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
March 31, 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
|
|
13-5409005
|
(State or other
jurisdiction of
|
|
(I.R.S.
Employer
|
incorporation
or organization)
|
|
Identification
Number
)
|
5959 LAS COLINAS BOULEVARD, IRVING,
TEXAS
75039-2298
(Address of
principal executive offices) (Zip Code)
(972) 940-6000
(Registrant's
telephone number, including area code)
Indicate by check
mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes
☑
No
☐
Indicate by check
mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files). Yes
☑
No
☐
Indicate by check
mark whether the registrant is a large accelerated filer, an accelerated filer,
a non-accelerated filer, smaller reporting company, or an emerging growth
company. See the definitions of "large accelerated filer,"
"accelerated filer," "smaller reporting company," and
“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer
|
☑
|
Accelerated
filer
|
☐
|
Non-accelerated
filer
|
☐
|
Smaller
reporting company
|
☐
|
|
|
Emerging
growth company
|
☐
|
If an emerging growth
company, indicate by check mark if the registrant has elected not to use the
extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check
mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes
☐
No
☑
Indicate the
number of shares outstanding of each of the issuer's classes of common stock,
as of the latest practicable date.
Class
|
|
Outstanding as
of March 31, 2018
|
Common stock,
without par value
|
|
4,233,834,437
|
PART I. FINANCIAL INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
Item 1.
Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
EXXON MOBIL CORPORATION
|
|
CONDENSED CONSOLIDATED STATEMENT OF
INCOME
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
Revenues and
other income
|
|
|
|
|
|
|
|
|
Sales and other
operating revenue
|
|
|
65,436
|
|
|
56,474
|
|
|
Income from
equity affiliates
|
|
|
1,910
|
|
|
1,710
|
|
|
Other income
|
|
|
865
|
|
|
487
|
|
|
|
Total revenues
and other income
|
|
|
68,211
|
|
|
58,671
|
|
Costs and other
deductions
|
|
|
|
|
|
|
|
|
Crude oil and
product purchases
|
|
|
36,288
|
|
|
30,359
|
|
|
Production and
manufacturing expenses
|
|
|
8,491
|
|
|
7,566
|
|
|
Selling, general
and administrative expenses
|
|
|
2,747
|
|
|
2,505
|
|
|
Depreciation and
depletion
|
|
|
4,470
|
|
|
4,519
|
|
|
Exploration
expenses, including dry holes
|
|
|
287
|
|
|
289
|
|
|
Non-service
pension and postretirement benefit expense
|
|
|
337
|
|
|
373
|
|
|
Interest expense
|
|
|
204
|
|
|
146
|
|
|
Other taxes and
duties
|
|
|
8,147
|
|
|
6,996
|
|
|
|
Total costs and
other deductions
|
|
|
60,971
|
|
|
52,753
|
|
Income before
income taxes
|
|
|
7,240
|
|
|
5,918
|
|
|
Income taxes
|
|
|
2,457
|
|
|
1,828
|
|
Net income
including noncontrolling interests
|
|
|
4,783
|
|
|
4,090
|
|
|
Net income
attributable to noncontrolling interests
|
|
|
133
|
|
|
80
|
|
Net income
attributable to ExxonMobil
|
|
|
4,650
|
|
|
4,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share
(dollars)
|
|
|
1.09
|
|
|
0.95
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share - assuming dilution
(dollars)
|
|
|
1.09
|
|
|
0.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends per
common share
(dollars)
|
|
|
0.77
|
|
|
0.75
|
|
The information in the Notes to Condensed Consolidated Financial
Statements is an integral part of these statements.
EXXON MOBIL CORPORATION
|
|
CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
including noncontrolling interests
|
|
|
|
4,783
|
|
|
4,090
|
|
|
Other
comprehensive income (net of income taxes)
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange
translation adjustment
|
|
|
|
(804)
|
|
|
1,408
|
|
|
|
Adjustment for
foreign exchange translation (gain)/loss included in net income
|
|
|
168
|
|
|
-
|
|
|
|
Postretirement
benefits reserves adjustment (excluding amortization)
|
|
|
(434)
|
|
|
(25)
|
|
|
|
Amortization and
settlement of postretirement benefits reserves adjustment
|
|
|
|
|
|
|
|
|
|
|
|
included in net
periodic benefit costs
|
|
|
|
237
|
|
|
256
|
|
|
|
|
Total other
comprehensive income
|
|
|
|
(833)
|
|
|
1,639
|
|
|
Comprehensive
income including noncontrolling interests
|
|
|
3,950
|
|
|
5,729
|
|
|
|
Comprehensive
income attributable to noncontrolling interests
|
|
|
(9)
|
|
|
159
|
|
|
Comprehensive
income attributable to ExxonMobil
|
|
|
|
3,959
|
|
|
5,570
|
|
The information in the Notes to Condensed Consolidated Financial
Statements is an integral part of these statements.
EXXON MOBIL CORPORATION
|
|
CONDENSED CONSOLIDATED BALANCE SHEET
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mar. 31,
|
|
|
Dec. 31,
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
Assets
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
4,125
|
|
|
3,177
|
|
|
|
Notes and
accounts receivable – net
|
|
|
24,686
|
|
|
25,597
|
|
|
|
Inventories
|
|
|
|
|
|
|
|
|
|
|
Crude oil,
products and merchandise
|
|
|
13,879
|
|
|
12,871
|
|
|
|
|
Materials and
supplies
|
|
|
4,169
|
|
|
4,121
|
|
|
|
Other current
assets
|
|
|
1,456
|
|
|
1,368
|
|
|
|
|
Total current
assets
|
|
|
48,315
|
|
|
47,134
|
|
|
Investments,
advances and long-term receivables
|
|
|
40,350
|
|
|
39,160
|
|
|
Property, plant
and equipment – net
|
|
|
250,352
|
|
|
252,630
|
|
|
Other assets,
including intangibles – net
|
|
|
9,809
|
|
|
9,767
|
|
|
|
|
Total assets
|
|
|
348,826
|
|
|
348,691
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
|
Notes and loans
payable
|
|
|
19,836
|
|
|
17,930
|
|
|
|
Accounts payable
and accrued liabilities
|
|
|
37,207
|
|
|
36,796
|
|
|
|
Income taxes
payable
|
|
|
3,263
|
|
|
3,045
|
|
|
|
|
Total current
liabilities
|
|
|
60,306
|
|
|
57,771
|
|
|
Long-term debt
|
|
|
20,781
|
|
|
24,406
|
|
|
Postretirement
benefits reserves
|
|
|
21,696
|
|
|
21,132
|
|
|
Deferred income
tax liabilities
|
|
|
26,760
|
|
|
26,893
|
|
|
Long-term
obligations to equity companies
|
|
|
4,818
|
|
|
4,774
|
|
|
Other long-term
obligations
|
|
|
19,554
|
|
|
19,215
|
|
|
|
|
Total liabilities
|
|
|
153,915
|
|
|
154,191
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies (Note 3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
Common stock
without par value
|
|
|
|
|
|
|
|
|
|
(9,000 million
shares authorized, 8,019 million shares issued)
|
|
|
14,888
|
|
|
14,656
|
|
|
Earnings reinvested
|
|
|
415,970
|
|
|
414,540
|
|
|
Accumulated other
comprehensive income
|
|
|
(16,992)
|
|
|
(16,262)
|
|
|
Common stock held
in treasury
|
|
|
|
|
|
|
|
|
|
(3,785 million
shares at March 31, 2018 and
|
|
|
|
|
|
|
|
|
3,780 million
shares at December 31, 2017)
|
|
|
(225,671)
|
|
|
(225,246)
|
|
|
|
|
ExxonMobil share
of equity
|
|
|
188,195
|
|
|
187,688
|
|
|
Noncontrolling
interests
|
|
|
6,716
|
|
|
6,812
|
|
|
|
|
Total equity
|
|
|
194,911
|
|
|
194,500
|
|
|
|
|
Total liabilities
and equity
|
|
|
348,826
|
|
|
348,691
|
|
The information in the Notes to Condensed Consolidated Financial
Statements is an integral part of these statements.
EXXON MOBIL CORPORATION
|
|
CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
|
Net income including
noncontrolling interests
|
|
|
4,783
|
|
|
4,090
|
|
|
Depreciation and
depletion
|
|
|
4,470
|
|
|
4,519
|
|
|
Changes in
operational working capital, excluding cash and debt
|
|
|
351
|
|
|
793
|
|
|
All other items –
net
|
|
|
(1,085)
|
|
|
(1,229)
|
|
|
|
|
Net cash provided
by operating activities
|
|
|
8,519
|
|
|
8,173
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
|
|
Additions to
property, plant and equipment
|
|
|
(3,349)
|
|
|
(2,890)
|
|
|
Proceeds
associated with sales of subsidiaries, property, plant and
|
|
|
|
|
|
|
|
|
|
equipment, and
sales and returns of investments
|
|
|
1,441
|
|
|
687
|
|
|
Additional
investments and advances
|
|
|
(138)
|
|
|
(1,738)
|
|
|
Other investing
activities including collection of advances
|
|
|
187
|
|
|
180
|
|
|
|
|
Net cash used in
investing activities
|
|
|
(1,859)
|
|
|
(3,761)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing
activities
|
|
|
|
|
|
|
|
|
Additions to
long-term debt
|
|
|
-
|
|
|
60
|
|
|
Additions to
short-term debt
|
|
|
-
|
|
|
1,734
|
|
|
Reductions in
short-term debt
|
|
|
(3,872)
|
|
|
(2,669)
|
|
|
Additions/(reductions)
in commercial paper, and debt with three
|
|
|
|
|
|
|
|
|
|
months or less
maturity
(1)
|
|
|
1,950
|
|
|
1,308
|
|
|
Cash dividends to
ExxonMobil shareholders
|
|
|
(3,291)
|
|
|
(3,134)
|
|
|
Cash dividends to
noncontrolling interests
|
|
|
(43)
|
|
|
(44)
|
|
|
Changes in
noncontrolling interests
|
|
|
(59)
|
|
|
-
|
|
|
Common stock
acquired
|
|
|
(427)
|
|
|
(501)
|
|
|
|
|
Net cash used in
financing activities
|
|
|
(5,742)
|
|
|
(3,246)
|
|
Effects of
exchange rate changes on cash
|
|
|
30
|
|
|
74
|
|
Increase/(decrease)
in cash and cash equivalents
|
|
|
948
|
|
|
1,240
|
|
Cash and cash
equivalents at beginning of period
|
|
|
3,177
|
|
|
3,657
|
|
Cash and cash
equivalents at end of period
|
|
|
4,125
|
|
|
4,897
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosures
|
|
|
|
|
|
|
|
|
Income taxes paid
|
|
|
2,117
|
|
|
1,970
|
|
|
Cash interest
paid
|
|
|
360
|
|
|
368
|
|
2017 Noncash
Transactions
In the first three
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 reduction of commercial paper with a maturity
of over three months of $0.3 billion in 2018 and a net addition of $0.1 billion
in 2017. The gross amount of commercial paper with a maturity of over three
months issued was $0.4 billion in 2018 and $1.1 billion in 2017, while the
gross amount repaid was $0.7 billion in 2018 and $1.0 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
|
|
|
264
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
264
|
|
|
-
|
|
|
264
|
|
Other
|
|
|
(84)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(84)
|
|
|
-
|
|
|
(84)
|
|
Net income for
the period
|
|
|
-
|
|
|
4,010
|
|
|
-
|
|
|
-
|
|
|
4,010
|
|
|
80
|
|
|
4,090
|
|
Dividends
|
|
|
-
|
|
|
(3,134)
|
|
|
-
|
|
|
-
|
|
|
(3,134)
|
|
|
(44)
|
|
|
(3,178)
|
|
Other
comprehensive income
|
|
|
-
|
|
|
-
|
|
|
1,560
|
|
|
-
|
|
|
1,560
|
|
|
79
|
|
|
1,639
|
|
Acquisitions, at
cost
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(582)
|
|
|
(582)
|
|
|
-
|
|
|
(582)
|
|
Issued for
acquisitions
|
|
|
2,078
|
|
|
-
|
|
|
-
|
|
|
5,711
|
|
|
7,789
|
|
|
-
|
|
|
7,789
|
|
Dispositions
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3
|
|
|
3
|
|
|
-
|
|
|
3
|
Balance as of
March 31, 2017
|
|
|
14,415
|
|
|
408,707
|
|
|
(20,679)
|
|
|
(225,292)
|
|
|
177,151
|
|
|
6,620
|
|
|
183,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
237
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
237
|
|
|
-
|
|
|
237
|
|
Other
|
|
|
(5)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(5)
|
|
|
-
|
|
|
(5)
|
|
Net income for
the period
|
|
|
-
|
|
|
4,650
|
|
|
-
|
|
|
-
|
|
|
4,650
|
|
|
133
|
|
|
4,783
|
|
Dividends
|
|
|
-
|
|
|
(3,291)
|
|
|
-
|
|
|
-
|
|
|
(3,291)
|
|
|
(43)
|
|
|
(3,334)
|
|
Cumulative effect
of accounting
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
change
|
|
|
-
|
|
|
71
|
|
|
(39)
|
|
|
-
|
|
|
32
|
|
|
15
|
|
|
47
|
|
Other
comprehensive income
|
|
|
-
|
|
|
-
|
|
|
(691)
|
|
|
-
|
|
|
(691)
|
|
|
(142)
|
|
|
(833)
|
|
Acquisitions, at
cost
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(427)
|
|
|
(427)
|
|
|
(59)
|
|
|
(486)
|
|
Dispositions
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2
|
|
|
2
|
|
|
-
|
|
|
2
|
Balance as of
March 31, 2018
|
|
|
14,888
|
|
|
415,970
|
|
|
(16,992)
|
|
|
(225,671)
|
|
|
188,195
|
|
|
6,716
|
|
|
194,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2018
|
|
|
|
|
Three Months Ended March 31, 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
March 31
|
|
|
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 March 31, 2018 and the carrying value of equity securities without readily
determinable fair values at March 31, 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 of about $100 million in Corporate and
financing expenses for the first quarter of 2018, offset 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
period ended March 31, 2017, is shown below.
|
|
|
|
|
As of March 31, 2017
|
|
|
|
|
|
|
|
As Reported
|
|
Change
|
|
As Adjusted
|
|
|
|
|
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production and
manufacturing expenses
|
|
|
7,845
|
|
(279)
|
|
7,566
|
|
|
|
Selling, general
and administrative expenses
|
|
|
2,599
|
|
(94)
|
|
2,505
|
|
|
|
Non-service
pension and postretirement benefit expense
|
|
|
-
|
|
373
|
|
373
|
|
|
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 be recorded on the
balance sheet as an asset and a lease liability. The Corporation is gathering
and evaluating data and recently acquired a system to facilitate
implementation. We are progressing an assessment of the magnitude of the effect
on the Corporation’s financial statements.
3.
Litigation and Other Contingencies
Litigation
A variety of claims
have been made against ExxonMobil and certain of its consolidated subsidiaries
in a number of pending lawsuits. Management has regular litigation reviews,
including updates from corporate and outside counsel, to assess the need for accounting
recognition or disclosure of these contingencies. The Corporation accrues an
undiscounted liability for those contingencies where the incurrence of a loss
is probable and the amount can be reasonably estimated. If a range of amounts
can be reasonably estimated and no amount within the range is a better estimate
than any other amount, then the minimum of the range is accrued. The
Corporation does not record liabilities when the likelihood that the liability
has been incurred is probable but the amount cannot be reasonably estimated or
when the liability is believed to be only reasonably possible or remote. For
contingencies where an unfavorable outcome is reasonably possible and which are
significant, the Corporation discloses the nature of the contingency and, where
feasible, an estimate of the possible loss. For purposes of our contingency
disclosures, “significant” includes material matters, as well as other matters
which management believes should be disclosed. ExxonMobil will continue to
defend itself vigorously in these matters. Based on a consideration of all
relevant facts and circumstances, the Corporation does not believe the ultimate
outcome of any currently pending lawsuit against ExxonMobil will have a
material adverse effect upon the Corporation's operations, financial condition,
or financial statements taken as a whole.
Other Contingencies
The Corporation and
certain of its consolidated subsidiaries were contingently liable at
March 31, 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 March 31, 2018
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
Company
|
|
|
Third Party
|
|
|
|
|
|
|
|
|
|
|
|
Obligations
(1)
|
|
|
Obligations
|
|
|
Total
|
|
|
|
|
|
|
|
|
(millions of dollars)
|
|
|
|
Guarantees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt-related
|
|
|
96
|
|
|
328
|
|
|
424
|
|
|
|
|
Other
|
|
|
1,558
|
|
|
4,887
|
|
|
6,445
|
|
|
|
|
|
Total
|
|
|
1,654
|
|
|
5,215
|
|
|
6,869
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) ExxonMobil
share
|
|
|
|
|
|
|
|
|
|
|
|
Additionally, the Corporation and its affiliates have numerous
long-term sales and purchase commitments in their various business activities,
all of which are expected to be fulfilled with no adverse consequences material
to the Corporation’s operations or financial condition.
The
operations and earnings of the Corporation and its affiliates throughout the
world have been, and may in the future be, affected from time to time in varying
degree by political developments and laws and regulations, such as forced
divestiture of assets; restrictions on production, imports and exports; price
controls; tax increases and retroactive tax claims; expropriation of property;
cancellation of contract rights and environmental regulations. Both the
likelihood of such occurrences and their overall effect upon the Corporation
vary greatly from country to country and are not predictable.
In accordance with a
nationalization decree issued by Venezuela’s president in February 2007,
by May 1, 2007, a subsidiary of the Venezuelan National Oil Company
(PdVSA) assumed the operatorship of the Cerro Negro Heavy Oil Project. This
Project had been operated and owned by ExxonMobil affiliates holding a 41.67
percent ownership interest in the Project. The decree also required conversion
of the Cerro Negro Project into a “mixed enterprise” and an increase in PdVSA’s
or one of its affiliate’s ownership interest in the Project, with the
stipulation that if ExxonMobil refused to accept the terms for the formation of
the mixed enterprise within a specified period of time, the government would
“directly assume the activities” carried out by the joint venture. ExxonMobil
refused to accede to the terms proffered by the government, and on June 27,
2007, the government expropriated ExxonMobil’s 41.67 percent interest in the
Cerro Negro Project.
On September 6,
2007, affiliates of ExxonMobil filed a Request for Arbitration with the
International Centre for Settlement of Investment Disputes (ICSID). The ICSID
Tribunal issued a decision on June 10, 2010, finding that it had
jurisdiction to proceed on the basis of the Netherlands-Venezuela Bilateral
Investment Treaty. On October 9, 2014, the ICSID Tribunal issued its final
award finding in favor of the ExxonMobil affiliates and awarding $1.6 billion
as of the date of expropriation, June 27, 2007, and interest from that
date at 3.25 percent compounded annually until the date of payment in full. The
Tribunal also noted that one of the Cerro Negro Project agreements provides a
mechanism to prevent double recovery between the ICSID award and all or part of
an earlier award of $908 million to an ExxonMobil affiliate, Mobil Cerro Negro,
Ltd., against PdVSA and a PdVSA affiliate, PdVSA CN, in an arbitration under
the rules of the International Chamber of Commerce.
On February 2,
2015, Venezuela filed a Request for Annulment of the ICSID award. On March 9,
2017, the ICSID Committee hearing the Request for Annulment issued a decision
partially annulling the award of the Tribunal issued on October 9, 2014.
The Committee affirmed the compensation due for the La Ceiba project and for
export curtailments at the Cerro Negro project, but annulled the portion of the
award relating to the Cerro Negro Project’s expropriation ($1.4 billion) based
on its determination that the prior Tribunal failed to adequately explain why
the cap on damages in the indemnity owed by PdVSA did not affect or limit the
amount owed for the expropriation of the Cerro Negro project. As a result,
ExxonMobil retains an award for $260 million (including accrued interest). ExxonMobil
reached an agreement with Venezuela for full payment of the $260 million. To
date, Venezuela continues to meet its payment obligations. The agreement does
not impact ExxonMobil’s ability to re-arbitrate the issue that was the basis
for the annulment in a new ICSID arbitration proceeding.
The United States District
Court for the Southern District of New York entered judgment on the ICSID award
on October 10, 2014. On July 11, 2017, the United States Court of
Appeals for the Second Circuit rendered its opinion overturning the District
Court’s decision and vacating the judgment on the grounds that a different
procedure should have been used to reduce the award to judgment. The
Corporation did not seek a writ of certiorari and the court case is now
concluded.
The net impact of
these matters on the Corporation’s consolidated financial results cannot be
reasonably estimated. Regardless, the Corporation does not expect the
resolution to have a material effect upon the Corporation’s operations or
financial condition.
An affiliate of ExxonMobil is one of the Contractors
under a Production Sharing Contract (PSC) with the Nigerian National Petroleum
Corporation (NNPC) covering the Erha block located in the offshore waters of
Nigeria. ExxonMobil's affiliate is the operator of the block and owns a 56.25
percent interest under the PSC. The Contractors are in dispute with NNPC
regarding NNPC's lifting of crude oil in excess of its entitlement under the
terms of the PSC. In accordance with the terms of the PSC, the Contractors
initiated arbitration in Abuja, Nigeria, under the Nigerian Arbitration and
Conciliation Act. On October 24, 2011, a three-member arbitral Tribunal
issued an award upholding the Contractors' position in all material respects
and awarding damages to the Contractors jointly in an amount of approximately
$1.8 billion plus $234 million in accrued interest. The Contractors petitioned
a Nigerian federal court for enforcement of the award, and NNPC petitioned the
same court to have the award set aside. On May 22, 2012, the court set
aside the award. The Contractors appealed that judgment to the Court of Appeal,
Abuja Judicial Division. On July 22, 2016, the Court of Appeal upheld the
decision of the lower court setting aside the award.
On October 21,
2016, the Contractors appealed the decision to the Supreme Court of Nigeria. In
June 2013, the Contractors filed a lawsuit against NNPC in the Nige
rian federal high court in order to preserve their ability
to seek enforcement of the PSC in the courts if necessary. Following dismissal
by this court, the Contractors appealed to the Nigerian Court of Appeal in June
2016. In October 2014, the Contractors filed suit in the United States District
Court for the Southern District of New York to enforce, if necessary, the
arbitration award against NNPC assets residing within that jurisdiction. NNPC
has moved to dismiss the lawsuit. The stay in the proceedings in the Southern
District of New York has been lifted. At this time, the net impact of this
matter on the Corporation's consolidated financial results cannot be reasonably
estimated. However, regardless of the outcome of enforcement proceedings, the
Corporation does not expect the proceedings to have a material effect upon the
Corporation's operations or financial condition.
4.
Other Comprehensive
Income Information
|
|
|
|
|
|
Cumulative
|
|
|
Post-
|
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
retirement
|
|
|
|
|
|
|
|
|
|
Exchange
|
|
|
Benefits
|
|
|
|
|
ExxonMobil
Share of Accumulated Other
|
|
|
Translation
|
|
|
Reserves
|
|
|
|
|
Comprehensive
Income
|
|
|
Adjustment
|
|
|
Adjustment
|
|
|
Total
|
|
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of
December 31, 2016
|
|
|
(14,501)
|
|
|
(7,738)
|
|
|
(22,239)
|
|
Current period
change excluding amounts reclassified
|
|
|
|
|
|
|
|
|
|
|
|
from accumulated
other comprehensive income
|
|
|
1,342
|
|
|
(29)
|
|
|
1,313
|
|
Amounts
reclassified from accumulated other
|
|
|
|
|
|
|
|
|
|
|
|
comprehensive
income
|
|
|
-
|
|
|
247
|
|
|
247
|
|
Total change in
accumulated other comprehensive income
|
|
|
1,342
|
|
|
218
|
|
|
1,560
|
|
Balance as of
March 31, 2017
|
|
|
(13,159)
|
|
|
(7,520)
|
|
|
(20,679)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of
December 31, 2017
|
|
|
(9,482)
|
|
|
(6,780)
|
|
|
(16,262)
|
|
Current period
change excluding amounts reclassified
|
|
|
|
|
|
|
|
|
|
|
|
from accumulated
other comprehensive income
|
|
|
(686)
|
|
|
(440)
|
|
|
(1,126)
|
|
Amounts
reclassified from accumulated other
|
|
|
|
|
|
|
|
|
|
|
|
comprehensive
income
|
|
|
168
|
|
|
228
|
|
|
396
|
|
Total change in
accumulated other comprehensive income
|
|
|
(518)
|
|
|
(212)
|
|
|
(730)
|
|
Balance as of
March 31, 2018
|
|
|
(10,000)
|
|
|
(6,992)
|
|
|
(16,992)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Amounts
Reclassified Out of Accumulated Other
|
|
|
|
|
|
March 31,
|
|
Comprehensive
Income - Before-tax Income/(Expense)
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange
translation gain/(loss) included in net income
|
|
|
|
|
|
|
|
|
|
|
|
(Statement of
Income line: Other income)
|
|
|
|
|
|
(168)
|
|
|
-
|
|
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)
|
|
|
(320)
|
|
|
(359)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Income Tax
(Expense)/Credit For
|
|
|
|
|
|
March 31,
|
|
Components
of Other Comprehensive Income
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange
translation adjustment
|
|
|
|
|
|
-
|
|
|
(18)
|
|
Postretirement
benefits reserves adjustment (excluding amortization)
|
|
|
|
|
|
124
|
|
|
5
|
|
Amortization and
settlement of postretirement benefits reserves
|
|
|
|
|
|
|
|
|
|
|
|
adjustment
included in net periodic benefit costs
|
|
|
|
|
|
(83)
|
|
|
(103)
|
|
Total
|
|
|
|
|
|
41
|
|
|
(116)
|
5. Earnings Per
Share
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to ExxonMobil
(millions of dollars)
|
|
|
4,650
|
|
|
4,010
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding
(millions of shares)
|
|
|
4,270
|
|
|
4,223
|
|
|
|
|
|
|
|
|
|
Earnings per
common share
(dollars)
(1)
|
|
|
1.09
|
|
|
0.95
|
|
|
|
|
|
|
|
|
|
(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
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
(millions of dollars)
|
|
Components of
net benefit cost
|
|
|
|
|
|
|
|
|
|
Pension Benefits
- U.S.
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
|
|
209
|
|
|
197
|
|
|
|
Interest cost
|
|
|
|
180
|
|
|
199
|
|
|
|
Expected return
on plan assets
|
|
|
|
(182)
|
|
|
(194)
|
|
|
|
Amortization of
actuarial loss/(gain) and prior service cost
|
|
|
91
|
|
|
110
|
|
|
|
Net pension
enhancement and curtailment/settlement cost
|
|
|
63
|
|
|
105
|
|
|
|
Net benefit cost
|
|
|
|
361
|
|
|
417
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
- Non-U.S.
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
|
|
158
|
|
|
145
|
|
|
|
Interest cost
|
|
|
|
200
|
|
|
187
|
|
|
|
Expected return
on plan assets
|
|
|
|
(252)
|
|
|
(239)
|
|
|
|
Amortization of
actuarial loss/(gain) and prior service cost
|
|
|
118
|
|
|
127
|
|
|
|
Net pension
enhancement and curtailment/settlement cost
|
|
|
33
|
|
|
(5)
|
|
|
|
Net benefit cost
|
|
|
|
257
|
|
|
215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Postretirement Benefits
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
|
|
36
|
|
|
26
|
|
|
|
Interest cost
|
|
|
|
75
|
|
|
72
|
|
|
|
Expected return
on plan assets
|
|
|
|
(6)
|
|
|
(6)
|
|
|
|
Amortization of
actuarial loss/(gain) and prior service cost
|
|
|
17
|
|
|
17
|
|
|
|
Net benefit cost
|
|
|
|
122
|
|
|
109
|
|
|
|
|
|
|
|
|
|
|
|
|
7. 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 March 31, 2018, and the related hierarchy level for the fair
value measurement is as follows:
|
|
|
|
|
At March 31, 2018
|
|
|
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
|
|
Fair Value
|
|
|
|
|
|
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Advances
to/receivables from equity companies (included in
|
|
|
|
|
|
|
|
|
|
|
|
|
the Balance
Sheet line: Investments, advances and
|
|
|
|
|
|
|
|
|
|
|
|
|
long-term
receivables)
|
|
9,240
|
|
-
|
|
2,221
|
|
7,171
|
|
9,392
|
|
Other long-term
financial assets (included in the Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
Sheet lines:
Investments, advances and long-term receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
and Other
assets, including intangibles – net)
|
|
1,695
|
|
742
|
|
-
|
|
976
|
|
1,718
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
(excluding capitalized lease obligations)
|
|
19,315
|
|
19,266
|
|
152
|
|
4
|
|
19,422
|
|
Long-term
obligations to equity companies
|
|
4,818
|
|
-
|
|
-
|
|
5,058
|
|
5,058
|
|
Other long-term
financial liabilities (included in the
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet
line: Other long-term obligations)
|
|
1,066
|
|
-
|
|
-
|
|
1,059
|
|
1,059
|
8. Disclosures about Segments and Related Information
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
Earnings
After Income Tax
|
|
|
|
(millions of dollars)
|
|
|
Upstream
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
|
429
|
|
|
(18)
|
|
|
|
Non-U.S.
|
|
|
|
3,068
|
|
|
2,270
|
|
|
Downstream
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
|
319
|
|
|
292
|
|
|
|
Non-U.S.
|
|
|
|
621
|
|
|
824
|
|
|
Chemical
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
|
503
|
|
|
529
|
|
|
|
Non-U.S.
|
|
|
|
508
|
|
|
642
|
|
|
Corporate and
financing
(1)
|
|
|
|
(798)
|
|
|
(529)
|
|
|
Corporate total
|
|
|
|
4,650
|
|
|
4,010
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and
Other Operating Revenue
|
|
|
|
|
|
|
|
|
|
Upstream
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
|
2,361
|
|
|
2,324
|
|
|
|
Non-U.S.
|
|
|
|
3,628
|
|
|
3,509
|
|
|
Downstream
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
|
16,995
|
|
|
14,582
|
|
|
|
Non-U.S.
|
|
|
|
34,372
|
|
|
29,044
|
|
|
Chemical
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
|
2,989
|
|
|
2,783
|
|
|
|
Non-U.S.
|
|
|
|
5,078
|
|
|
4,218
|
|
|
Corporate and
financing
|
|
|
|
13
|
|
|
14
|
|
|
Corporate total
|
|
|
|
65,436
|
|
|
56,474
|
|
|
|
|
|
|
|
|
|
|
|
|
Intersegment
Revenue
|
|
|
|
|
|
|
|
|
|
Upstream
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
|
2,062
|
|
|
1,290
|
|
|
|
Non-U.S.
|
|
|
|
6,871
|
|
|
5,899
|
|
|
Downstream
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
|
4,944
|
|
|
3,646
|
|
|
|
Non-U.S.
|
|
|
|
7,089
|
|
|
5,214
|
|
|
Chemical
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
|
2,194
|
|
|
1,770
|
|
|
|
Non-U.S.
|
|
|
|
1,843
|
|
|
1,190
|
|
|
Corporate and
financing
|
|
|
|
49
|
|
|
56
|
(
1)
See Note 2 for additional details
regarding the change in segmentation of
Non-service pension and postretirement
benefit expense.
|
Geographic
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
March 31,
|
|
Sales and
Other Operating Revenue
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
22,345
|
|
|
19,689
|
|
Non-U.S.
|
|
|
43,091
|
|
|
36,785
|
|
|
Total
|
|
|
65,436
|
|
|
56,474
|
|
|
|
|
|
|
|
|
|
|
|
Significant
Non-U.S. revenue sources include:
(1)
|
|
|
|
|
|
|
|
|
Canada
|
|
|
5,375
|
|
|
4,634
|
|
|
United Kingdom
|
|
|
4,672
|
|
|
4,135
|
|
|
Belgium
|
|
|
3,977
|
|
|
3,265
|
|
|
Singapore
|
|
|
3,427
|
|
|
2,751
|
|
|
France
|
|
|
3,245
|
|
|
2,568
|
|
|
Italy
|
|
|
3,154
|
|
|
2,669
|
|
|
Germany
|
|
|
2,231
|
|
|
2,004
|
(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
|
|
|
|
|
|
|
|
|
|
|
|
|
First Three Months
|
Earnings (U.S.
GAAP)
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(millions of dollars)
|
Upstream
|
|
|
|
|
|
|
|
United States
|
|
|
429
|
|
|
(18)
|
|
Non-U.S.
|
|
|
3,068
|
|
|
2,270
|
Downstream
|
|
|
|
|
|
|
|
United States
|
|
|
319
|
|
|
292
|
|
Non-U.S.
|
|
|
621
|
|
|
824
|
Chemical
|
|
|
|
|
|
|
|
United States
|
|
|
503
|
|
|
529
|
|
Non-U.S.
|
|
|
508
|
|
|
642
|
Corporate and
financing
(1)
|
|
|
(798)
|
|
|
(529)
|
|
Net income
attributable to ExxonMobil (U.S. GAAP)
|
|
|
4,650
|
|
|
4,010
|
|
|
|
|
|
|
|
Earnings per
common share
(dollars)
|
|
|
1.09
|
|
|
0.95
|
|
|
|
|
|
|
|
|
Earnings per
common share - assuming dilution
(dollars)
|
|
1.09
|
|
|
0.95
|
|
|
|
|
|
|
|
|
(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 FIRST QUARTER 2018 RESULTS
ExxonMobil’s first
quarter 2018 earnings were $4.7 billion, or $1.09 per share assuming
dilution, compared with $4 billion a year earlier. Increased commodity
prices, coupled with a focus on operating efficiently and strengthening the
portfolio, resulted in higher earnings and the highest cash flow from
operations and asset sales since 2014.
Through new
discoveries and acquired acreage, the Corporation has positioned its Upstream
portfolio well for future growth. The Corporation also made good progress on
plans to improve the production mix and grow premium product sales in the
Downstream and Chemical businesses.
|
|
|
|
|
First Three Months
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
(millions of dollars)
|
Upstream
earnings
|
|
|
|
|
|
|
|
United States
|
|
|
429
|
|
|
(18)
|
|
Non-U.S.
|
|
|
3,068
|
|
|
2,270
|
|
|
Total
|
|
|
3,497
|
|
|
2,252
|
Upstream
earnings were $3,497 million in the first quarter of 2018, up $1,245 million
from the first quarter of 2017.
·
Higher
liquids and gas realizations increased earnings by $1,430 million.
·
Lower volume
and mix effects, including the impact from the Papua New Guinea earthquake,
decreased earnings by $190 million.
·
All other
items increased earnings by $10 million, as the $366 million gain on
the Scarborough sale in Australia was partially offset by higher expenses.
·
U.S. Upstream
earnings were $429 million, up $447 million from the prior year.
·
Non‑U.S.
Upstream earnings were $3,068 million, up $798 million from the prior
year.
·
On an oil‑equivalent
basis, production decreased 6 percent from the first quarter of 2017.
·
Liquids
production totaled 2.2 million barrels per day, down 117,000 barrels
per day as lower volumes from decline, entitlements, and divestments, were
partially offset by growth in North America.
·
Natural gas
production was 10 billion cubic feet per day, down 870 million cubic
feet per day driven by higher downtime, including impacts from the Papua New
Guinea earthquake, lower entitlements, and base decline.
|
|
|
First Quarter
|
Upstream
additional information
|
|
(thousands of barrels daily)
|
Volumes
reconciliation
(Oil-equivalent production)
(1)
|
|
|
|
|
2017
|
|
|
|
4,151
|
|
|
Entitlements -
Net Interest
|
|
|
|
(3)
|
|
|
Entitlements -
Price / Spend / Other
|
|
|
|
(70)
|
|
|
Quotas
|
|
|
|
-
|
|
|
Divestments
|
|
|
|
(53)
|
|
|
Growth / Other
|
|
|
|
(136)
|
|
2018
|
|
|
|
3,889
|
|
|
|
|
|
|
|
|
(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.
|
|
|
|
|
First Three Months
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
(millions of dollars)
|
Downstream
earnings
|
|
|
|
|
|
|
|
United States
|
|
|
319
|
|
|
292
|
|
Non-U.S.
|
|
|
621
|
|
|
824
|
|
|
Total
|
|
|
940
|
|
|
1,116
|
Downstream
earnings were $940 million, down $176 million from the first quarter
of 2017.
·
Margins
decreased earnings $30 million, as lower Non‑U.S. margins were
partially offset by higher U.S. margins.
·
Lower volumes
and mix effects, primarily reflecting lower throughput at the Joliet refinery
in Illinois, decreased earnings by $60 million.
·
All other
items decreased earnings by $90 million, as lower divestment gains and
higher expenses were partially offset by lower turnaround costs in the U.S.
·
U.S.
Downstream earnings were $319 million, up $27 million from the prior
year.
·
Non‑U.S.
Downstream earnings were $621 million, down $203 million from the
prior year.
·
Petroleum
product sales of 5.4 million barrels per day were 37,000 barrels per
day higher than last year’s first quarter.
|
|
|
|
|
First Three Months
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
(millions of dollars)
|
Chemical
earnings
|
|
|
|
|
|
|
|
United States
|
|
|
503
|
|
|
529
|
|
Non-U.S.
|
|
|
508
|
|
|
642
|
|
|
Total
|
|
|
1,011
|
|
|
1,171
|
Chemical earnings of
$1,011 million were $160 million lower than the first quarter of 2017.
·
Weaker margins decreased earnings by $270 million.
·
Volume and mix effects increased earnings by $120 million.
·
All other items decreased earnings by $10 million, as higher
growth‑related expenses were partially offset by favorable foreign
exchange impacts.
·
U.S. Chemical
earnings were $503 million, down $26 million from the prior year.
·
Non‑U.S.
Chemical earnings were $508 million, down $134 million from the prior
year.
·
First quarter prime product sales of 6.7 million metric tons
were 596,000 metric tons, or 10 percent, higher than the prior year
due to project growth and acquisitions.
|
|
|
|
|
First Three Months
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
Corporate
and financing earnings
|
|
|
(798)
|
|
|
(529)
|
Corporate and financing
expenses were $798 million for the first quarter of 2018, up $269 million
from the first quarter of 2017 mainly due to the impact of a lower U.S. tax
rate, and higher pension and financing related costs.
LIQUIDITY AND
CAPITAL RESOURCES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Three Months
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
(millions of dollars)
|
Net cash
provided by/(used in)
|
|
|
|
|
|
|
|
Operating
activities
|
|
|
8,519
|
|
|
8,173
|
|
Investing
activities
|
|
|
(1,859)
|
|
|
(3,761)
|
|
Financing
activities
|
|
|
(5,742)
|
|
|
(3,246)
|
Effect of
exchange rate changes
|
|
|
30
|
|
|
74
|
Increase/(decrease)
in cash and cash equivalents
|
|
|
948
|
|
|
1,240
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents (at end of period)
|
|
|
4,125
|
|
|
4,897
|
|
|
|
|
|
|
|
|
|
Cash flow from
operations and asset sales
|
|
|
|
|
|
|
|
Net cash
provided by operating activities (U.S. GAAP)
|
|
|
8,519
|
|
|
8,173
|
|
Proceeds
associated with sales of subsidiaries, property, plant & equipment,
|
|
|
|
|
|
|
|
and sales and
returns of investments
|
|
|
1,441
|
|
|
687
|
|
Cash flow from
operations and asset sales
|
|
|
9,960
|
|
|
8,860
|
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 first quarter of 2018 was $10.0 billion,
including asset sales of $1.4 billion, an increase of $1.1 billion from the
comparable 2017 period primarily due to higher earnings and increased proceeds
from asset management activity.
Cash provided by
operating activities totaled $8.5 billion for the first quarter of 2018, $0.3
billion higher than 2017. The major source of funds was net income including
noncontrolling interests of $4.8 billion, an increase of $0.7 billion from the
prior year period. The adjustment for the noncash provision of $4.5 billion for
depreciation and depletion was essentially in line with 2017. Changes in
operational working capital increased cash flows by $0.4 billion, down $0.4
billion from the prior year period. All other items net decreased cash flows by
$1.1 billion in 2018 compared to a reduction of $1.2 billion in 2017. See the
Condensed Consolidated Statement of Cash Flows for additional details.
Investing activities
for the first quarter of 2018 used net cash of $1.9 billion, a decrease of $1.9
billion compared to the prior year. Spending for additions to property, plant
and equipment of $3.3 billion was $0.5 billion higher than 2017. Proceeds from
asset sales of $1.4 billion increased $0.8 billion. Investments and advances decreased
$1.6 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.
Net cash used by
financing activities was $5.7 billion in the first quarter of 2018, an increase
of $2.5 billion from 2017. The net reduction in short and long term debt was
$1.9 billion compared to a net addition of $0.4 billion in 2017.
During the first quarter
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 first 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 $3.3 billion to shareholders in the first quarter of 2018
through dividends.
Total cash and cash
equivalents of $4.1 billion at the end of the first quarter of 2018 compared to
$3.2 billion at year-end 2017.
Total debt at the end
of the first quarter of 2018 was $40.6 billion compared to $42.3 billion at
year-end 2017. The Corporation's debt to total capital ratio was 17.2 percent
at the end of the first 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Three Months
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
|
2,457
|
|
|
1,828
|
|
|
|
Effective
income tax rate
|
|
|
40
|
%
|
|
38
|
%
|
|
Total other
taxes and duties
(1)
|
|
|
8,815
|
|
|
7,629
|
|
|
|
Total
|
|
|
11,272
|
|
|
9,457
|
|
|
(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 $11.3 billion for the first quarter of 2018,
an increase of $1.8 billion from 2017. Income tax expense increased by $0.6
billion to $2.5 billion reflecting higher pre-tax income. The effective income
tax rate was 40 percent compared to 38 percent in the prior year period due to
a higher share of earnings in higher tax jurisdictions. Total other taxes and
duties increased by $1.2 billion to $8.8 billion.
During the first three months of 2018, there were no
significant changes to the Corporation’s reasonable estimates of the income tax
effects reflected in 2017 for the changes in tax law and tax rate from the
enactment of the U.S. Tax Cuts and Jobs Act and following guidance outlined in
the SEC Staff Accounting Bulletin No. 118. The impact of tax law changes
on the Corporation’s financial statements could differ from its estimates due
to further analysis of the new law, regulatory guidance, technical corrections
legislation, or guidance under U.S. GAAP. If significant changes occur, the
Corporation will provide updated information in connection with future
regulatory filings.
In the United States, the Corporation has various ongoing
U.S. federal income tax positions at issue with the Internal Revenue Service
(IRS) for tax years beginning in 2006. The IRS has asserted penalties
associated with several of those positions. The Corporation has not recognized
the penalties as an expense because the Corporation does not expect the
penalties to be sustained under applicable law. The Corporation has filed a
refund suit for tax years 2006-2009 in a U.S. federal district court with
respect to the positions at issue for those years. Unfavorable resolution of all
positions at issue with the IRS would not have a materially adverse effect on
the Corporation’s net income or liquidity.
CAPITAL AND EXPLORATION EXPENDITURES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Three Months
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
Upstream
(including exploration expenses)
|
|
|
3,759
|
|
|
3,119
|
|
Downstream
|
|
|
614
|
|
|
545
|
|
Chemical
|
|
|
465
|
|
|
497
|
|
Other
|
|
|
29
|
|
|
8
|
|
|
Total
|
|
|
4,867
|
|
|
4,169
|
|
Capital and exploration expenditures in the first
quarter of 2018 were $4.9 billion, up 17 percent from the first quarter of 2017.
The Corporation anticipates an investment level of $24 billion in 2018. Actual
spending could vary depending on the progress of individual projects and
property acquisitions.
In 2014,
the European Union and United States imposed sanctions relating to the Russian
energy sector. ExxonMobil continues to comply with all sanctions and regulatory
licenses applicable to its affiliates’ investments in the Russian Federation.
See Part II. Other Information, Item 1. Legal Proceedings in this report for
information concerning a civil penalty assessment related to this matter which
the Corporation is contesting.
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 are actively in
discussions with the government on the associated implementation measures. If
the Cabinet’s intentions are implemented, the reduction to the Corporation’s
proved reserves could be up to 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 be recorded on the balance sheet as an asset and a lease
liability. The Corporation is gathering and evaluating data and recently
acquired a system to facilitate implementation. We are progressing an
assessment of the magnitude of the effect on the Corporation’s financial
statements.
FORWARD-LOOKING STATEMENTS
Statements
relating to future plans, projections, events or conditions are forward-looking
statements. Future results, including project plans, costs, timing, and
capacities; business growth; integration benefits; resource recoveries; the
impact of new technologies; and share purchase levels, could differ materially
due to factors including: changes in oil, gas or petrochemical prices or other
market or economic conditions affecting the oil, gas or petrochemical
industries, including the scope and duration of economic recessions; the
outcome of exploration and development efforts; timely completion of new
projects; changes in law or government regulation, including tax and
environmental requirements; the impact of fiscal and commercial terms and
outcome of commercial negotiations; the results of research programs; changes
in technical or operating conditions; actions of competitors; and other factors
discussed under the heading “Factors Affecting Future Results” in the
“Investors” section of our website and in Item 1A of ExxonMobil's 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 three months ended March 31, 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 March 31, 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.