
values of contingent amounts were based on assumptions about the outcome of the
resource certification, future business plans and appropriate discount rates.
Amounts due to the Corporation related to the contingent receivable are
expected to exceed those payable under the terms of the CRP.
Permian Basin
Properties
On February 28, 2017,
the Corporation completed the acquisition for $6.2 billion of a number of companies
from the Bass family in Fort Worth, Texas, that indirectly own mostly unproved
oil and gas properties in the Permian Basin and other assets. Consideration
included 68 million shares of Exxon Mobil Corporation common stock having a value
on the acquisition date of $5.5 billion, together with additional contingent
cash payments tied to future drilling and completion activities (up to a
maximum of $1.02 billion). The fair value of the contingent payment was $0.7
billion as of the acquisition date and is expected to be paid beginning in 2020
and ending no later than 2032 commensurate with the development of the
resource. Fair value of the contingent payment was based on assumptions
including drilling and completion activities, appropriate discount rates and
tax rates.
Below is a summary of
the net assets acquired for each acquisition.
|
|
|
|
IOC
|
|
Permian
|
|
|
|
|
(billions
of dollars)
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
0.6
|
|
-
|
|
Property, plant and equipment
|
|
|
2.9
|
|
6.3
|
|
Other
|
|
|
0.6
|
|
-
|
|
Total assets
|
|
|
4.1
|
|
6.3
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
0.5
|
|
-
|
|
Long-term liabilities
|
|
|
0.9
|
|
0.1
|
|
Total liabilities
|
|
|
1.4
|
|
0.1
|
|
|
|
|
|
|
|
|
Net assets acquired
|
|
|
2.7
|
|
6.2
|
10.
Accounting for
Suspended Exploratory Well Costs
For the category of exploratory well costs
at year-end 2016 that were suspended more than one year, a total of $240
million was expensed in the first six months of 2017.
EXXON MOBIL
CORPORATION
Item 2. Management's
Discussion and Analysis of Financial Condition and Results of Operations
FUNCTIONAL EARNINGS SUMMARY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second
Quarter
|
|
|
First
Six Months
|
Earnings (U.S. GAAP)
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
(millions
of dollars)
|
Upstream
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
(183)
|
|
|
(514)
|
|
|
(201)
|
|
|
(1,346)
|
|
Non-U.S.
|
|
|
1,367
|
|
|
808
|
|
|
3,637
|
|
|
1,564
|
Downstream
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
347
|
|
|
412
|
|
|
639
|
|
|
599
|
|
Non-U.S.
|
|
|
1,038
|
|
|
413
|
|
|
1,862
|
|
|
1,132
|
Chemical
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
481
|
|
|
509
|
|
|
1,010
|
|
|
1,090
|
|
Non-U.S.
|
|
|
504
|
|
|
708
|
|
|
1,146
|
|
|
1,482
|
Corporate and financing
|
|
|
(204)
|
|
|
(636)
|
|
|
(733)
|
|
|
(1,011)
|
|
Net income attributable to ExxonMobil (U.S. GAAP)
|
|
|
3,350
|
|
|
1,700
|
|
|
7,360
|
|
|
3,510
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share
(dollars)
|
|
|
0.78
|
|
|
0.41
|
|
|
1.73
|
|
|
0.84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share - assuming dilution
(dollars)
|
|
|
0.78
|
|
|
0.41
|
|
|
1.73
|
|
|
0.84
|
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 SECOND QUARTER 2017 RESULTS
ExxonMobil’s
second quarter 2017 earnings of $3.4 billion, or $0.78 per diluted share,
compared with $1.7 billion a year earlier, as oil and gas realizations
increased and refining margins improved.
The
solid results across the Corporation’s business segments were driven by higher
commodity prices and a continued focus on operations and business fundamentals.
The Corporation’s job is to grow long‑term value by investing in ExxonMobil’s
integrated portfolio of opportunities that succeed regardless of market
conditions.
Earnings
of $7.4 billion for the first six months of 2017 increased 110 percent
from $3.5 billion in 2016.
Earnings
per share assuming dilution were $1.73.
Capital
and exploration expenditures were $8.1 billion, down 21 percent from
2016.
Oil‑equivalent
production was 4 million oil‑equivalent barrels per day, down 3 percent
from the prior year. Excluding entitlement effects and divestments, oil‑equivalent
production was flat with the prior year.
The
Corporation distributed $6.4 billion in dividends to shareholders.
|
|
|
|
|
Second
Quarter
|
|
|
First
Six Months
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
(millions
of dollars)
|
Upstream earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
(183)
|
|
|
(514)
|
|
|
(201)
|
|
|
(1,346)
|
|
Non-U.S.
|
|
|
1,367
|
|
|
808
|
|
|
3,637
|
|
|
1,564
|
|
|
Total
|
|
|
1,184
|
|
|
294
|
|
|
3,436
|
|
|
218
|
Upstream
earnings were $1,184 million in the second quarter of 2017, up $890 million
from the second quarter of 2016. Higher liquids and gas realizations increased earnings
by $890 million. Lower liquids volume and mix effects decreased earnings
by $260 million due to lower sales from timing of liftings. Higher gas
volumes and mix effects increased earnings by $120 million. All other
items, including lower expenses, increased earnings by $140 million.
On
an oil-equivalent basis, production decreased 1 percent from the second
quarter of 2016. Liquids production totaled 2.3 million barrels per day,
down 61,000 barrels per day as field decline and lower entitlements were
partly offset by increased project volumes and work programs. Natural gas
production was 9.9 billion cubic feet per day, up 158 million cubic
feet per day from 2016 as project ramp‑up, primarily in Australia, was
partly offset by field decline and lower demand.
U.S.
Upstream results were a loss of $183 million in the second quarter of 2017,
compared to a loss of $514 million in the second quarter of 2016. Non‑U.S.
Upstream earnings were $1,367 million, up $559 million from the prior
year period.
Upstream
earnings were $3,436 million, up $3,218 million from the first half
of 2016. Higher realizations increased earnings by $3.2 billion.
Unfavorable volume and mix effects decreased earnings by $320 million. All
other items increased earnings by $310 million, primarily due to lower
expenses partly offset by unfavorable tax items in the current year.
On
an oil‑equivalent basis, production of 4 million barrels per day was
down 3 percent compared to 2016. Liquids production of 2.3 million
barrels per day decreased 133,000 barrels per day as lower entitlements
and field decline were partly offset by increased project volumes and work
programs. Natural gas production of 10.4 billion cubic feet per day
increased 168 million cubic feet per day from 2016 as project ramp‑up,
primarily in Australia, was partly offset by field decline.
U.S.
Upstream results were a loss of $201 million in 2017, compared to a loss
of $1,346 million in 2016. Earnings outside the U.S. were $3,637 million,
up $2,073 million from the prior year.
|
|
|
|
Second
Quarter
|
|
|
First
Six Months
|
Upstream additional information
|
|
|
|
(thousands
of barrels daily)
|
|
Volumes reconciliation
(Oil-equivalent production)
(1)
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
|
3,957
|
|
|
|
|
4,141
|
|
|
Entitlements - Net Interest
|
|
|
|
(1)
|
|
|
|
|
2
|
|
|
Entitlements - Price / Spend / Other
|
|
|
|
(76)
|
|
|
|
|
(92)
|
|
|
Quotas
|
|
|
|
-
|
|
|
|
|
-
|
|
|
Divestments
|
|
|
|
(5)
|
|
|
|
|
(6)
|
|
|
Growth / Other
|
|
|
|
47
|
|
|
|
|
(9)
|
|
2017
|
|
|
|
3,922
|
|
|
|
|
4,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Gas converted to oil-equivalent at 6 million cubic feet = 1
thousand barrels.
|
|
|
Listed below are descriptions of ExxonMobil’s volumes reconciliation
factors which are provided to facilitate understanding of the terms.
Entitlements - Net
Interest
are changes to ExxonMobil’s share of production volumes caused by
non-operational changes to volume-determining factors. These factors consist of
net interest changes specified in Production Sharing Contracts (PSCs) which
typically occur when cumulative investment returns or production volumes
achieve defined thresholds, changes in equity upon achieving pay-out in partner
investment carry situations, equity redeterminations as specified in venture
agreements, or as a result of the termination or expiry of a concession. Once a
net interest change has occurred, it typically will not be reversed by
subsequent events, such as lower crude oil prices.
Entitlements - Price,
Spend and Other
are changes to ExxonMobil’s share of production volumes resulting
from temporary changes to non-operational volume-determining factors. These
factors include changes in oil and gas prices or spending levels from one
period to another. According to the terms of contractual arrangements or
government royalty regimes, price or spending variability can increase or
decrease royalty burdens and/or volumes attributable to ExxonMobil. For
example, at higher prices, fewer barrels are required for ExxonMobil to recover
its costs. These effects generally vary from period to period with field
spending patterns or market prices for oil and natural gas. Such factors can
also include other temporary changes in net interest as dictated by specific
provisions in production agreements.
Quotas
are changes in
ExxonMobil’s allowable production arising from production constraints imposed
by countries which are members of the Organization of the Petroleum Exporting
Countries (OPEC). Volumes reported in this category would have been readily
producible in the absence of the quota.
Divestments
are reductions in
ExxonMobil’s production arising from commercial arrangements to fully or
partially reduce equity in a field or asset in exchange for financial or other
economic consideration.
Growth and Other
factors comprise all
other operational and non-operational factors not covered by the above definitions
that may affect volumes attributable to ExxonMobil. Such factors include, but
are not limited to, production enhancements from project and work program
activities, acquisitions including additions from asset exchanges, downtime,
market demand, natural field decline, and any fiscal or commercial terms that
do not affect entitlements.
|
|
|
|
|
Second
Quarter
|
|
|
First
Six Months
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
(millions
of dollars)
|
Downstream earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
347
|
|
|
412
|
|
|
639
|
|
|
599
|
|
Non-U.S.
|
|
|
1,038
|
|
|
413
|
|
|
1,862
|
|
|
1,132
|
|
|
Total
|
|
|
1,385
|
|
|
825
|
|
|
2,501
|
|
|
1,731
|
Downstream
earnings were $1,385 million, up $560 million from the second quarter
of 2016. Higher margins increased earnings by $220 million, while
favorable volume and mix effects increased earnings by $90 million. All
other items increased earnings by $250 million, including asset management
gains, favorable foreign exchange impacts, and lower turnaround expenses.
Petroleum product sales of 5.6 million barrels per day were 58,000 barrels
per day higher than last year’s second quarter.
Earnings
from the U.S. Downstream were $347 million, down $65 million from the
second quarter of 2016. Non‑U.S. Downstream earnings of $1,038 million
were $625 million higher than prior year.
Downstream
earnings of $2,501 million for the first six months of 2017 increased $770 million
from 2016. Stronger refining and marketing margins increased earnings by
$230 million, while volume and mix effects increased earnings by $260 million.
All other items increased earnings by $280 million, mainly reflecting
asset management gains and lower maintenance expense. Petroleum product sales
of 5.5 million barrels per day were 60,000 barrels per day higher
than 2016.
U.S.
Downstream earnings were $639 million, an increase of $40 million
from 2016. Non‑U.S. Downstream earnings were $1,862 million, up $730 million
from the prior year.
|
|
|
|
|
Second
Quarter
|
|
|
First
Six Months
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
(millions
of dollars)
|
Chemical earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
481
|
|
|
509
|
|
|
1,010
|
|
|
1,090
|
|
Non-U.S.
|
|
|
504
|
|
|
708
|
|
|
1,146
|
|
|
1,482
|
|
|
Total
|
|
|
985
|
|
|
1,217
|
|
|
2,156
|
|
|
2,572
|
Chemical earnings of $985 million
were $232 million lower than the second quarter of 2016. Weaker margins
decreased earnings by $40 million. Volume and mix effects decreased
earnings by $50 million. All other items decreased earnings by $140 million
primarily due to higher turnaround expenses. Second quarter prime product sales
of 6.1 million metric tons were 190,000 metric tons lower than the
prior year.
U.S. Chemical earnings of $481 million
were $28 million lower than the second quarter of 2016. Non‑U.S.
Chemical earnings of $504 million were $204 million lower than prior
year.
Chemical
earnings of $2,156 million for the first six months of 2017 decreased $416 million
from 2016. Weaker margins decreased earnings by $110 million. Volume and
mix effects decreased earnings by $60 million. All other items decreased
earnings by $250 million, primarily due to higher turnaround expenses and
unfavorable foreign exchange effects. Prime product sales of 12.2 million
metric tons were down 291,000 metric tons from the first half of 2016.
U.S.
Chemical earnings were $1,010 million, down $80 million from 2016.
Non‑U.S. Chemical earnings of $1,146 million were $336 million
lower than prior year.
|
|
|
Second
Quarter
|
|
|
First
Six Months
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
(millions
of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and financing earnings
|
|
|
(204)
|
|
|
(636)
|
|
|
(733)
|
|
|
(1,011)
|
Corporate and financing expenses
were $204 million for the second quarter of 2017, down $432 million
from the second quarter of 2016 mainly due to favorable tax items.
Corporate
and financing expenses were $733 million in the first six months of 2017
compared to $1,011 million in 2016, with the decrease mainly due to net
favorable tax‑related items.
LIQUIDITY AND
CAPITAL RESOURCES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second
Quarter
|
|
|
First
Six Months
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
(millions
of dollars)
|
Net cash provided by/(used in)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities
|
|
|
|
|
|
|
|
|
15,120
|
|
|
9,331
|
|
Investing activities
|
|
|
|
|
|
|
|
|
(6,639)
|
|
|
(7,496)
|
|
Financing activities
|
|
|
|
|
|
|
|
|
(8,305)
|
|
|
(1,251)
|
Effect of exchange rate changes
|
|
|
|
|
|
|
|
|
209
|
|
|
69
|
Increase/(decrease) in cash and cash equivalents
|
|
|
|
|
|
|
|
|
385
|
|
|
653
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents (at end of period)
|
|
|
|
|
|
|
|
|
4,042
|
|
|
4,358
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from operations and asset sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities (U.S. GAAP)
|
|
|
6,947
|
|
|
4,519
|
|
|
15,120
|
|
|
9,331
|
|
Proceeds associated with sales of subsidiaries, property,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
plant & equipment, and sales and returns of investments
|
|
|
154
|
|
|
1,029
|
|
|
841
|
|
|
1,206
|
|
Cash flow from operations and asset sales
|
|
|
7,101
|
|
|
5,548
|
|
|
15,961
|
|
|
10,537
|
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 second quarter of 2017 was $7.1 billion,
including asset sales of $0.2 billion, an increase of $1.6 billion from the
comparable 2016 period primarily due to higher earnings.
Cash provided by
operating activities totaled $15.1 billion for the first six months of 2017, $5.8
billion higher than 2016. The major source of funds was net income including
noncontrolling interests of $7.4 billion, an increase of $3.9 billion from the
prior year period. The adjustment for the non-cash provision of $9.2 billion
for depreciation and depletion decreased by $0.4 billion. Changes in
operational working capital decreased cash flows by $0.2 billion in 2017 versus
a reduction of $1.7 billion in 2016. All other items net decreased cash flows
by $1.2 billion in 2017 compared to a reduction of $2.0 billion in 2016. For
additional details, see the Condensed Consolidated Statement of Cash Flows on
page 6.
Investing activities
for the first six months of 2017 used net cash of $6.6 billion, a decrease of
$0.9 billion compared to the prior year. Spending for additions to property,
plant and equipment of $6.0 billion was $2.9 billion lower than 2016. Proceeds
from asset sales of $0.8 billion decreased $0.4 billion. Additional investments
and advances were $1.8 billion, an increase of $1.5 billion, and principally reflect
the deposit into escrow of the maximum potential contingent consideration
payable as a result of the acquisition of InterOil Corporation.
Cash flow from
operations and asset sales in the first six months of 2017 was $16.0 billion,
including asset sales of $0.8 billion, an increase of $5.4 billion from the
comparable 2016 period primarily due to higher earnings.
Net cash used by
financing activities was $8.3 billion in the first six months of 2017, an
increase of $7.1 billion from 2016 mainly reflecting the absence of the
Corporation’s issuance of $12.0 billion in long-term debt in the prior year.
During the first six
months of 2017, Exxon Mobil Corporation purchased 6 million shares of its
common stock for the treasury at a gross cost of $0.5 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 increased
from 4,148 million at year-end to 4,237 million at the end of the second
quarter of 2017, mainly due to shares issued for the acquisitions of InterOil
Corporation and of companies that hold acreage in the Permian Basin. Purchases
may be made both in the open market and through negotiated transactions, and
may be increased, decreased or discontinued at any time without prior notice.
The Corporation
distributed a total of $3.3 billion to shareholders in the second quarter of
2017 through dividends.
Total cash and cash
equivalents of $4.0 billion at the end of the second quarter of 2017 compared
to $4.4 billion at the end of the second quarter of 2016.
Total debt at the end
of the second quarter of 2017 was $41.9 billion compared to $42.8 billion at
year-end 2016. The Corporation's debt to total capital ratio was 18.4 percent
at the end of the second quarter of 2017 compared to 19.7 percent at year-end
2016.
The Corporation has
access to significant capacity of long-term and short-term liquidity.
Internally generated funds are expected to cover the majority of financial
requirements, supplemented by long-term and short-term debt.
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second
Quarter
|
|
|
First
Six Months
|
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
(millions
of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
|
892
|
|
|
715
|
|
|
2,720
|
|
|
664
|
|
|
Effective income tax rate
|
|
|
31
|
%
|
|
40
|
%
|
|
35
|
%
|
|
31
|
%
|
Sales-based taxes
|
|
|
5,589
|
|
|
5,435
|
|
|
10,931
|
|
|
10,250
|
|
All other taxes and duties
|
|
|
7,170
|
|
|
7,291
|
|
|
14,073
|
|
|
14,022
|
|
|
|
Total
|
|
|
13,651
|
|
|
13,441
|
|
|
27,724
|
|
|
24,936
|
|
Income,
sales-based and all other taxes and duties totaled $13.7 billion for the second
quarter of 2017, an increase of $0.2 billion from 2016. Income tax expense
increased by $0.2 billion to $0.9 billion reflecting higher pre-tax income. The
effective income tax rate was 31 percent compared to 40 percent in the prior
year period reflecting favorable one-time tax items. Sales
-based taxes and all other taxes and duties were
essentially unchanged.
Income,
sales-based and all other taxes and duties totaled $27.7 billion for the first
six months of 2017, an increase of $2.8 billion from 2016. Income tax expense
increased by $2.1 billion to $2.7 billion reflecting higher pre-tax income. The
effective income tax rate was 35 percent compared to 31 percent in the prior
year period due a higher share of earnings in high tax jurisdictions. Sales
-based taxes and all other taxes and duties increased by
$0.7 billion to $25.0 billion as a result of higher sales realizations.
In the United States, the
Corporation has various ongoing U.S. federal income tax positions at issue with
the Internal Revenue Service (IRS) for tax years beginning in 2006. The IRS has
asserted penalties associated with several of those positions. The Corporation
has not recognized the penalties as an expense because the Corporation does not
expect the penalties to be sustained under applicable law. The Corporation has
filed a refund suit for tax years 2006-2009 in a U.S. federal district court
with respect to the positions at issue for those years. Unfavorable resolution
of all positions at issue with the IRS would not have a materially adverse
effect on the Corporation’s net income or liquidity.
CAPITAL AND
EXPLORATION EXPENDITURES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second
Quarter
|
|
|
First
Six Months
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
(millions
of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Upstream (including exploration expenses)
|
|
|
2,786
|
|
|
3,919
|
|
|
5,905
|
|
|
7,898
|
|
Downstream
|
|
|
586
|
|
|
642
|
|
|
1,131
|
|
|
1,170
|
|
Chemical
|
|
|
535
|
|
|
563
|
|
|
1,032
|
|
|
1,174
|
|
Other
|
|
|
18
|
|
|
34
|
|
|
26
|
|
|
43
|
|
|
Total
|
|
|
3,925
|
|
|
5,158
|
|
|
8,094
|
|
|
10,285
|
|
Capital and exploration expenditures in the second quarter of 2017
were $3.9 billion, down 24 percent from the second quarter of 2016.
Capital
and
exploration expenditures in the first six months of
2017 were $8.1 billion, down 21 percent from the first six months of 2016 due
primarily to lower upstream major project spending. The Corporation anticipates
an investment level of $22 billion in 2017. Actual spending could vary
depending on the progress of individual projects and property acquisitions.
In 2014,
the European Union and United States imposed sanctions relating to the Russian
energy sector. ExxonMobil continues to comply with all sanctions and regulatory
licenses applicable to its affiliates’ investments in the Russian Federation.
See Part II. Other Information, Item 1. Legal Proceedings in this report for
information concerning a civil penalty assessment related to this matter which
the Corporation is contesting.
RECENTLY ISSUED ACCOUNTING STANDARDS
In
May 2014, the Financial Accounting Standards Board issued a new standard,
Revenue
from Contracts with Customers
. The standard establishes a single revenue
recognition model for all contracts with customers, eliminates industry
specific requirements, and expands disclosure requirements. The standard is
required to be adopted beginning January 1, 2018. “Sales and Other Operating
Revenue” on the Consolidated Statement of Income includes sales, excise and
value-added taxes on sales transactions. When the Corporation adopts the
standard, revenue will exclude sales-based taxes collected on behalf of third
parties. This change in reporting will not impact earnings. The Corporation
expects to adopt the standard using the Modified Retrospective method, under
which prior years’ results are not restated, but supplemental information on
the impact of the new standard is provided for 2018 results. The Corporation
continues to evaluate other areas of the standard, which are not expected to
have a material effect on the Corporation’s financial statements.
In
February 2016, the Financial Accounting Standards Board issued a new standard,
Leases
.
The standard requires all leases with an initial term greater than one year be
recorded on the balance sheet as an asset and a lease liability. ExxonMobil is
evaluating the standard and its effect on the Corporation’s financial
statements and plans to adopt it in 2019.
In March 2017, the Financial Accounting
Standards Board issued an Accounting Standards Update,
Compensation –
Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic
Pension Cost and Net Periodic Postretirement Benefit Cost
. The update
requires that the service cost component of net benefit costs be reported in
the same line in the income statement as other compensation costs and that the
other components of net benefit costs be presented separately from the service
cost component. Additionally, only the service cost component of net benefit
costs will be eligible for capitalization. The update is required to be adopted
beginning January 1, 2018. ExxonMobil is evaluating the standard and its effect
on the Corporation’s financial statements.
FORWARD-LOOKING STATEMENTS
Statements
relating to future plans, projections, events or conditions are forward-looking
statements. Future results, including project plans, costs, timing, and
capacities; capital and exploration expenditures; production rates; resource
recoveries; the impact of new technologies; and share purchase levels, could
differ materially due to factors including: changes in oil, gas or
petrochemical prices or other market or economic conditions affecting the oil,
gas or petrochemical industries, including the scope and duration of economic
recessions; the outcome of exploration and development efforts; changes in law
or government regulation, including tax and environmental requirements; the impact
of fiscal and commercial terms and outcome of commercial negotiations; the
results of research programs; changes in technical or operating conditions;
actions of competitors; and other factors discussed under the heading “Factors
Affecting Future Results” in the “Investors” section of our website and in Item
1A of ExxonMobil's 2016 Form 10-K. Closing of pending acquisitions is also
subject to satisfaction of the conditions precedent provided in the applicable
agreement. We assume no duty to update these statements as of any future date.
The term
“project” as used in this report can refer to a variety of different activities
and does not necessarily have the same meaning as in any government payment
transparency reports.
Item 3. Quantitative and Qualitative Disclosures About Market
Risk
Information about
market risks for the six months ended June 30, 2017, does not differ
materially from that discussed under Item 7A of the registrant's Annual Report
on Form 10-K for 2016.
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 June 30, 2017.
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.