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, 2018
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
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|
13-5409005
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(State
or other jurisdiction of
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|
(I.R.S.
Employer
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incorporation
or organization)
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Identification
Number
)
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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)
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
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☑
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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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
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Outstanding
as of September 30, 2018
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Common
stock, without par value
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|
4,233,807,170
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PART
I. FINANCIAL INFORMATION
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Item 1.
Financial Statements
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EXXON MOBIL CORPORATION
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CONDENSED CONSOLIDATED STATEMENT OF
INCOME
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(millions of dollars)
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Three Months Ended
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Nine Months Ended
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September 30,
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September 30,
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2018
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2017
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2018
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2017
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Revenues and
other income
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Sales and other
operating revenue
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74,187
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59,350
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211,079
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171,850
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Income from
equity affiliates
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1,960
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1,472
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5,599
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4,707
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Other income
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458
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278
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1,639
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1,291
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Total revenues
and other income
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76,605
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61,100
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218,317
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177,848
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Costs and other
deductions
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Crude oil and
product purchases
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41,776
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31,432
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119,391
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91,985
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Production and
manufacturing expenses
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9,097
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7,952
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26,506
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23,578
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Selling, general
and administrative expenses
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2,892
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2,632
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8,632
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7,693
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Depreciation and
depletion
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4,658
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4,880
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13,717
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14,051
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Exploration
expenses, including dry holes
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292
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284
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911
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1,087
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Non-service
pension and postretirement benefit expense
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307
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475
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952
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1,267
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Interest expense
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200
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111
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551
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415
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Other taxes and
duties
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8,303
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7,751
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24,825
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22,115
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Total costs and
other deductions
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67,525
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55,517
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195,485
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162,191
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Income before
income taxes
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9,080
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5,583
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22,832
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15,657
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Income taxes
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2,634
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1,498
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7,617
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4,218
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Net income including
noncontrolling interests
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6,446
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4,085
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15,215
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11,439
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Net income
attributable to noncontrolling interests
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206
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115
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375
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109
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Net income
attributable to ExxonMobil
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6,240
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3,970
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14,840
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11,330
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Earnings per
common share
(dollars)
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1.46
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0.93
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3.47
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2.66
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Earnings per
common share - assuming dilution
(dollars)
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1.46
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0.93
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3.47
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2.66
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The information in the Notes to Condensed Consolidated Financial
Statements is an integral part of these statements.
EXXON
MOBIL CORPORATION
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CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
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(millions of dollars)
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Three Months Ended
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Nine Months Ended
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September 30,
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September 30,
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2018
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2017
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2018
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2017
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Net income
including noncontrolling interests
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6,446
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4,085
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15,215
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11,439
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Other
comprehensive income (net of income taxes)
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Foreign exchange
translation adjustment
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124
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2,342
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(2,720)
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5,424
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Adjustment for
foreign exchange translation (gain)/loss
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included in net
income
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-
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-
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186
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234
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Postretirement
benefits reserves adjustment
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(excluding
amortization)
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(3)
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(145)
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(394)
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(329)
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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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223
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311
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689
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850
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Total other
comprehensive income
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344
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2,508
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(2,239)
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6,179
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Comprehensive
income including noncontrolling interests
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6,790
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6,593
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12,976
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17,618
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Comprehensive
income attributable to
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noncontrolling
interests
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311
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372
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205
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700
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Comprehensive
income attributable to ExxonMobil
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6,479
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6,221
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12,771
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16,918
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The information in the Notes to Condensed Consolidated Financial
Statements is an integral part of these statements.
EXXON
MOBIL CORPORATION
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CONDENSED CONSOLIDATED BALANCE SHEET
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(millions of dollars)
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Sept. 30,
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Dec. 31,
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2018
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2017
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Assets
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Current assets
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Cash and cash
equivalents
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5,669
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3,177
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Notes and
accounts receivable – net
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27,880
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25,597
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Inventories
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Crude oil,
products and merchandise
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14,617
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12,871
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Materials and
supplies
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4,144
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4,121
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Other current
assets
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1,665
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1,368
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Total current
assets
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53,975
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47,134
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Investments,
advances and long-term receivables
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40,427
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39,160
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Property, plant
and equipment – net
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249,153
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252,630
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Other assets,
including intangibles – net
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11,073
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9,767
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Total assets
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354,628
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348,691
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Liabilities
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Current
liabilities
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Notes and loans
payable
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19,413
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17,930
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Accounts payable
and accrued liabilities
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41,714
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36,796
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Income taxes
payable
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4,161
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3,045
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Total current
liabilities
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65,288
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57,771
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Long-term debt
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20,624
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24,406
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Postretirement
benefits reserves
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21,448
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21,132
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Deferred income
tax liabilities
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27,084
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26,893
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Long-term
obligations to equity companies
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4,625
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4,774
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Other long-term
obligations
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18,728
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19,215
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Total liabilities
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157,797
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154,191
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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)
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15,254
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14,656
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Earnings reinvested
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419,155
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414,540
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Accumulated other
comprehensive income
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(18,370)
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(16,262)
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Common stock held
in treasury
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(3,785 million
shares at September 30, 2018 and
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3,780 million
shares at December 31, 2017)
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(225,674)
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(225,246)
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ExxonMobil share
of equity
|
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190,365
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187,688
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Noncontrolling
interests
|
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6,466
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6,812
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Total equity
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196,831
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194,500
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Total liabilities
and equity
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354,628
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348,691
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The information in the Notes to Condensed Consolidated Financial
Statements is an integral part of these statements.
EXXON
MOBIL CORPORATION
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CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS
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(millions of dollars)
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Nine Months Ended
|
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September 30,
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2018
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2017
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Cash flows from
operating activities
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Net income
including noncontrolling interests
|
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15,215
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|
11,439
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Depreciation and
depletion
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13,717
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14,051
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Changes in
operational working capital, excluding cash and debt
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(25)
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(547)
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All other items –
net
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(1,500)
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(2,288)
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Net cash provided
by operating activities
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27,407
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22,655
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Cash flows from
investing activities
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Additions to
property, plant and equipment
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(13,480)
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(10,901)
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Proceeds
associated with sales of subsidiaries, property, plant and
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equipment, and
sales and returns of investments
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3,239
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1,695
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Additional
investments and advances
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(1,113)
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(1,950)
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Other investing
activities including collection of advances
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492
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1,962
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Net cash used in
investing activities
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(10,862)
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(9,194)
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Cash flows from
financing activities
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Additions to
long-term debt
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|
-
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60
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Additions to
short-term debt
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|
-
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1,735
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Reductions in
short-term debt
|
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|
(4,279)
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(4,971)
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Additions/(reductions)
in commercial paper, and debt with three
|
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|
|
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|
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months or less
maturity
(1)
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|
1,626
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|
|
339
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Cash dividends to
ExxonMobil shareholders
|
|
|
(10,296)
|
|
|
(9,712)
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|
Cash dividends to
noncontrolling interests
|
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|
(192)
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|
|
(139)
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Changes in
noncontrolling interests
|
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|
(374)
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|
|
(90)
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|
Common stock
acquired
|
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|
(430)
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|
|
(515)
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|
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Net cash used in financing
activities
|
|
|
(13,945)
|
|
|
(13,293)
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|
Effects of
exchange rate changes on cash
|
|
|
(108)
|
|
|
441
|
|
Increase/(decrease)
in cash and cash equivalents
|
|
|
2,492
|
|
|
609
|
|
Cash and cash
equivalents at beginning of period
|
|
|
3,177
|
|
|
3,657
|
|
Cash and cash equivalents
at end of period
|
|
|
5,669
|
|
|
4,266
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosures
|
|
|
|
|
|
|
|
|
Income taxes paid
|
|
|
6,740
|
|
|
4,611
|
|
|
Cash interest
paid
|
|
|
839
|
|
|
965
|
|
2017 Noncash Transactions
In the first nine
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
noncash component associated with the issuance of a combined 96 million shares
of Exxon Mobil Corporation common stock in acquisition consideration.
(1)
Includes a net
addition of commercial paper with a maturity of over three months of $0.3
billion in 2018 and a net reduction of $0.5 billion in 2017. The gross amount
of commercial paper with a maturity of over three months issued was $3.1
billion in 2018 and $2.7 billion in 2017, while the gross amount repaid was
$2.8 billion in 2018 and $3.2 billion in 2017.
The information in the
Notes to Condensed Consolidated Financial Statements is an integral part of
these statements.
|
EXXON MOBIL CORPORATION
|
|
CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ExxonMobil Share of Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
Common
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compre-
|
|
Stock
|
|
ExxonMobil
|
|
Non-
|
|
|
|
|
|
|
|
|
Common
|
|
Earnings
|
|
hensive
|
|
Held in
|
|
Share of
|
|
controlling
|
|
Total
|
|
|
|
|
|
Stock
|
|
Reinvested
|
|
Income
|
|
Treasury
|
|
Equity
|
|
Interests
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of
December 31, 2016
|
|
|
12,157
|
|
|
407,831
|
|
|
(22,239)
|
|
|
(230,424)
|
|
|
167,325
|
|
|
6,505
|
|
|
173,830
|
|
Amortization of
stock-based awards
|
|
|
635
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
635
|
|
|
-
|
|
|
635
|
|
Other
|
|
|
(87)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(87)
|
|
|
(54)
|
|
|
(141)
|
|
Net income for
the period
|
|
|
-
|
|
|
11,330
|
|
|
-
|
|
|
-
|
|
|
11,330
|
|
|
109
|
|
|
11,439
|
|
Dividends -
common shares
|
|
|
-
|
|
|
(9,712)
|
|
|
-
|
|
|
-
|
|
|
(9,712)
|
|
|
(139)
|
|
|
(9,851)
|
|
Other
comprehensive income
|
|
|
-
|
|
|
-
|
|
|
5,588
|
|
|
-
|
|
|
5,588
|
|
|
591
|
|
|
6,179
|
|
Acquisitions, at
cost
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(596)
|
|
|
(596)
|
|
|
(90)
|
|
|
(686)
|
|
Issued for
acquisitions
|
|
|
2,078
|
|
|
-
|
|
|
-
|
|
|
5,711
|
|
|
7,789
|
|
|
-
|
|
|
7,789
|
|
Dispositions
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
4
|
|
|
4
|
|
|
-
|
|
|
4
|
Balance as of
September 30, 2017
|
|
|
14,783
|
|
|
409,449
|
|
|
(16,651)
|
|
|
(225,305)
|
|
|
182,276
|
|
|
6,922
|
|
|
189,198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2018
|
|
|
|
|
Nine Months Ended September 30, 2017
|
|
|
|
|
|
|
|
|
Held in
|
|
|
|
|
|
|
|
|
|
|
Held in
|
|
|
|
|
Common
Stock Share Activity
|
|
Issued
|
|
Treasury
|
|
Outstanding
|
|
|
|
|
Issued
|
|
Treasury
|
|
Outstanding
|
|
|
|
|
(millions of shares)
|
|
|
|
|
(millions of shares)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of
December 31
|
|
|
8,019
|
|
|
(3,780)
|
|
|
4,239
|
|
|
|
|
|
8,019
|
|
|
(3,871)
|
|
|
4,148
|
|
|
|
Acquisitions
|
|
|
-
|
|
|
(5)
|
|
|
(5)
|
|
|
|
|
|
-
|
|
|
(7)
|
|
|
(7)
|
|
|
|
Issued for
acquisitions
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
-
|
|
|
96
|
|
|
96
|
|
|
|
Dispositions
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Balance as of
September 30
|
|
|
8,019
|
|
|
(3,785)
|
|
|
4,234
|
|
|
|
|
|
8,019
|
|
|
(3,782)
|
|
|
4,237
|
The information in the Notes to Condensed Consolidated Financial
Statements is an integral part of these statements.
EXXON MOBIL CORPORATION
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
1.
Basis of Financial Statement Preparation
These unaudited condensed consolidated
financial statements should be read in the context of the consolidated
financial statements and notes thereto filed with the Securities and Exchange
Commission in the Corporation's 2017 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, 2018, ExxonMobil adopted the Financial
Accounting Standards Board’s standard,
Revenue from Contracts with Customers
(Topic 606)
, as amended. The standard establishes a single revenue
recognition model for all contracts with customers, eliminates industry and
transaction specific requirements, and expands disclosure requirements. The
standard was adopted using the Modified Retrospective method, under which prior
year results are not restated, but supplemental information is provided for any
material impacts of the standard on 2018 results. The adoption of the standard
did not have a material impact on any of the lines reported in the
Corporation’s financial statements. The cumulative effect of adoption of the
standard was de minimis. The Corporation did not elect any practical expedients
that require disclosure. See Note 9.
Effective January 1, 2018, ExxonMobil adopted the Financial
Accounting Standards Board’s Update,
Financial Instruments
–
Overall
(Subtopic 825-10): Recognition and Measurement of Financial Assets and
Financial Liabilities
.
The standard requires investments in equity securities other than consolidated
subsidiaries and equity method investments to be measured at fair value with
changes in the fair value recognized through net income. The Corporation
elected a modified approach for equity securities that do not have a readily
determinable fair value. This modified approach measures investments at cost
minus impairment, if any, plus or minus changes resulting from observable price
changes in orderly transactions for the identical or a similar investment of
the same issuer. The cumulative effect adjustment related to the adoption of
this standard increased equity $47 million. The portion of unrealized gains and
losses recognized during the reporting period on equity securities still held
at September 30, 2018 and the carrying value of equity securities without
readily determinable fair values at September 30, 2018 were not significant to
the Corporation. The standard also expanded disclosures related to financial
instruments. See Note 7.
Effective January 1, 2018, ExxonMobil adopted the Financial
Accounting Standards Board’s Update,
Compensation – Retirement Benefits
(Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net
Periodic Postretirement Benefit Cost
. The update requires separate
presentation of the service cost component from other components of net benefit
costs. The other components are reported in a new line on the Corporation’s
Statement of Income, “Non-service pension and postretirement benefit expense.”
The Corporation elected to use the practical expedient which uses the amounts
disclosed in the pension and other postretirement benefit plan note for the
prior comparative periods as the estimation basis for applying the
retrospective presentation requirements, as it is impracticable to determine
the amounts capitalized in those periods. Beginning in 2018, the other
components of net benefit costs are included in the Corporate and financing segment.
The estimated after-tax impact from the change in segmentation is an increase in
Corporate and financing expenses of about $
100
million for the third quarter and $
300
million for the first nine
months of 2018. The increase in the Corporate and financing expenses is offset by
lower expenses across the operating segments.
Additionally, only the service cost component of net
benefit costs is eligible for capitalization in situations where it is
otherwise appropriate to capitalize employee costs in connection with the
construction or production of an asset.
The impact of the retrospective presentation
change on ExxonMobil's Consolidated Statement of Income for the three months
and nine months ended September 30, 2017, is shown below.
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30, 2017
|
|
September 30, 2017
|
|
|
|
As Reported
|
|
Change
|
|
As Adjusted
|
|
As Reported
|
|
Change
|
|
As Adjusted
|
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production and
manufacturing expenses
|
8,334
|
|
(382)
|
|
7,952
|
|
24,586
|
|
(1,008)
|
|
23,578
|
Selling, general
and administrative expenses
|
2,725
|
|
(93)
|
|
2,632
|
|
7,952
|
|
(259)
|
|
7,693
|
Non-service
pension and postretirement benefit expense
|
-
|
|
475
|
|
475
|
|
-
|
|
1,267
|
|
1,267
|
Effective January 1, 2019, ExxonMobil will
adopt the Financial Accounting Standards Board’s standard,
Leases (Topic
842)
, as amended. The standard requires all leases with an initial term
greater than one year to be recorded on the balance sheet as a right of use
asset and a lease liability. We expect to use a transition method that applies
the new lease standard at January 1, 2019, and recognizes any cumulative-effect
adjustments to the opening balance of 2019 retained earnings.
The Corporation acquired lease accounting
software to facilitate implementation, and is currently configuring and testing
the software. Based on leases outstanding at the end of 2017, the Corporation
estimates the operating lease right of use asset and lease liability would have
been in the range of $
4
billion to $
5
billion at that time. The
effect on the Corporation’s balance sheet as a result of implementing the
standard on January 1, 2019, could differ considerably depending on operating
leases commenced in 2018 as well as interest rates and other factors such as the
expiry or renewal of leases
during the year.
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, 2018, for guarantees relating to notes, loans and
performance under contracts. Where guarantees for environmental remediation and
other similar matters do not include a stated cap, the amounts reflect
management’s estimate of the maximum potential exposure. These guarantees are
not reasonably likely to have a material effect on the Corporation’s financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources.
|
|
|
|
|
|
As of September 30, 2018
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
Company
|
|
|
Third Party
|
|
|
|
|
|
|
|
|
|
|
|
Obligations
(1)
|
|
|
Obligations
|
|
|
Total
|
|
|
|
|
|
|
|
|
(millions of dollars)
|
|
|
|
Guarantees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt-related
|
|
|
461
|
|
|
63
|
|
|
524
|
|
|
|
|
Other
|
|
|
1,008
|
|
|
4,046
|
|
|
5,054
|
|
|
|
|
|
Total
|
|
|
1,469
|
|
|
4,109
|
|
|
5,578
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 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. 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, 2016
|
|
|
(14,501)
|
|
|
(7,738)
|
|
|
(22,239)
|
|
Current period
change excluding amounts reclassified
|
|
|
|
|
|
|
|
|
|
|
|
from accumulated
other comprehensive income
|
|
|
4,925
|
|
|
(300)
|
|
|
4,625
|
|
Amounts
reclassified from accumulated other
|
|
|
|
|
|
|
|
|
|
|
|
comprehensive
income
|
|
|
140
|
|
|
823
|
|
|
963
|
|
Total change in
accumulated other comprehensive income
|
|
|
5,065
|
|
|
523
|
|
|
5,588
|
|
Balance as of
September 30, 2017
|
|
|
(9,436)
|
|
|
(7,215)
|
|
|
(16,651)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
Amounts
Reclassified Out of Accumulated Other
|
|
|
September 30,
|
|
|
September 30,
|
|
Comprehensive
Income - Before-tax Income/(Expense)
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange
translation gain/(loss) included in net income
|
|
|
|
|
|
|
|
|
|
|
|
|
(Statement of
Income line: Other income)
|
-
|
|
|
-
|
|
|
(186)
|
|
|
(234)
|
|
Amortization and
settlement of postretirement benefits reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
adjustment
included in net periodic benefit costs
|
|
|
|
|
|
|
|
|
|
|
|
|
(Statement of
Income Line: Non-service pension and
|
|
|
|
|
|
|
|
|
|
|
|
|
postretirement
benefit expense)
|
(287)
|
|
|
(450)
|
|
|
(897)
|
|
|
(1,215)
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
Income Tax
(Expense)/Credit For
|
|
|
September 30,
|
|
|
September 30,
|
|
Components
of Other Comprehensive Income
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange
translation adjustment
|
|
|
8
|
|
|
17
|
|
|
13
|
|
|
(9)
|
|
Postretirement
benefits reserves adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(excluding
amortization)
|
|
|
-
|
|
|
74
|
|
|
66
|
|
|
154
|
|
Amortization and
settlement of postretirement benefits reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
adjustment
included in net periodic benefit costs
|
|
|
(64)
|
|
|
(139)
|
|
|
(208)
|
|
|
(365)
|
|
Total
|
|
|
(56)
|
|
|
(48)
|
|
|
(129)
|
|
|
(220)
|
5. Earnings Per
Share
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to ExxonMobil
(millions of dollars)
|
|
6,240
|
|
|
3,970
|
|
|
14,840
|
|
|
11,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
outstanding
(millions
of shares)
|
|
4,271
|
|
|
4,271
|
|
|
4,271
|
|
|
4,252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share
(dollars)
(1)
|
|
1.46
|
|
|
0.93
|
|
|
3.47
|
|
|
2.66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid
per common share
(dollars)
|
|
0.82
|
|
|
0.77
|
|
|
2.41
|
|
|
2.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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,
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of dollars)
|
|
Components of
net benefit cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
- U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
|
203
|
|
|
200
|
|
|
616
|
|
|
583
|
|
|
|
Interest cost
|
|
|
179
|
|
|
199
|
|
|
540
|
|
|
598
|
|
|
|
Expected return
on plan assets
|
|
|
(182)
|
|
|
(194)
|
|
|
(545)
|
|
|
(582)
|
|
|
|
Amortization of
actuarial loss/(gain) and prior
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
service cost
|
|
|
93
|
|
|
110
|
|
|
276
|
|
|
332
|
|
|
|
Net pension
enhancement and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
curtailment/settlement
cost
|
|
|
63
|
|
|
187
|
|
|
189
|
|
|
450
|
|
|
|
Net benefit cost
|
|
|
356
|
|
|
502
|
|
|
1,076
|
|
|
1,381
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
- Non-U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
|
149
|
|
|
155
|
|
|
461
|
|
|
445
|
|
|
|
Interest cost
|
|
|
185
|
|
|
198
|
|
|
571
|
|
|
574
|
|
|
|
Expected return
on plan assets
|
|
|
(233)
|
|
|
(260)
|
|
|
(722)
|
|
|
(743)
|
|
|
|
Amortization of
actuarial loss/(gain) and prior
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
service cost
|
|
|
113
|
|
|
135
|
|
|
344
|
|
|
388
|
|
|
|
Net pension
enhancement and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
curtailment/settlement
cost
|
|
|
-
|
|
|
-
|
|
|
33
|
|
|
(5)
|
|
|
|
Net benefit cost
|
|
|
214
|
|
|
228
|
|
|
687
|
|
|
659
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Postretirement Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
|
40
|
|
|
36
|
|
|
111
|
|
|
92
|
|
|
|
Interest cost
|
|
|
75
|
|
|
88
|
|
|
226
|
|
|
227
|
|
|
|
Expected return
on plan assets
|
|
|
(5)
|
|
|
(6)
|
|
|
(17)
|
|
|
(17)
|
|
|
|
Amortization of
actuarial loss/(gain) and prior
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
service cost
|
|
|
19
|
|
|
18
|
|
|
57
|
|
|
45
|
|
|
|
Net benefit cost
|
|
|
129
|
|
|
136
|
|
|
377
|
|
|
347
|
7. Financial Instruments and
Derivatives
Financial Instruments.
Effective January 1, 2018, ExxonMobil adopted the
Financial Accounting Standards Board’s Update,
Financial Instruments—Overall
(Subtopic 825-10): Recognition and Measurement of Financial Assets and
Financial Liabilities
.
The estimated fair value of financial
instruments at September 30, 2018, and the related hierarchy level for the fair
value measurement is as follows:
|
|
|
|
|
At September 30, 2018
|
|
|
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
|
|
Fair Value
|
|
|
|
|
|
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Derivative
assets (included in the Balance Sheet line: Other
|
|
|
|
|
|
|
|
|
|
|
|
|
current assets)
|
|
104
|
|
104
|
|
-
|
|
-
|
|
104
|
|
Advances
to/receivables from equity companies (included in
|
|
|
|
|
|
|
|
|
|
|
|
|
the Balance
Sheet line: Investments, advances and
|
|
|
|
|
|
|
|
|
|
|
|
|
long-term
receivables)
|
|
8,969
|
|
-
|
|
1,763
|
|
7,072
|
|
8,835
|
|
Other long-term
financial assets (included in the Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
Sheet lines:
Investments, advances and long-term receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
and Other
assets, including intangibles – net)
|
|
1,748
|
|
764
|
|
-
|
|
1,041
|
|
1,805
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Derivative
liabilities (included in the Balance Sheet line:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
and accrued liabilities)
|
|
248
|
|
248
|
|
-
|
|
-
|
|
248
|
|
Long-term debt
(excluding capitalized lease obligations)
|
|
19,275
|
|
19,020
|
|
110
|
|
4
|
|
19,134
|
|
Long-term
obligations to equity companies
|
|
4,625
|
|
-
|
|
-
|
|
4,728
|
|
4,728
|
|
Other long-term
financial liabilities (included in the
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet
line: Other long-term obligations)
|
|
1,114
|
|
-
|
|
-
|
|
1,121
|
|
1,121
|
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
interest rates, currency rates and commodity prices. In addition, the
Corporation uses commodity-based contracts, including derivatives, to manage
commodity price risk and for trading purposes. Credit risk associated with the
Corporation’s derivative position is mitigated by several factors, including
the use of derivative clearing exchanges and the quality of and financial
limits placed on derivative counterparties. The Corporation believes that there
are no material market or credit risks to the Corporation’s financial position,
results of operations or liquidity as a result of the derivatives. The
Corporation maintains a system of controls that includes the authorization,
reporting and monitoring of derivative activity. Derivative instruments are
currently not subject to a master netting agreement, and the Corporation has
not offset collateral against the carrying value. The carrying value of
derivative instruments, none of which are designated as hedging instruments, is
as follows
:
|
|
|
|
|
|
|
|
|
Sept. 30,
|
|
|
Dec. 31,
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
(millions of dollars)
|
Exchange
Traded Futures and Swaps
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
104
|
|
|
25
|
|
Liabilities
|
|
|
|
|
|
(248)
|
|
|
(63)
|
|
Collateral
receivable/(payable)
|
|
|
|
|
|
272
|
|
|
94
|
|
|
Total
|
|
|
|
|
|
128
|
|
|
56
|
At September 30, 2018, the net notional long/(short) position of
derivative instruments was (16) million barrels for crude oil and was (11)
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,
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and other
operating revenue
|
|
|
(68)
|
|
|
(11)
|
|
|
(72)
|
|
|
16
|
Crude oil and
product purchases
|
|
|
(107)
|
|
|
(80)
|
|
|
(380)
|
|
|
(37)
|
|
|
Total
|
|
|
(175)
|
|
|
(91)
|
|
|
(452)
|
|
|
(21)
|
8. Disclosures about Segments and Related Information
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Earnings
After Income Tax
|
|
(millions of dollars)
|
|
|
Upstream
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
606
|
|
|
(238)
|
|
|
1,474
|
|
|
(439)
|
|
|
|
Non-U.S.
|
|
|
3,623
|
|
|
1,805
|
|
|
9,292
|
|
|
5,442
|
|
|
Downstream
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
961
|
|
|
391
|
|
|
1,975
|
|
|
1,030
|
|
|
|
Non-U.S.
|
|
|
681
|
|
|
1,141
|
|
|
1,331
|
|
|
3,003
|
|
|
Chemical
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
404
|
|
|
403
|
|
|
1,360
|
|
|
1,413
|
|
|
|
Non-U.S.
|
|
|
309
|
|
|
689
|
|
|
1,254
|
|
|
1,835
|
|
|
Corporate and
financing
(1)
|
|
|
(344)
|
|
|
(221)
|
|
|
(1,846)
|
|
|
(954)
|
|
|
Corporate total
|
|
|
6,240
|
|
|
3,970
|
|
|
14,840
|
|
|
11,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and
Other Operating Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Upstream
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
2,728
|
|
|
2,282
|
|
|
7,637
|
|
|
6,955
|
|
|
|
Non-U.S.
|
|
|
4,129
|
|
|
3,633
|
|
|
11,344
|
|
|
10,586
|
|
|
Downstream
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
19,963
|
|
|
15,423
|
|
|
56,616
|
|
|
44,533
|
|
|
|
Non-U.S.
|
|
|
39,077
|
|
|
30,955
|
|
|
110,855
|
|
|
88,866
|
|
|
Chemical
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
3,152
|
|
|
2,589
|
|
|
9,160
|
|
|
8,118
|
|
|
|
Non-U.S.
|
|
|
5,125
|
|
|
4,455
|
|
|
15,429
|
|
|
12,751
|
|
|
Corporate and
financing
|
|
|
13
|
|
|
13
|
|
|
38
|
|
|
41
|
|
|
Corporate total
|
|
|
74,187
|
|
|
59,350
|
|
|
211,079
|
|
|
171,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intersegment
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Upstream
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
2,203
|
|
|
1,365
|
|
|
6,336
|
|
|
3,937
|
|
|
|
Non-U.S.
|
|
|
8,536
|
|
|
5,734
|
|
|
22,788
|
|
|
16,356
|
|
|
Downstream
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
5,834
|
|
|
3,134
|
|
|
16,527
|
|
|
10,621
|
|
|
|
Non-U.S.
|
|
|
8,275
|
|
|
5,866
|
|
|
22,975
|
|
|
16,048
|
|
|
Chemical
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
2,408
|
|
|
1,675
|
|
|
6,952
|
|
|
5,290
|
|
|
|
Non-U.S.
|
|
|
1,841
|
|
|
1,482
|
|
|
5,657
|
|
|
3,776
|
|
|
Corporate and
financing
|
|
|
54
|
|
|
51
|
|
|
153
|
|
|
154
|
(
1)
See Note 2 for
additional details regarding the change in segmentation of
Non-service pension and
postretirement benefit expense.
|
Geographic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
|
September 30,
|
|
|
September 30,
|
|
Sales and
Other Operating Revenue
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
25,843
|
|
|
20,294
|
|
|
73,413
|
|
|
59,606
|
|
Non-U.S.
|
|
48,344
|
|
|
39,056
|
|
|
137,666
|
|
|
112,244
|
|
|
Total
|
|
74,187
|
|
|
59,350
|
|
|
211,079
|
|
|
171,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant
Non-U.S. revenue sources include:
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada
|
|
6,214
|
|
|
5,260
|
|
|
17,752
|
|
|
14,492
|
|
|
United Kingdom
|
|
4,797
|
|
|
4,057
|
|
|
14,240
|
|
|
12,309
|
|
|
Belgium
|
|
3,996
|
|
|
3,247
|
|
|
12,063
|
|
|
9,833
|
|
|
France
|
|
3,588
|
|
|
2,984
|
|
|
10,405
|
|
|
8,290
|
|
|
Singapore
|
|
3,502
|
|
|
2,888
|
|
|
10,387
|
|
|
8,264
|
|
|
Italy
|
|
3,316
|
|
|
2,913
|
|
|
9,684
|
|
|
8,317
|
|
|
Germany
|
|
2,518
|
|
|
2,210
|
|
|
7,184
|
|
|
6,283
|
(1)
Revenue is determined by primary country
of operations. Excludes certain sales and other operating revenues in Non‑U.S.
operations where attribution to a specific country is not practicable.
9. Additional Information on Revenue Recognition
Accounting Policy for Revenue Recognition
The Corporation
generally sells crude oil, natural gas and petroleum and chemical products
under short-term agreements at prevailing market prices. In some cases (e.g.,
natural gas), products may be sold under long-term agreements, with periodic
price adjustments to reflect market conditions. Revenue is recognized at the
amount the Corporation expects to receive when the customer has taken control,
which is typically when title transfers and the customer has assumed the risks
and rewards of ownership. The prices of certain sales are based on price
indexes that are sometimes not available until the next period. In such cases,
estimated realizations are accrued when the sale is recognized, and are
finalized when the price is available. Such adjustments to revenue from
performance obligations satisfied in previous periods are not significant.
Payment for revenue transactions is typically due within 30 days. Future volume
delivery obligations that are unsatisfied at the end of the period are expected
to be fulfilled through ordinary production or purchases. These performance
obligations are based on market prices at the time of the transaction and are
fully constrained due to market price volatility.
“Sales and other
operating revenue” and “Notes and accounts receivable” primarily arise from
contracts with customers. Long-term receivables are primarily from
non-customers. Contract assets are mainly from marketing assistance programs
and are not significant. Contract liabilities are mainly customer prepayments
and accruals of expected volume discounts and are not significant.
EXXON MOBIL CORPORATION
Item 2. Management's
Discussion and Analysis of Financial Condition and Results of Operations
FUNCTIONAL
EARNINGS SUMMARY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
|
First Nine Months
|
Earnings
(U.S. GAAP)
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
(millions of dollars)
|
Upstream
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
606
|
|
|
(238)
|
|
|
1,474
|
|
|
(439)
|
|
Non-U.S.
|
|
|
3,623
|
|
|
1,805
|
|
|
9,292
|
|
|
5,442
|
Downstream
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
961
|
|
|
391
|
|
|
1,975
|
|
|
1,030
|
|
Non-U.S.
|
|
|
681
|
|
|
1,141
|
|
|
1,331
|
|
|
3,003
|
Chemical
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
404
|
|
|
403
|
|
|
1,360
|
|
|
1,413
|
|
Non-U.S.
|
|
|
309
|
|
|
689
|
|
|
1,254
|
|
|
1,835
|
Corporate and
financing
(1)
|
|
|
(344)
|
|
|
(221)
|
|
|
(1,846)
|
|
|
(954)
|
|
Net income
attributable to ExxonMobil (U.S. GAAP)
|
|
|
6,240
|
|
|
3,970
|
|
|
14,840
|
|
|
11,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share
(dollars)
|
|
|
1.46
|
|
|
0.93
|
|
|
3.47
|
|
|
2.66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share - assuming dilution
(dollars)
|
|
|
1.46
|
|
|
0.93
|
|
|
3.47
|
|
|
2.66
|
(1)
See Note 2 to the financial statements for
additional details regarding the change in segmentation of
Non-service pension and
postretirement benefit expense.
References in this
discussion to 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 2018 RESULTS
ExxonMobil’s third quarter 2018 earnings were $6.2 billion, or $1.46
per diluted share, compared with $4 billion a year earlier, as liquids
realizations increased.
Earnings of $14.8 billion for the first nine months of 2018
increased 31 percent from $11.3 billion in 2017.
Earnings per share assuming dilution were $3.47.
Capital and exploration expenditures were $18.1 billion, up
28 percent from 2017.
Oil‑equivalent production was 3.8 million barrels per day,
down 5 percent from the prior year. Excluding entitlement effects and
divestments, oil‑equivalent production was down 2 percent from the prior
year.
The Corporation distributed $10.3 billion in dividends to
shareholders.
|
|
|
|
|
Third Quarter
|
|
|
First Nine Months
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(millions of dollars)
|
Upstream
earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
606
|
|
|
(238)
|
|
|
1,474
|
|
|
(439)
|
|
Non-U.S.
|
|
|
3,623
|
|
|
1,805
|
|
|
9,292
|
|
|
5,442
|
|
|
Total
|
|
|
4,229
|
|
|
1,567
|
|
|
10,766
|
|
|
5,003
|
Upstream earnings were
$4,229 million in the third quarter of 2018, up $2,662 million from
the third quarter of 2017.
·
Realizations
increased earnings by $2,580 million due to higher liquids and gas
realizations.
·
Higher
volume and mix effects increased earnings by $50 million.
·
All
other items increased earnings by $30 million including favorable one-time tax
impacts, partly offset by higher production expenses.
·
U.S.
Upstream earnings were $606 million, up $844 million from the prior
year quarter.
·
Non‑U.S.
Upstream earnings were $3,623 million, up $1,818 million from the
prior year quarter.
·
On
an oil‑equivalent basis, production decreased 2 percent from the
third quarter of 2017.
·
Liquids
production totaled 2.3 million barrels per day, up 6,000 barrels per
day as growth more than offset lower volumes from entitlements, divestments,
decline, and downtime.
·
Natural
gas production was 9 billion cubic feet per day, down 584 million
cubic feet per day driven by decline largely in the U.S. aligned with value
focus, lower volumes from divestments and lower demand.
Upstream earnings were
$10,766 million in the first nine months of 2018, up $5,763 million from the
first nine months of 2017.
·
Realizations
increased earnings by $6,400 million mainly due to higher liquids realizations.
·
Lower
volume and mix effects decreased earnings by $430 million.
·
All
other items decreased earnings by $210 million, mainly due to higher production
expenses and unfavorable tax impacts, partly offset by favorable one-time tax
items and higher divestment gains.
·
U.S.
Upstream earnings were $1,474 million, up $1,913 million from the first nine
months of prior year.
·
Non-U.S.
Upstream earnings were $9,292 million, up $3,850 million from the first nine
months of prior year.
·
On
an oil-equivalent basis, production decreased 5 percent from the first nine
months of 2017.
·
Liquids
production totaled 2.2 million barrels per day, down 56,000 barrels per day as
growth in North America was more than offset by lower volumes from decline,
entitlements, and divestments.
·
Natural
gas production was 9.2 billion cubic feet per day, down 920 million cubic feet
per day driven by decline in the U.S. aligned with value focus, higher downtime
and lower volumes from entitlements and divestments.
|
|
|
|
Third Quarter
|
|
|
First Nine Months
|
Upstream
additional information
|
|
|
|
(thousands of barrels daily)
|
|
Volumes
reconciliation
(Oil-equivalent production)
(1)
|
|
|
|
|
|
|
|
|
|
2017
|
|
|
|
3,878
|
|
|
|
|
3,983
|
|
|
Entitlements -
Net Interest
|
|
|
|
(3)
|
|
|
|
|
(3)
|
|
|
Entitlements -
Price / Spend / Other
|
|
|
|
(84)
|
|
|
|
|
(68)
|
|
|
Quotas
|
|
|
|
-
|
|
|
|
|
-
|
|
|
Divestments
|
|
|
|
(69)
|
|
|
|
|
(64)
|
|
|
Growth / Other
|
|
|
|
64
|
|
|
|
|
(74)
|
|
2018
|
|
|
|
3,786
|
|
|
|
|
3,774
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Gas
converted to oil-equivalent at 6 million cubic feet = 1 thousand barrels.
|
|
|
Listed below are descriptions of ExxonMobil’s volumes
reconciliation factors which are provided to facilitate understanding of the
terms.
Entitlements - Net
Interest
are changes to ExxonMobil’s share of production volumes caused by
non-operational changes to volume-determining factors. These factors consist of
net interest changes specified in Production Sharing Contracts (PSCs) which
typically occur when cumulative investment returns or production volumes
achieve defined thresholds, changes in equity upon achieving pay-out in partner
investment carry situations, equity redeterminations as specified in venture
agreements, or as a result of the termination or expiry of a concession. Once a
net interest change has occurred, it typically will not be reversed by
subsequent events, such as lower crude oil prices.
Entitlements - Price,
Spend and Other
are changes to ExxonMobil’s share of production volumes resulting
from temporary changes to non-operational volume-determining factors. These
factors include changes in oil and gas prices or spending levels from one
period to another. According to the terms of contractual arrangements or
government royalty regimes, price or spending variability can increase or
decrease royalty burdens and/or volumes attributable to ExxonMobil. For
example, at higher prices, fewer barrels are required for ExxonMobil to recover
its costs. These effects generally vary from period to period with field
spending patterns or market prices for oil and natural gas. Such factors can
also include other temporary changes in net interest as dictated by specific
provisions in production agreements.
Quotas
are changes in
ExxonMobil’s allowable production arising from production constraints imposed
by countries which are members of the Organization of the Petroleum Exporting
Countries (OPEC). Volumes reported in this category would have been readily
producible in the absence of the quota.
Divestments
are reductions in
ExxonMobil’s production arising from commercial arrangements to fully or
partially reduce equity in a field or asset in exchange for financial or other
economic consideration.
Growth and Other
factors comprise all
other operational and non-operational factors not covered by the above
definitions that may affect volumes attributable to ExxonMobil. Such factors
include, but are not limited to, production enhancements from project and work
program activities, acquisitions including additions from asset exchanges,
downtime, market demand, natural field decline, and any fiscal or commercial
terms that do not affect entitlements.
|
|
|
|
|
Third Quarter
|
|
|
First Nine Months
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(millions of dollars)
|
Downstream
earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
961
|
|
|
391
|
|
|
1,975
|
|
|
1,030
|
|
Non-U.S.
|
|
|
681
|
|
|
1,141
|
|
|
1,331
|
|
|
3,003
|
|
|
Total
|
|
|
1,642
|
|
|
1,532
|
|
|
3,306
|
|
|
4,033
|
Downstream earnings
were $1,642 million in the third quarter of 2018, up $110 million
from the third quarter of 2017.
·
Margins
decreased earnings by $110 million, as lower Non-U.S. margins were
partially offset by higher U.S. margins.
·
Higher
volume and mix effects increased earnings by $210 million, primarily due to
improved refinery operations.
·
All
other items increased earnings by $10 million, mainly due to favorable tax
impacts and divestment gains, partly offset by higher maintenance expenses.
·
U.S.
Downstream earnings were $961 million, up $570 million from the prior
year quarter.
·
Non‑U.S.
Downstream earnings were $681 million, down $460 million from the
prior year quarter.
·
Petroleum
product sales of 5.6 million barrels per day were 74,000 barrels per
day higher than the prior year quarter.
Downstream earnings
were $3,306 million in the first nine months of 2018, down $727 million from
the first nine months of 2017.
·
Margins
increased earnings by $110 million, as higher U.S. margins were partially
offset by lower Non-U.S. margins.
·
Lower
volume and mix effects decreased earnings by $40 million, primarily due to
downtime and maintenance partly offset by improved refinery mix/ yield and
higher sales.
·
All
other items decreased earnings by $800 million, mainly due to unfavorable
foreign exchange impacts of $250 million, lower divestment gains of $180
million, and other unfavorable impacts of $370 million including higher
expenses from downtime / maintenance.
·
U.S.
Downstream earnings were $1,975 million, up $945 million from the first nine
months of prior year.
·
Non-U.S.
Downstream earnings were $1,331 million, down $1,672 million from the first
nine months of prior year.
·
Petroleum
product sales of 5.5 million barrels per day were 18,000 barrels per day higher
than the first nine months of prior year.
|
|
|
|
|
Third Quarter
|
|
|
First Nine Months
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(millions of dollars)
|
Chemical
earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
404
|
|
|
403
|
|
|
1,360
|
|
|
1,413
|
|
Non-U.S.
|
|
|
309
|
|
|
689
|
|
|
1,254
|
|
|
1,835
|
|
|
Total
|
|
|
713
|
|
|
1,092
|
|
|
2,614
|
|
|
3,248
|
Chemical earnings of $713 million in the third quarter
of 2018, were $379 million lower than the third quarter of 2017.
·
Weaker margins
decreased earnings by $140 million.
·
Volume and mix effects
increased earnings by $20 million.
·
All other items
decreased earnings by $260 million, mainly due to higher expenses.
·
U.S.
Chemical earnings were $404 million, up $1 million from the prior
year quarter.
·
Non‑U.S.
Chemical earnings were $309 million, down $380 million from the prior
year quarter.
·
Third quarter prime
product sales of 6.7 million metric tons were 231,000 metric tons
higher than the prior year quarter due to project growth and acquisitions.
Chemical earnings were
$2,614 million in the first nine months of 2018, down $634 million from the
first nine months of 2017.
·
Weaker
margins decreased earnings by $640 million.
·
Volume
and mix effects increased earnings by $250 million.
·
All
other items decreased earnings by $240 million, as higher expenses were
partially offset by favorable foreign exchange and tax impacts.
·
U.S.
Chemical earnings were $1,360 million, down $53 million from the first nine
months of prior year.
·
Non-U.S.
Chemical earnings were $1,254 million, down $581 million from the first nine
months of prior year.
·
Prime
product sales of 20.2 million metric tons in the first nine months were 1.6
million metric tons higher than the first nine months of prior year due to
project growth and acquisitions.
|
|
|
Third Quarter
|
|
|
First Nine Months
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
and financing earnings
|
|
|
(344)
|
|
|
(221)
|
|
|
(1,846)
|
|
|
(954)
|
Corporate and financing expenses were $344 million for
the third quarter of 2018, up $123 million from the third quarter of 2017,
mainly due to the impact of a lower U.S. tax rate.
Corporate and financing
expenses were $1,846 million in the first nine months of 2018, up $892 million
from the first nine months of 2017, mainly due to lower net favorable tax
items, the impact of a lower U.S. tax rate, and higher pension and financing
related costs.
LIQUIDITY AND CAPITAL RESOURCES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
|
First Nine Months
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(millions of dollars)
|
Net cash
provided by/(used in)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
activities
|
|
|
|
|
|
|
|
|
27,407
|
|
|
22,655
|
|
Investing
activities
|
|
|
|
|
|
|
|
|
(10,862)
|
|
|
(9,194)
|
|
Financing
activities
|
|
|
|
|
|
|
|
|
(13,945)
|
|
|
(13,293)
|
Effect of
exchange rate changes
|
|
|
|
|
|
|
|
|
(108)
|
|
|
441
|
Increase/(decrease)
in cash and cash equivalents
|
|
|
|
|
|
|
|
|
2,492
|
|
|
609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents (at end of period)
|
|
|
|
|
|
|
|
|
5,669
|
|
|
4,266
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from
operations and asset sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash
provided by operating activities (U.S. GAAP)
|
|
|
11,108
|
|
|
7,535
|
|
|
27,407
|
|
|
22,655
|
|
Proceeds
associated with sales of subsidiaries, property,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
plant &
equipment, and sales and returns of investments
|
|
|
1,491
|
|
|
854
|
|
|
3,239
|
|
|
1,695
|
|
Cash flow from
operations and asset sales
|
|
|
12,599
|
|
|
8,389
|
|
|
30,646
|
|
|
24,350
|
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 2018 was $12.6 billion,
including asset sales of $1.5 billion, an increase of $4.2 billion from the
comparable 2017 period primarily reflecting higher earnings and favorable
working capital effects.
Cash provided by
operating activities totaled $27.4 billion for the first nine months of 2018, $4.8
billion higher than 2017. The major source of funds was net income including
noncontrolling interests of $15.2 billion, an increase of $3.8 billion from the
prior year period. The adjustment for the noncash provision of $13.7 billion
for depreciation and depletion was down $0.3 billion from 2017. Changes in
operational working capital were essentially flat, compared to a decrease of
$0.5 billion in the prior year period. All other items net decreased cash flows
by $1.5 billion in 2018 versus a reduction of $2.3 billion in 2017. See the
Condensed Consolidated Statement of Cash Flows for additional details.
Investing activities
for the first nine months of 2018 used net cash of $10.9 billion, an increase
of $1.7 billion compared to the prior year. Spending for additions to property,
plant and equipment of $13.5 billion was $2.6 billion higher than 2017.
Proceeds from asset sales of $3.2 billion increased $1.5 billion. Investments
and advances decreased $0.8 billion, principally reflecting the absence of the
deposit into escrow of the maximum potential contingent consideration payable
as a result of the acquisition of InterOil Corporation in 2017. This was partly
offset by cash outflows in 2018 related to the acquisition of a Downstream
business in Indonesia.
Cash flow from
operations and asset sales in the first nine months of 2018 was $30.6 billion,
including asset sales of $3.2 billion, an increase of $6.3 billion from the
comparable 2017 period primarily reflecting higher earnings and increased asset
sale proceeds.
Net cash used by
financing activities was $13.9 billion in the first nine months of 2018, an
increase of $0.7 billion from 2017. The net reduction in short and long term
debt was $2.7 billion compared to $2.8 billion in 2017.
During the first nine
months of 2018, 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 4,239 million at year-end to 4,234 million at the end of the third quarter
of 2018. Purchases may be made both in the open market and through negotiated
transactions, and may be increased, decreased or discontinued at any time
without prior notice.
The Corporation
distributed a total of $10.3 billion to shareholders in the first nine months
of 2018 through dividends.
Total cash and cash equivalents of $5.7 billion at the
end of the third quarter of 2018 compared to $3.2 billion at year-end 2017.
Total debt at the end
of the third quarter of 2018 was $40 billion compared to $42.3 billion at
year-end 2017. The Corporation's debt to total capital ratio was 16.9 percent
at the end of the third quarter of 2018 compared to 17.9 percent at year-end
2017.
The Corporation has
access to significant capacity of long-term and short-term liquidity.
Internally generated funds are generally expected to cover financial
requirements, supplemented by short-term and long-term debt as required.
The Corporation, as
part of its ongoing asset management program, continues to evaluate its mix of
assets for potential upgrade. Because of the ongoing nature of this program,
dispositions will continue to be made from time to time which will result in
either gains or losses. Additionally, the Corporation continues to evaluate
opportunities to enhance its business portfolio through acquisitions of assets
or companies, and enters into such transactions from time to time. Key criteria
for evaluating acquisitions include potential for future growth and attractive
current valuations. Acquisitions may be made with cash, shares of the Corporation’s
common stock, or both.
Litigation and other
contingencies are discussed in Note 3 to the unaudited condensed consolidated
financial statements.
TAXES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
|
First Nine Months
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
|
2,634
|
|
|
1,498
|
|
|
7,617
|
|
|
4,218
|
|
|
Effective
income tax rate
|
|
|
34
|
%
|
|
33
|
%
|
|
39
|
%
|
|
34
|
%
|
Total other
taxes and duties
(1)
|
|
|
8,939
|
|
|
8,287
|
|
|
26,757
|
|
|
23,876
|
|
|
|
Total
|
|
|
11,573
|
|
|
9,785
|
|
|
34,374
|
|
|
28,094
|
|
(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 $11.6 billion for the third quarter of 2018,
an increase of $1.8 billion from 2017. Income tax expense increased by $1.1
billion to $2.6 billion reflecting higher pre-tax income. The effective income
tax rate was 34 percent compared to 33 percent in the prior year period. This
increase mainly reflects a higher share of earnings in higher tax jurisdictions,
partly offset by the impact of favorable one-time tax items. Total other taxes
and duties increased by $0.7 billion to $8.9 billion.
Total taxes were $34.4 billion for the first nine months of
2018, an increase of $6.3 billion from 2017. Income tax expense increased by $3.4
billion to $7.6 billion reflecting higher pre-tax income. The effective income
tax rate was 39 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 increased by $2.9 billion to $26.8 billion.
Non-U.S. Upstream earnings included a $270 million tax
credit resulting from an updated estimate of the impact of U.S. tax reform and
from clarifications provided in proposed transition tax regulations issued by
the Treasury in the third quarter of 2018. The adjustment restores a portion of
the U.S. tax reform deferred income tax expense reported in the non-U.S.
Upstream segment in the fourth quarter of 2017. There were no other significant
changes during the first nine months of 2018 to the Corporation’s reasonable
estimates of the income tax effects reflected in 2017 for the changes in tax
law and tax rate from U.S. tax reform and following guidance outlined in the
SEC Staff Accounting Bulletin No. 118. The impact of tax law changes on the
Corporation’s financial statements could differ from its estimates due to
further analysis of the new law, regulatory guidance, technical corrections
legislation, guidance under U.S. GAAP, or other considerations. If significant
changes occur, the Corporation will provide updated information in connection
with its Form 10-K for 2018.
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
|
First Nine Months
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Upstream (including
exploration expenses)
|
|
|
5,330
|
|
|
3,175
|
|
|
13,944
|
|
|
9,080
|
|
Downstream
|
|
|
719
|
|
|
611
|
|
|
2,563
|
|
|
1,742
|
|
Chemical
|
|
|
526
|
|
|
2,183
|
|
|
1,524
|
|
|
3,215
|
|
Other
|
|
|
11
|
|
|
18
|
|
|
49
|
|
|
44
|
|
|
Total
|
|
|
6,586
|
|
|
5,987
|
|
|
18,080
|
|
|
14,081
|
|
Capital and
exploration expenditures in the third quarter of 2018 were $6.6 billion, up 10
percent from the third quarter of 2017.
Capital
and
exploration expenditures in the first nine months of 2018
were $18.1 billion, up 28 percent from the first nine months of 2017 due
primarily to increased U.S. drilling activity and acreage acquisitions in
Brazil. The Corporation anticipates an investment level of approximately $25
billion in 2018. Actual spending could vary depending on the progress of
individual projects and property acquisitions.
In 2013 and
2014, the Corporation and Rosneft established various entities to conduct
exploration and research activities. In 2014, the European Union and United
States imposed sanctions relating to the Russian energy sector. ExxonMobil
continues to comply with all sanctions and regulatory licenses applicable to
its affiliates’ investments in the Russian Federation. See Part II. Other Information,
Item 1. Legal Proceedings in this report for information concerning a civil
penalty assessment related to this matter which the Corporation is contesting.
The Corporation withdrew from the aforementioned joint ventures with Rosneft,
effective April 30, 2018.
The
Groningen field is operated by Nederlandse Aardolie Maatschappij (NAM), a
Netherlands company owned 50 percent by affiliates of the Corporation. NAM has
a 60 percent interest in the Groningen field. On March 29, 2018, the Dutch
Cabinet notified Parliament of its intention to further reduce previously
legislated Groningen gas extraction in response to seismic events over the last
several years. Affiliates of the Corporation and their partners have actively
been in discussions with the government on the associated implementation
measures which resulted in a signed Heads of Agreement (HoA – agreement on
principles) on June 25, 2018 and the execution of additional implementation
agreements in September. In anticipation of a lower production outlook, the
Corporation has reduced its estimate of proved reserves by 0.8 billion
oil-equivalent barrels. In addition, the seismic activity has yielded various
claims. Where losses are probable and reasonably estimable, liabilities have
been recorded. The Corporation does not expect these matters to have a material
effect on the Corporation’s operations or financial condition. While the future
production profile and other considerations related to the Groningen field
could vary depending on a wide variety of factors, reduced gas extraction in
the future is expected to result in lower reported production, earnings and
cash flows than in recent years for the Corporation’s share of NAM.
RECENTLY ISSUED ACCOUNTING STANDARDS
Effective January 1, 2019, ExxonMobil will adopt the Financial
Accounting Standards Board’s standard,
Leases (Topic 842)
, as amended.
The standard requires all leases with an initial term greater than one year to
be recorded on the balance sheet as a right of use asset and a lease liability.
We expect to use a transition method that applies the new lease standard at
January 1, 2019, and recognizes any cumulative-effect adjustments to the
opening balance of 2019 retained earnings.
The Corporation acquired lease accounting
software to facilitate implementation, and is currently configuring and testing
the software. Based on leases outstanding at the end of 2017, the Corporation
estimates the operating lease right of use asset and lease liability would have
been in the range of $
4
billion to
$
5
billion at
that time. The effect on the Corporation’s balance sheet as a result of
implementing the standard on January 1, 2019, could differ considerably
depending on operating leases commenced in 2018 as well as interest rates and
other factors such as the expiry or renewal of leases
during the year.
FORWARD-LOOKING STATEMENTS
Statements
relating to future plans and objectives, projections, events or conditions are
forward-looking statements. Future results, including new projects, growth
strategies, costs, timing, and capacities; business growth; integration
benefits; resource recoveries; and the impact of new technologies, could differ
materially due to a number of factors. These include changes in supply and
demand for oil, gas or petrochemicals or other market conditions affecting the
oil, gas and petrochemical industries; reservoir performance; timely completion
of new projects; the impact of fiscal and commercial terms and the outcome of
commercial negotiations; changes in law, taxes, or government regulation and
timely granting of governmental permits; war and other political or security
disturbances; the actions of competitors; unforeseen technical or operating
difficulties; unexpected technological developments; general economic
conditions including the occurrence and duration of economic recessions; commodity
cycles within the general economy; 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 2017
Form 10-K. We assume no duty to update these statements as of any future
date.
The term
“project” as used in this report can refer to a variety of different activities
and does not necessarily have the same meaning as in any government payment
transparency reports.
Item 3. Quantitative and Qualitative Disclosures About Market
Risk
Information about
market risks for the nine months ended September 30, 2018, does not differ
materially from that discussed under Item 7A of the registrant's Annual Report
on Form 10-K for 2017.
Item 4. Controls and
Procedures
As indicated in the
certifications in Exhibit 31 of this report, the Corporation’s Chief Executive Officer,
Principal Financial Officer and Principal Accounting Officer have evaluated the
Corporation’s disclosure controls and procedures as of September 30, 2018.
Based on that evaluation, these officers have concluded that the Corporation’s
disclosure controls and procedures are effective in ensuring that information
required to be disclosed by the Corporation in the reports that it files or
submits under the Securities Exchange Act of 1934, as amended, is accumulated
and communicated to them in a manner that allows for timely decisions regarding
required disclosures and are effective in ensuring that such information is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission’s rules and forms. There were no
changes during the Corporation’s last fiscal quarter that materially affected,
or are reasonably likely to materially affect, the Corporation’s internal
control over financial reporting.