UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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 |
(State or other jurisdiction of |
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(I.R.S. Employer |
incorporation or organization) |
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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 |
☐
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Non-accelerated filer |
☐
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Smaller reporting company |
☐ |
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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 |
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Outstanding as of June 30, 2018 |
Common stock, without par value |
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4,233,810,348 |
EXXON MOBIL CORPORATION
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2018
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements
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Condensed Consolidated Statement of Income Three and six months ended June 30, 2018 and 2017
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3 |
Condensed Consolidated Statement of Comprehensive Income Three and six months ended June 30, 2018 and 2017
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4 |
Condensed Consolidated Balance Sheet As of June 30, 2018 and December 31, 2017 |
5 |
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Condensed Consolidated Statement of Cash Flows Six months ended June 30, 2018 and 2017
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6 |
Condensed Consolidated Statement of Changes in Equity Six months ended June 30, 2018 and 2017
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7 |
Notes to Condensed Consolidated Financial Statements
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8 |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
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16 |
Item 3. Quantitative and Qualitative Disclosures About Market Risk
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24 |
Item 4. Controls and Procedures
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24 |
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PART II. OTHER INFORMATION
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Item 1. Legal Proceedings
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25 |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
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26 |
Item 6. Exhibits
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26 |
Index to Exhibits
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27 |
Signature
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28 |
2
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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Six Months Ended |
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June 30, |
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June 30, |
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2018 |
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2017 |
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2018 |
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2017 |
Revenues and other income |
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Sales and other operating revenue |
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71,456 |
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56,026 |
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136,892 |
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112,500 |
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Income from equity affiliates |
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1,729 |
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1,525 |
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3,639 |
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3,235 |
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Other income |
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316 |
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526 |
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1,181 |
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1,013 |
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Total revenues and other income |
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73,501 |
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58,077 |
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141,712 |
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116,748 |
Costs and other deductions |
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Crude oil and product purchases |
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41,327 |
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30,194 |
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77,615 |
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60,553 |
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Production and manufacturing expenses |
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8,918 |
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8,060 |
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17,409 |
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15,626 |
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Selling, general and administrative expenses |
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2,993 |
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2,556 |
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5,740 |
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5,061 |
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Depreciation and depletion |
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4,589 |
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4,652 |
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9,059 |
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9,171 |
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Exploration expenses, including dry holes |
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332 |
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514 |
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619 |
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803 |
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Non-service pension and postretirement benefit expense |
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308 |
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419 |
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645 |
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792 |
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Interest expense |
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147 |
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158 |
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351 |
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304 |
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Other taxes and duties |
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8,375 |
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7,368 |
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16,522 |
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14,364 |
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Total costs and other deductions |
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66,989 |
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53,921 |
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127,960 |
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106,674 |
Income before income taxes |
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6,512 |
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4,156 |
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13,752 |
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10,074 |
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Income taxes |
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2,526 |
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892 |
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4,983 |
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2,720 |
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Net income including noncontrolling interests |
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3,986 |
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3,264 |
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8,769 |
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7,354 |
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Net income attributable to noncontrolling interests |
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36 |
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(86) |
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169 |
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(6) |
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Net income attributable to ExxonMobil |
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3,950 |
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3,350 |
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8,600 |
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7,360 |
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Earnings per common share (dollars) |
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0.92 |
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0.78 |
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2.01 |
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1.73 |
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Earnings per common share - assuming dilution (dollars) |
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0.92 |
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0.78 |
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2.01 |
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1.73 |
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Dividends per common share (dollars) |
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0.82 |
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0.77 |
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1.59 |
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1.52 |
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The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.
3
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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Six Months Ended |
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June 30, |
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June 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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3,986 |
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3,264 |
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8,769 |
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7,354 |
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Other comprehensive income (net of income taxes) |
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Foreign exchange translation adjustment |
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(2,040) |
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1,674 |
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(2,844) |
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3,082 |
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Adjustment for foreign exchange translation (gain)/loss |
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included in net income |
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18 |
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234 |
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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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43 |
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(159) |
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(391) |
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(184) |
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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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229 |
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283 |
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466 |
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539 |
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Total other comprehensive income |
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(1,750) |
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2,032 |
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(2,583) |
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3,671 |
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Comprehensive income including noncontrolling interests |
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2,236 |
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5,296 |
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6,186 |
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11,025 |
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Comprehensive income attributable to |
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noncontrolling interests |
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(97) |
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169 |
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(106) |
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328 |
Comprehensive income attributable to ExxonMobil |
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2,333 |
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5,127 |
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6,292 |
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10,697 |
The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.
4
EXXON MOBIL CORPORATION |
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CONDENSED CONSOLIDATED BALANCE SHEET |
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(millions of dollars) |
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June 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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3,430 |
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3,177 |
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Notes and accounts receivable – net |
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26,993 |
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25,597 |
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Inventories |
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Crude oil, products and merchandise |
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14,373 |
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12,871 |
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Materials and supplies |
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4,110 |
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4,121 |
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Other current assets |
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1,649 |
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1,368 |
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Total current assets |
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50,555 |
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47,134 |
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Investments, advances and long-term receivables |
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39,691 |
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39,160 |
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Property, plant and equipment – net |
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248,209 |
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252,630 |
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Other assets, including intangibles – net |
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10,335 |
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9,767 |
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Total assets |
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348,790 |
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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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20,500 |
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17,930 |
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Accounts payable and accrued liabilities |
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38,490 |
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36,796 |
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Income taxes payable |
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3,457 |
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3,045 |
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Total current liabilities |
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62,447 |
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57,771 |
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Long-term debt |
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20,720 |
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24,406 |
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Postretirement benefits reserves |
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21,504 |
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21,132 |
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Deferred income tax liabilities |
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26,783 |
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26,893 |
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Long-term obligations to equity companies |
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4,575 |
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4,774 |
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Other long-term obligations |
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19,228 |
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19,215 |
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Total liabilities |
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155,257 |
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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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15,086 |
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14,656 |
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Earnings reinvested |
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416,418 |
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414,540 |
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Accumulated other comprehensive income |
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(18,609) |
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(16,262) |
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Common stock held in treasury |
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(3,785 million shares at June 30, 2018 and |
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3,780 million shares at December 31, 2017) |
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(225,673) |
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(225,246) |
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ExxonMobil share of equity |
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187,222 |
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187,688 |
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Noncontrolling interests |
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6,311 |
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6,812 |
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Total equity |
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193,533 |
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194,500 |
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Total liabilities and equity |
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348,790 |
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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.
5
EXXON MOBIL CORPORATION |
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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS |
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(millions of dollars) |
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Six Months Ended |
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June 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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8,769 |
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7,354 |
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Depreciation and depletion |
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9,059 |
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9,171 |
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Changes in operational working capital, excluding cash and debt |
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(982) |
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(228) |
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All other items – net |
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(547) |
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(1,177) |
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Net cash provided by operating activities |
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16,299 |
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15,120 |
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Cash flows from investing activities |
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Additions to property, plant and equipment |
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(8,276) |
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(5,988) |
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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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1,748 |
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841 |
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Additional investments and advances |
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(704) |
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(1,793) |
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Other investing activities including collection of advances |
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277 |
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301 |
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Net cash used in investing activities |
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(6,955) |
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(6,639) |
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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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(4,256) |
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(2,722) |
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Additions/(reductions) in commercial paper, and debt with three |
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months or less maturity (1) |
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2,902 |
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(321) |
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Cash dividends to ExxonMobil shareholders |
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(6,793) |
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(6,423) |
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Cash dividends to noncontrolling interests |
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(135) |
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(91) |
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Changes in noncontrolling interests |
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(275) |
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(29) |
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Common stock acquired |
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(429) |
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(514) |
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Net cash used in financing activities |
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(8,986) |
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(8,305) |
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Effects of exchange rate changes on cash |
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(105) |
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209 |
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Increase/(decrease) in cash and cash equivalents |
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253 |
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385 |
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Cash and cash equivalents at beginning of period |
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3,177 |
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3,657 |
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Cash and cash equivalents at end of period |
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3,430 |
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4,042 |
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Supplemental Disclosures |
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Income taxes paid |
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4,426 |
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3,247 |
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Cash interest paid |
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|
477 |
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|
587 |
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2017 Noncash Transactions
In the first six months of 2017, the Corporation completed the acquisitions of InterOil Corporation and of companies that own certain oil and gas properties in the Permian Basin and other assets. These transactions included a significant 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 $0.9 billion in 2018 and a net addition of $0.2 billion in 2017. The gross amount of commercial paper with a maturity of over three months issued was $2.2 billion in both 2018 and 2017, while the gross amount repaid was $1.3 billion in 2018 and $2.0 billion in 2017.
The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.
6
|
EXXON MOBIL CORPORATION |
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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY |
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(millions of dollars) |
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|
|
|
|
|
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 |
|
|
467 |
|
|
- |
|
|
- |
|
|
- |
|
|
467 |
|
|
- |
|
|
467 |
||
|
Other |
|
|
(85) |
|
|
- |
|
|
- |
|
|
- |
|
|
(85) |
|
|
(53) |
|
|
(138) |
||
|
Net income for the period |
|
|
- |
|
|
7,360 |
|
|
- |
|
|
- |
|
|
7,360 |
|
|
(6) |
|
|
7,354 |
||
|
Dividends |
|
|
- |
|
|
(6,423) |
|
|
- |
|
|
- |
|
|
(6,423) |
|
|
(91) |
|
|
(6,514) |
||
|
Other comprehensive income |
|
|
- |
|
|
- |
|
|
3,337 |
|
|
- |
|
|
3,337 |
|
|
334 |
|
|
3,671 |
||
|
Acquisitions, at cost |
|
|
- |
|
|
- |
|
|
- |
|
|
(595) |
|
|
(595) |
|
|
(29) |
|
|
(624) |
||
|
Issued for acquisitions |
|
|
2,078 |
|
|
- |
|
|
- |
|
|
5,711 |
|
|
7,789 |
|
|
- |
|
|
7,789 |
||
|
Dispositions |
|
|
- |
|
|
- |
|
|
- |
|
|
3 |
|
|
3 |
|
|
- |
|
|
3 |
||
Balance as of June 30, 2017 |
|
|
14,617 |
|
|
408,768 |
|
|
(18,902) |
|
|
(225,305) |
|
|
179,178 |
|
|
6,660 |
|
|
185,838 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
436 |
|
|
- |
|
|
- |
|
|
- |
|
|
436 |
|
|
- |
|
|
436 |
||
|
Other |
|
|
(6) |
|
|
- |
|
|
- |
|
|
- |
|
|
(6) |
|
|
(7) |
|
|
(13) |
||
|
Net income for the period |
|
|
- |
|
|
8,600 |
|
|
- |
|
|
- |
|
|
8,600 |
|
|
169 |
|
|
8,769 |
||
|
Dividends |
|
|
- |
|
|
(6,793) |
|
|
- |
|
|
- |
|
|
(6,793) |
|
|
(135) |
|
|
(6,928) |
||
|
Cumulative effect of accounting |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
change |
|
|
- |
|
|
71 |
|
|
(39) |
|
|
- |
|
|
32 |
|
|
15 |
|
|
47 |
|
Other comprehensive income |
|
|
- |
|
|
- |
|
|
(2,308) |
|
|
- |
|
|
(2,308) |
|
|
(275) |
|
|
(2,583) |
||
|
Acquisitions, at cost |
|
|
- |
|
|
- |
|
|
- |
|
|
(429) |
|
|
(429) |
|
|
(268) |
|
|
(697) |
||
|
Dispositions |
|
|
- |
|
|
- |
|
|
- |
|
|
2 |
|
|
2 |
|
|
- |
|
|
2 |
||
Balance as of June 30, 2018 |
|
|
15,086 |
|
|
416,418 |
|
|
(18,609) |
|
|
(225,673) |
|
|
187,222 |
|
|
6,311 |
|
|
193,533 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2018 |
|
|
|
|
Six Months Ended June 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 June 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.
7
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.
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 June 30, 2018 and the carrying value of equity securities without readily determinable fair values at June 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 second quarter and $200 million for the first six 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.
8
|
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
|
June 30, 2017 |
|
June 30, 2017 |
||||||||
|
|
|
As Reported |
|
Change |
|
As Adjusted |
|
As Reported |
|
Change |
|
As Adjusted |
|
|
|
(millions of dollars) |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production and manufacturing expenses |
8,407 |
|
(347) |
|
8,060 |
|
16,252 |
|
(626) |
|
15,626 |
||
Selling, general and administrative expenses |
2,628 |
|
(72) |
|
2,556 |
|
5,227 |
|
(166) |
|
5,061 |
||
Non-service pension and postretirement benefit expense |
- |
|
419 |
|
419 |
|
- |
|
792 |
|
792 |
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. The Corporation acquired lease accounting software to facilitate implementation, and is currently installing, 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
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.
The Corporation and certain of its consolidated subsidiaries were contingently liable at June 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 June 30, 2018 |
|
|
||||||
|
|
|
|
|
|
Equity |
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
Company |
|
|
Third Party |
|
|
|
|
|
|
|
|
|
|
|
Obligations (1) |
|
|
Obligations |
|
|
Total |
|
|
|
|
|
|
|
|
(millions of dollars) |
|
|
||||||
|
Guarantees |
|
|
|
|
|
|
|
|
|
|
|
||
|
|
Debt-related |
|
|
408 |
|
|
58 |
|
|
466 |
|
|
|
|
|
Other |
|
|
1,188 |
|
|
4,678 |
|
|
5,866 |
|
|
|
|
|
|
Total |
|
|
1,596 |
|
|
4,736 |
|
|
6,332 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) ExxonMobil share |
|
|
|
|
|
|
|
|
|
|
|
9
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 retained an award for $260 million (including accrued interest). In accordance with an agreement between ExxonMobil and Venezuela the $260 million has been fully paid. 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 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 Nigerian federal high court in order to preserve their ability to seek enforcement of the PSC in the courts if necessary. Following dismissal by this court, the Contractors appealed to the Nigerian Court of Appeal in June 2016. In October 2014, the Contractors filed suit in the United States District Court for the Southern District of New York 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.
10
4. Other Comprehensive Income Information
|
|
|
|
|
|
Cumulative |
|
|
Post- |
|
|
|
|
|
|
|
|
|
Foreign |
|
|
retirement |
|
|
|
|
|
|
|
|
|
Exchange |
|
|
Benefits |
|
|
|
|
ExxonMobil Share of Accumulated Other |
|
|
Translation |
|
|
Reserves |
|
|
|
||
|
Comprehensive Income |
|
|
Adjustment |
|
|
Adjustment |
|
|
Total |
||
|
|
|
|
|
|
(millions of dollars) |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2016 |
|
|
(14,501) |
|
|
(7,738) |
|
|
(22,239) |
||
|
Current period change excluding amounts reclassified |
|
|
|
|
|
|
|
|
|
||
|
|
from accumulated other comprehensive income |
|
|
2,849 |
|
|
(172) |
|
|
2,677 |
|
|
Amounts reclassified from accumulated other |
|
|
|
|
|
|
|
|
|
||
|
|
comprehensive income |
|
|
140 |
|
|
520 |
|
|
660 |
|
|
Total change in accumulated other comprehensive income |
|
|
2,989 |
|
|
348 |
|
|
3,337 |
||
|
Balance as of June 30, 2017 |
|
|
(11,512) |
|
|
(7,390) |
|
|
(18,902) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2017 |
|
|
(9,482) |
|
|
(6,780) |
|
|
(16,262) |
||
|
Current period change excluding amounts reclassified |
|
|
|
|
|
|
|
|
|
||
|
|
from accumulated other comprehensive income |
|
|
(2,573) |
|
|
(409) |
|
|
(2,982) |
|
|
Amounts reclassified from accumulated other |
|
|
|
|
|
|
|
|
|
||
|
|
comprehensive income |
|
|
186 |
|
|
449 |
|
|
635 |
|
|
Total change in accumulated other comprehensive income |
|
|
(2,387) |
|
|
40 |
|
|
(2,347) |
||
|
Balance as of June 30, 2018 |
|
|
(11,869) |
|
|
(6,740) |
|
|
(18,609) |
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
||||||
|
Amounts Reclassified Out of Accumulated Other |
|
|
June 30, |
|
|
June 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) |
(18) |
|
|
(234) |
|
|
(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) |
(290) |
|
|
(406) |
|
|
(610) |
|
|
(765) |
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
||||||
|
Income Tax (Expense)/Credit For |
|
|
June 30, |
|
|
June 30, |
||||||||
|
Components of Other Comprehensive Income |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
||
|
|
|
|
|
(millions of dollars) |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange translation adjustment |
|
|
5 |
|
|
(8) |
|
|
5 |
|
|
(26) |
||
|
Postretirement benefits reserves adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
(excluding amortization) |
|
|
(58) |
|
|
75 |
|
|
66 |
|
|
80 |
|
|
Amortization and settlement of postretirement benefits reserves |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
adjustment included in net periodic benefit costs |
|
|
(61) |
|
|
(123) |
|
|
(144) |
|
|
(226) |
|
|
Total |
|
|
(114) |
|
|
(56) |
|
|
(73) |
|
|
(172) |
11
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
||||||
|
|
|
|
|
June 30, |
|
|
June 30, |
||||||
|
|
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share |
|
|
|
|
|
|
|
|
|
|
|
||
|
Net income attributable to ExxonMobil (millions of dollars) |
|
3,950 |
|
|
3,350 |
|
|
8,600 |
|
|
7,360 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Weighted average number of common shares |
|
|
|
|
|
|
|
|
|
|
|
||
|
|
outstanding (millions of shares) |
|
4,271 |
|
|
4,271 |
|
|
4,270 |
|
|
4,244 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share (dollars) (1) |
|
0.92 |
|
|
0.78 |
|
|
2.01 |
|
|
1.73 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The calculation of earnings per common share and earnings per common share – assuming dilution are the same in each period shown.
6. Pension and Other Postretirement Benefits
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
||||||
|
|
|
|
|
|
|
June 30, |
|
|
June 30, |
||||||
|
|
|
|
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of dollars) |
||||||||||
|
Components of net benefit cost |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
Pension Benefits - U.S. |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
Service cost |
|
|
204 |
|
|
186 |
|
|
413 |
|
|
383 |
|
|
|
|
Interest cost |
|
|
181 |
|
|
200 |
|
|
361 |
|
|
399 |
|
|
|
|
Expected return on plan assets |
|
|
(181) |
|
|
(194) |
|
|
(363) |
|
|
(388) |
|
|
|
|
Amortization of actuarial loss/(gain) and prior |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
service cost |
|
|
92 |
|
|
112 |
|
|
183 |
|
|
222 |
|
|
|
Net pension enhancement and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
curtailment/settlement cost |
|
|
63 |
|
|
158 |
|
|
126 |
|
|
263 |
|
|
|
Net benefit cost |
|
|
359 |
|
|
462 |
|
|
720 |
|
|
879 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits - Non-U.S. |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
Service cost |
|
|
154 |
|
|
145 |
|
|
312 |
|
|
290 |
|
|
|
|
Interest cost |
|
|
186 |
|
|
189 |
|
|
386 |
|
|
376 |
|
|
|
|
Expected return on plan assets |
|
|
(237) |
|
|
(244) |
|
|
(489) |
|
|
(483) |
|
|
|
|
Amortization of actuarial loss/(gain) and prior |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
service cost |
|
|
113 |
|
|
126 |
|
|
231 |
|
|
253 |
|
|
|
Net pension enhancement and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
curtailment/settlement cost |
|
|
- |
|
|
- |
|
|
33 |
|
|
(5) |
|
|
|
Net benefit cost |
|
|
216 |
|
|
216 |
|
|
473 |
|
|
431 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Postretirement Benefits |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
Service cost |
|
|
35 |
|
|
30 |
|
|
71 |
|
|
56 |
|
|
|
|
Interest cost |
|
|
76 |
|
|
67 |
|
|
151 |
|
|
139 |
|
|
|
|
Expected return on plan assets |
|
|
(6) |
|
|
(5) |
|
|
(12) |
|
|
(11) |
|
|
|
|
Amortization of actuarial loss/(gain) and prior |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
service cost |
|