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, 2015

or

 

  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________to________

 

Commission File Number 1-2256

 

EXXON MOBIL CORPORATION

(Exact name of registrant as specified in its charter)

 

NEW JERSEY

 

13-5409005

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification Number

 

5959 LAS COLINAS BOULEVARD, IRVING, TEXAS 75039-2298

(Address of principal executive offices) (Zip Code)

 

(972) 444-1000

(Registrant's telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes   No    

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

  

Non-accelerated filer

 

Smaller reporting company

 

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, 2015

Common stock, without par value

 

 4,181,108,290  

  

 


 

EXXON MOBIL CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2015

 

TABLE OF CONTENTS

 

 

PART I.  FINANCIAL INFORMATION

 

 

 

Item 1.       Financial Statements

 

 

     Condensed Consolidated Statement of Income

Three months ended March 31, 2015 and 2014

 

3

     Condensed Consolidated Statement of Comprehensive Income

Three months ended March 31, 2015 and 2014

 

4

     Condensed Consolidated Balance Sheet

As of March 31, 2015 and December 31, 2014

5

 

 

     Condensed Consolidated Statement of Cash Flows

          Three months ended March 31, 2015 and 2014

 

6

     Condensed Consolidated Statement of Changes in Equity

          Three months ended March 31, 2015 and 2014

 

7

     Notes to Condensed Consolidated Financial Statements

 

8

Item 2.       Management's Discussion and Analysis of Financial

                     Condition and Results of Operations

 

14

Item 3.       Quantitative and Qualitative Disclosures About Market Risk

 

19

Item 4.       Controls and Procedures

 

19

 

 

PART II.  OTHER INFORMATION

 

Item 1.       Legal Proceedings

 

20

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

 

21

Item 6.       Exhibits

 

21

Signature

 

22

Index to Exhibits

 

23

  


2  


 

PART I.  FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

 

 

 

Item 1. Financial Statements

 

 

 

 

 

 

 

 

 

 

 

EXXON MOBIL CORPORATION

 

CONDENSED CONSOLIDATED STATEMENT OF INCOME

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

2015

 

 

2014

 

Revenues and other income

 

 

 

 

 

 

 

 

Sales and other operating revenue (1) 

 

 

64,758

 

 

101,312

 

 

Income from equity affiliates

 

 

2,261

 

 

4,108

 

 

Other income

 

 

599

 

 

905

 

 

 

Total revenues and other income

 

 

67,618

 

 

106,325

 

Costs and other deductions

 

 

 

 

 

 

 

 

Crude oil and product purchases

 

 

32,698

 

 

57,866

 

 

Production and manufacturing expenses

 

 

8,730

 

 

10,088

 

 

Selling, general and administrative expenses

 

 

2,713

 

 

3,132

 

 

Depreciation and depletion

 

 

4,300

 

 

4,192

 

 

Exploration expenses, including dry holes

 

 

311

 

 

317

 

 

Interest expense

 

 

88

 

 

66

 

 

Sales-based taxes (1) 

 

 

5,530

 

 

7,416

 

 

Other taxes and duties

 

 

6,613

 

 

8,021

 

 

 

Total costs and other deductions

 

 

60,983

 

 

91,098

 

Income before income taxes

 

 

6,635

 

 

15,227

 

 

Income taxes

 

 

1,560

 

 

5,857

 

Net income including noncontrolling interests

 

 

5,075

 

 

9,370

 

 

Net income attributable to noncontrolling interests

 

 

135

 

 

270

 

Net income attributable to ExxonMobil

 

 

4,940

 

 

9,100

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

Earnings per common share (dollars) 

 

 

1.17

 

 

2.10

 

  

 

 

 

 

 

 

 

 

Earnings per common share - assuming dilution (dollars) 

 

 

1.17

 

 

2.10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends per common share (dollars) 

 

 

0.69

 

 

0.63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Sales-based taxes included in sales and other operating revenue

 

5,530

 

 

7,416

 



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


3  


 

EXXON MOBIL CORPORATION

 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

 

 

 

2015

 

 

2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income including noncontrolling interests

 

 

 

5,075

 

 

9,370

 

 

Other comprehensive income (net of income taxes)

 

 

 

 

 

 

 

 

 

 

Foreign exchange translation adjustment

 

 

 

(5,353)

 

 

(786)

 

 

 

Adjustment for foreign exchange translation (gain)/loss included in net income

 

 

 -  

 

 

82

 

 

 

Postretirement benefits reserves adjustment (excluding amortization)

 

 

813

 

 

(84)

 

 

 

Amortization and settlement of postretirement benefits reserves adjustment

 

 

 

 

 

 

 

 

 

 

 

included in net periodic benefit costs

 

 

 

351

 

 

316

 

 

 

Unrealized change in fair value of stock investments

 

 

2

 

 

(54)

 

 

 

Realized (gain)/loss from stock investments included in net income

 

 

8

 

 

 -  

 

 

 

 

Total other comprehensive income

 

 

 

(4,179)

 

 

(526)

 

 

Comprehensive income including noncontrolling interests

 

 

896

 

 

8,844

 

 

 

Comprehensive income attributable to noncontrolling interests

 

 

(406)

 

 

59

 

 

Comprehensive income attributable to ExxonMobil

 

 

 

1,302

 

 

8,785

 



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


4  


 

EXXON MOBIL CORPORATION

 

CONDENSED CONSOLIDATED BALANCE SHEET

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mar. 31,

 

 

Dec. 31,

 

 

 

 

 

 

 

2015

 

 

2014

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

5,184

 

 

4,616

 

 

 

Cash and cash equivalents – restricted

 

 

43

 

 

42

 

 

 

Notes and accounts receivable – net

 

 

25,031

 

 

28,009

 

 

 

Inventories

 

 

 

 

 

 

 

 

 

 

Crude oil, products and merchandise

 

 

11,792

 

 

12,384

 

 

 

 

Materials and supplies

 

 

4,310

 

 

4,294

 

 

 

Other current assets

 

 

4,298

 

 

3,565

 

 

 

 

Total current assets

 

 

50,658

 

 

52,910

 

 

Investments, advances and long-term receivables

 

 

34,471

 

 

35,239

 

 

Property, plant and equipment – net

 

 

249,497

 

 

252,668

 

 

Other assets, including intangibles – net

 

 

8,335

 

 

8,676

 

 

 

 

Total assets

 

 

342,961

 

 

349,493

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Notes and loans payable

 

 

13,277

 

 

17,468

 

 

 

Accounts payable and accrued liabilities

 

 

38,144

 

 

42,227

 

 

 

Income taxes payable

 

 

4,512

 

 

4,938

 

 

 

 

Total current liabilities

 

 

55,933

 

 

64,633

 

 

Long-term debt

 

 

19,494

 

 

11,653

 

 

Postretirement benefits reserves

 

 

24,632

 

 

25,802

 

 

Deferred income tax liabilities

 

 

38,935

 

 

39,230

 

 

Long-term obligations to equity companies

 

 

5,519

 

 

5,325

 

 

Other long-term obligations

 

 

21,002

 

 

21,786

 

 

 

 

Total liabilities

 

 

165,515

 

 

168,429

 

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Common stock without par value

 

 

 

 

 

 

 

 

 

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

 

 

11,006

 

 

10,792

 

 

Earnings reinvested

 

 

410,414

 

 

408,384

 

 

Accumulated other comprehensive income

 

 

(22,595)

 

 

(18,957)

 

 

Common stock held in treasury

 

 

 

 

 

 

 

 

 

(3,838 million shares at March 31, 2015 and

 

 

 

 

 

 

 

 

   3,818 million shares at December 31, 2014)

 

 

(227,598)

 

 

(225,820)

 

 

 

 

ExxonMobil share of equity

 

 

171,227

 

 

174,399

 

 

Noncontrolling interests

 

 

6,219

 

 

6,665

 

 

 

 

Total equity

 

 

177,446

 

 

181,064

 

 

 

 

Total liabilities and equity

 

 

342,961

 

 

349,493

 



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


5  


 

EXXON MOBIL CORPORATION

 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

 

2015

 

 

2014

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net income including noncontrolling interests

 

 

5,075

 

 

9,370

 

 

Depreciation and depletion

 

 

4,300

 

 

4,192

 

 

Changes in operational working capital, excluding cash and debt

 

 

(509)

 

 

2,452

 

 

All other items – net

 

 

(868)

 

 

(911)

 

 

 

 

Net cash provided by operating activities

 

 

7,998

 

 

15,103

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Additions to property, plant and equipment

 

 

(6,844)

 

 

(7,328)

 

 

Proceeds associated with sales of subsidiaries, property, plant and

 

 

 

 

 

 

 

 

 

equipment, and sales and returns of investments

 

 

484

 

 

1,111

 

 

Additional investments and advances

 

 

(282)

 

 

(457)

 

 

Other investing activities – net

 

 

290

 

 

368

 

 

 

 

Net cash used in investing activities

 

 

(6,352)

 

 

(6,306)

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Additions to long-term debt

 

 

8,000

 

 

5,500

 

 

Reductions in long-term debt

 

 

(10)

 

 

 -  

 

 

Additions/(reductions) in short-term debt – net

 

 

(157)

 

 

(446)

 

 

Additions/(reductions) in debt with three months or less maturity

 

 

(3,956)

 

 

(6,222)

 

 

Cash dividends to ExxonMobil shareholders

 

 

(2,910)

 

 

(2,732)

 

 

Cash dividends to noncontrolling interests

 

 

(40)

 

 

(58)

 

 

Common stock acquired

 

 

(1,781)

 

 

(3,860)

 

 

Common stock sold

 

 

 -  

 

 

2

 

 

 

 

Net cash used in financing activities

 

 

(854)

 

 

(7,816)

 

Effects of exchange rate changes on cash

 

 

(224)

 

 

(24)

 

Increase/(decrease) in cash and cash equivalents

 

 

568

 

 

957

 

Cash and cash equivalents at beginning of period

 

 

4,616

 

 

4,644

 

Cash and cash equivalents at end of period

 

 

5,184

 

 

5,601

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosures

 

 

 

 

 

 

 

 

Income taxes paid

 

 

1,226

 

 

4,145

 

 

Cash interest paid

 

 

170

 

 

87

 



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


6  


 

 

EXXON MOBIL CORPORATION

 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ExxonMobil Share of Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

Common

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compre-

 

Stock

 

ExxonMobil

 

Non-

 

 

 

 

 

 

 

 

Common

 

Earnings

 

hensive

 

Held in

 

Share of

 

controlling

 

Total

 

 

 

 

 

Stock

 

Reinvested

 

Income

 

Treasury

 

Equity

 

Interests

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2013

 

 

10,077

 

 

387,432

 

 

(10,725)

 

 

(212,781)

 

 

174,003

 

 

6,492

 

 

180,495

 

Amortization of stock-based awards

 

 

201

 

 

 -  

 

 

 -  

 

 

 -  

 

 

201

 

 

 -  

 

 

201

 

Tax benefits related to stock-based

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

awards

 

 

3

 

 

 -  

 

 

 -  

 

 

 -  

 

 

3

 

 

 -  

 

 

3

 

Other

 

 

(5)

 

 

 -  

 

 

 -  

 

 

 -  

 

 

(5)

 

 

 -  

 

 

(5)

 

Net income for the period

 

 

 -  

 

 

9,100

 

 

 -  

 

 

 -  

 

 

9,100

 

 

270

 

 

9,370

 

Dividends – common shares

 

 

 -  

 

 

(2,732)

 

 

 -  

 

 

 -  

 

 

(2,732)

 

 

(58)

 

 

(2,790)

 

Other comprehensive income

 

 

 -  

 

 

 -  

 

 

(315)

 

 

 -  

 

 

(315)

 

 

(211)

 

 

(526)

 

Acquisitions, at cost

 

 

 -  

 

 

 -  

 

 

 -  

 

 

(3,860)

 

 

(3,860)

 

 

 -  

 

 

(3,860)

 

Dispositions

 

 

 -  

 

 

 -  

 

 

 -  

 

 

3

 

 

3

 

 

 -  

 

 

3

Balance as of March 31, 2014

 

 

10,276

 

 

393,800

 

 

(11,040)

 

 

(216,638)

 

 

176,398

 

 

6,493

 

 

182,891

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2014

 

 

10,792

 

 

408,384

 

 

(18,957)

 

 

(225,820)

 

 

174,399

 

 

6,665

 

 

181,064

 

Amortization of stock-based awards

 

 

213

 

 

 -  

 

 

 -  

 

 

 -  

 

 

213

 

 

 -  

 

 

213

 

Tax benefits related to stock-based

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

awards

 

 

3

 

 

 -  

 

 

 -  

 

 

 -  

 

 

3

 

 

 -  

 

 

3

 

Other

 

 

(2)

 

 

 -  

 

 

 -  

 

 

 -  

 

 

(2)

 

 

 -  

 

 

(2)

 

Net income for the period

 

 

 -  

 

 

4,940

 

 

 -  

 

 

 -  

 

 

4,940

 

 

135

 

 

5,075

 

Dividends – common shares

 

 

 -  

 

 

(2,910)

 

 

 -  

 

 

 -  

 

 

(2,910)

 

 

(40)

 

 

(2,950)

 

Other comprehensive income

 

 

 -  

 

 

 -  

 

 

(3,638)

 

 

 -  

 

 

(3,638)

 

 

(541)

 

 

(4,179)

 

Acquisitions, at cost

 

 

 -  

 

 

 -  

 

 

 -  

 

 

(1,781)

 

 

(1,781)

 

 

 -  

 

 

(1,781)

 

Dispositions

 

 

 -  

 

 

 -  

 

 

 -  

 

 

3

 

 

3

 

 

 -  

 

 

3

Balance as of March 31, 2015

 

 

11,006

 

 

410,414

 

 

(22,595)

 

 

(227,598)

 

 

171,227

 

 

6,219

 

 

177,446

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2015

 

 

 

 

Three Months Ended March 31, 2014

 

 

 

 

 

 

 

 

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

 

 

(3,818)

 

 

4,201

 

 

 

 

 

8,019

 

 

(3,684)

 

 

4,335

 

 

 

Acquisitions

 

 

 -  

 

 

(20)

 

 

(20)

 

 

 

 

 

 -  

 

 

(41)

 

 

(41)

 

 

 

Dispositions

 

 

 -  

 

 

 -  

 

 

 -  

 

 

 

 

 

 -  

 

 

 -  

 

 

 -  

 

Balance as of March 31

 

 

8,019

 

 

(3,838)

 

 

4,181

 

 

 

 

 

8,019

 

 

(3,725)

 

 

4,294



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 2014 Annual Report on Form 10-K. In the opinion of the Corporation, the information furnished herein reflects all known accruals and adjustments necessary for a fair statement of the results for the periods reported herein. All such adjustments are of a normal recurring nature. Prior data has been reclassified in certain cases to conform to the current presentation basis.

 

The Corporation's exploration and production activities are accounted for under the "successful efforts" method.

 

2.     Recently Issued Accounting Standard

 

In May 2014, the Financial Accounting Standards Board issued a new standard, Revenue from Contracts with Customers. The standard establishes a single revenue recognition model for all contracts with customers, eliminates industry specific requirements, and expands disclosure requirements. The standard is required to be adopted beginning January 1, 2017. ExxonMobil is evaluating the standard and its effect on the Corporation’s financial statements. 

 

3.      Litigation and Other Contingencies

 

Litigation

 

A variety of claims have been made against ExxonMobil and certain of its consolidated subsidiaries in a number of pending lawsuits. Management has regular litigation reviews, including updates from corporate and outside counsel, to assess the need for accounting recognition or disclosure of these contingencies. The Corporation accrues an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. The Corporation does not record liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote. For contingencies where an unfavorable outcome is reasonably possible and which are significant, the Corporation discloses the nature of the contingency and, where feasible, an estimate of the possible loss. For purposes of our contingency disclosures, “significant” includes material matters as well as other matters which management believes should be disclosed. ExxonMobil will continue to defend itself vigorously in these matters. Based on a consideration of all relevant facts and circumstances, the Corporation does not believe the ultimate outcome of any currently pending lawsuit against ExxonMobil will have a material adverse effect upon the Corporation's operations, financial condition, or financial statements taken as a whole.

 

Other Contingencies

 

The Corporation and certain of its consolidated subsidiaries were contingently liable at March 31, 2015, 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, 2015

 

 

 

 

 

 

 

 

Equity

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

Company

 

 

Third Party

 

 

 

 

 

 

 

 

 

 

 

Obligations (1) 

 

 

Obligations

 

 

Total

 

 

 

 

 

 

 

 

(millions of dollars)

 

 

 

Guarantees

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt-related

 

 

88

 

 

38

 

 

126

 

 

 

 

Other

 

 

3,141

 

 

3,733

 

 

6,874

 

 

 

 

 

Total

 

 

3,229

 

 

3,771

 

 

7,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) ExxonMobil share

 

 

 

 

 

 

 

 

 

 

 


8  


 

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 Corporation's outstanding unconditional purchase obligations at March 31, 2015, were similar to those at the prior year-end period. Unconditional purchase obligations as defined by accounting standards are those long-term commitments that are noncancelable or cancelable only under certain conditions, and that third parties have used to secure financing for the facilities that will provide the contracted goods or services.

 

The operations and earnings of the Corporation and its affiliates throughout the world have been, and may in the future be, affected from time to time in varying degree by political developments and laws and regulations, such as forced divestiture of assets; restrictions on production, imports and exports; price controls; tax increases and retroactive tax claims; expropriation of property; cancellation of contract rights and environmental regulations. Both the likelihood of such occurrences and their overall effect upon the Corporation vary greatly from country to country and are not predictable. 

 

In accordance with a nationalization decree issued by Venezuela’s president in February 2007, by May 1, 2007, a subsidiary of the Venezuelan National Oil Company (PdVSA) assumed the operatorship of the Cerro Negro Heavy Oil Project. This Project had been operated and owned by ExxonMobil affiliates holding a 41.67 percent ownership interest in the Project. The decree also required conversion of the Cerro Negro Project into a “mixed enterprise” and an increase in PdVSA’s or one of its affiliate’s ownership interest in the Project, with the stipulation that if ExxonMobil refused to accept the terms for the formation of the mixed enterprise within a specified period of time, the government would “directly assume the activities” carried out by the joint venture. ExxonMobil refused to accede to the terms proffered by the government, and on June 27, 2007, the government expropriated ExxonMobil’s 41.67 percent interest in the Cerro Negro Project.

 

On September 6, 2007, affiliates of ExxonMobil filed a Request for Arbitration with the International Centre for Settlement of Investment Disputes (ICSID). The ICSID Tribunal issued a decision on June 10, 2010, finding that it had jurisdiction to proceed on the basis of the Netherlands-Venezuela Bilateral Investment Treaty. On October 9, 2014, the ICSID Tribunal issued its final award finding in favor of the ExxonMobil affiliates and awarding $1.6 billion as of the date of expropriation, June 27, 2007, and interest from that date at 3.25% compounded annually until the date of payment in full. The Tribunal also noted that one of the Cerro Negro Project agreements provides a mechanism to prevent double recovery between the ICSID award and all or part of an earlier award of $908 million to an ExxonMobil affiliate, Mobil Cerro Negro, Ltd., against PdVSA and a PdVSA affiliate, PdVSA CN, in an arbitration under the rules of the International Chamber of Commerce (ICC).

 

Judgment was entered on the ICSID award by the United States District Court for the Southern District of New York on October 10, 2014. The Republic of Venezuela filed a motion to vacate that judgment on procedural grounds on October 14, 2014, and later, a motion to modify the judgment by reducing the rate of interest to be paid on the ICSID award from the entry of the court’s judgment, until the date of payment. The court denied the Republic of Venezuela’s two motions on February 13, 2015, and March 4, 2015, respectively. The Republic of Venezuela filed a notice of appeal of the court’s actions on the two motions on March 9, 2015.

 

On October 23, 2014, the Republic of Venezuela filed with ICSID an application to revise the ICSID award such that it requires repayment of the value of the ICC award to PdVSA at the same time as payment is made to the ExxonMobil affiliates for the ICSID award and that provision be made for interest on the amount to be repaid. Thereafter, pursuant to ICSID arbitration rules, the ICSID award was stayed pending further action of the Tribunal. On October 27, 2014, ExxonMobil filed a response with ICSID that contests the application for revision of that award on both factual and jurisdictional grounds. On February 2, 2015, the Republic of Venezuela filed an application to annul the ICSID award. The application alleges that, in issuing the ICSID award, the Tribunal exceeded its powers, failed to state reasons on which the ICSID award was based, and departed from a fundamental rule of procedure. Upon registration of this application with ICSID on February 9, 2015, a further stay of the ICSID award was entered.

 

The federal court in New York has stayed its judgment until such time as the stays of the ICSID award entered following the Government of Venezuela’s filing of its two applications have been lifted. 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.


9  


 

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 have appealed that judgment. 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. 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. 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

 

 

Unrealized

 

 

 

 

 

 

 

 

 

Exchange

 

 

Benefits

 

 

Change in

 

 

 

 

ExxonMobil Share of Accumulated Other

 

 

Translation

 

 

Reserves

 

 

Stock

 

 

 

 

Comprehensive Income

 

 

Adjustment

 

 

Adjustment

 

 

Investments

 

 

Total

 

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2013

 

 

(846)

 

 

(9,879)

 

 

 -  

 

 

(10,725)

 

Current period change excluding amounts reclassified

 

 

 

 

 

 

 

 

 

 

 

 

 

 

from accumulated other comprehensive income

 

 

(555)

 

 

(93)

 

 

(54)

 

 

(702)

 

Amounts reclassified from accumulated other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

comprehensive income

 

 

82

 

 

305

 

 

 -  

 

 

387

 

Total change in accumulated other comprehensive income

 

 

(473)

 

 

212

 

 

(54)

 

 

(315)

 

Balance as of March 31, 2014

 

 

(1,319)

 

 

(9,667)

 

 

(54)

 

 

(11,040)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2014

 

 

(5,952)

 

 

(12,945)

 

 

(60)

 

 

(18,957)

 

Current period change excluding amounts reclassified

 

 

 

 

 

 

 

 

 

 

 

 

 

 

from accumulated other comprehensive income

 

 

(4,784)

 

 

796

 

 

2

 

 

(3,986)

 

Amounts reclassified from accumulated other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

comprehensive income

 

 

 -  

 

 

340

 

 

8

 

 

348

 

Total change in accumulated other comprehensive income

 

 

(4,784)

 

 

1,136

 

 

10

 

 

(3,638)

 

Balance as of March 31, 2015

 

 

(10,736)

 

 

(11,809)

 

 

(50)

 

 

(22,595)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Amounts Reclassified Out of Accumulated Other

 

 

 

 

 

 

March 31,

 

Comprehensive Income - Before-tax Income/(Expense)

 

 

 

2015

 

 

2014

 

 

 

 

 

 

 

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

(Statement of Income line: Other income)

 

 

 

 -  

 

 

(82)

 

Amortization and settlement of postretirement benefits reserves

 

 

 

 

 

 

 

 

 

adjustment included in net periodic benefit costs (1) 

(511)

 

 

(451)

 

Realized change in fair value of stock investments included in net income

 

 

 

 

 

 

(Statement of Income line: Other income)

(12)

 

 

 -  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)   These accumulated other comprehensive income components are included in the computation of net periodic pension cost. (See Note 6 – Pension and Other Postretirement Benefits for additional details.)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Income Tax (Expense)/Credit For

 

 

 

 

 

 

 

 

March 31,

 

Components of Other Comprehensive Income

 

 

 

 

 

 

 

 

2015

 

 

2014

 

 

 

 

 

 

 

 

 

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange translation adjustment

 

 

 

 

 

 

 

 

90

 

 

(32)

 

Postretirement benefits reserves adjustment (excluding amortization)

 

 

(377)

 

 

50

 

Amortization and settlement of postretirement benefits reserves

 

 

 

 

 

 

 

 

adjustment included in net periodic benefit costs

 

 

(160)

 

 

(135)

 

Unrealized change in fair value of stock investments

 

 

(1)

 

 

29

 

Realized change in fair value of stock investments

 

 

 

 

 

 

 

 

included in net income

 

 

(4)

 

 

 -  

 

Total

 

 

 

 

 

 

 

 

(452)

 

 

(88)


11  


 

5.     Earnings Per Share

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

 

 

2015

 

 

2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to ExxonMobil (millions of dollars)

 

 

4,940

 

 

9,100

 

 

  

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding (millions of shares)

 

 

4,211

 

 

4,328

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share (dollars) (1)

 

 

 

1.17

 

 

2.10

 

 

 

 

 

 

 

 

 

 

 

 

 

(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,

 

 

 

 

 

 

 

 

2015

 

 

2014

 

 

 

 

 

 

 

 

(millions of dollars)

 

Components of net benefit cost

 

 

 

 

 

 

 

 

 

Pension Benefits - U.S.

 

 

 

 

 

 

 

 

 

 

Service cost

 

 

 

195

 

 

177

 

 

 

Interest cost

 

 

 

196

 

 

202

 

 

 

Expected return on plan assets

 

 

 

(207)

 

 

(200)

 

 

 

Amortization of actuarial loss/(gain) and prior service cost

 

 

138

 

 

104

 

 

 

Net pension enhancement and curtailment/settlement cost

 

 

117

 

 

112

 

 

 

Net benefit cost

 

 

 

439

 

 

395

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Benefits - Non-U.S.

 

 

 

 

 

 

 

 

 

 

Service cost

 

 

 

176

 

 

150

 

 

 

Interest cost

 

 

 

218

 

 

285

 

 

 

Expected return on plan assets

 

 

 

(278)

 

 

(298)

 

 

 

Amortization of actuarial loss/(gain) and prior service cost

 

 

211

 

 

192

 

 

 

Net benefit cost

 

 

 

327

 

 

329

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Postretirement Benefits

 

 

 

 

 

 

 

 

 

 

Service cost

 

 

 

37

 

 

37

 

 

 

Interest cost

 

 

 

90

 

 

92

 

 

 

Expected return on plan assets

 

 

 

(7)

 

 

(9)

 

 

 

Amortization of actuarial loss/(gain) and prior service cost

 

 

45

 

 

43

 

 

 

Net benefit cost

 

 

 

165

 

 

163

 

 

 

 

 

 

 

 

 

 

 

 


12  


 

7.     Financial Instruments

 

The fair value of financial instruments is determined by reference to observable market data and other valuation techniques as appropriate. The only category of financial instruments where the difference between fair value and recorded book value is notable is long-term debt. The estimated fair value of total long-term debt, excluding capitalized lease obligations, was $19,735  million at March 31, 2015, and $11,660  million at December 31, 2014, as compared to recorded book values of $19,155  million at March 31, 2015, and $11,278  million at December 31, 2014. The increase in the estimated fair value and book value of long-term debt reflects the Corporation’s issuance of $8.0 billion of long-term debt in the first quarter of 2015. The $8.0 billion of long-term debt is comprised of $500 million of floating-rate notes due in 2018, $500 million of floating-rate notes due in 2022, $1,600 million of 1.305% notes due in 2018, $1,500 million of 1.912% notes due in 2020, $1,150 million of 2.397% notes due in 2022, $1,750 million of 2.709% notes due in 2025, and $1,000 million of 3.567% notes due in 2045.

The fair value of long-term debt by hierarchy level at March 31, 2015, is: Level 1 $19,226 million; Level 2 $446 million; and Level 3 $63 million. Level 1 represents quoted prices in active markets. Level 2 includes debt whose fair value is based upon a publicly available index. Level 3 involves using internal data augmented by relevant market indicators if available.

 

8.     Disclosures about Segments and Related Information

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

 

2015

 

 

2014

 

Earnings After Income Tax

 

 

 

(millions of dollars)

 

 

Upstream

 

 

 

 

 

 

 

 

 

 

United States

 

 

 

(52)

 

 

1,244

 

 

 

Non-U.S.

 

 

 

2,907

 

 

6,539

 

 

Downstream

 

 

 

 

 

 

 

 

 

 

United States

 

 

 

567

 

 

623

 

 

 

Non-U.S.

 

 

 

1,100

 

 

190

 

 

Chemical

 

 

 

 

 

 

 

 

 

 

United States

 

 

 

605

 

 

679

 

 

 

Non-U.S.

 

 

 

377

 

 

368

 

 

All other

 

 

 

(564)

 

 

(543)

 

 

Corporate total

 

 

 

4,940

 

 

9,100

 

 

 

 

 

 

 

 

 

 

 

 

Sales and Other Operating Revenue (1) 

 

 

 

 

 

 

 

 

 

Upstream

 

 

 

 

 

 

 

 

 

 

United States

 

 

 

2,125

 

 

3,874

 

 

 

Non-U.S.

 

 

 

4,122

 

 

5,827

 

 

Downstream

 

 

 

 

 

 

 

 

 

 

United States

 

 

 

18,389

 

 

30,412

 

 

 

Non-U.S.

 

 

 

33,162

 

 

51,288

 

 

Chemical

 

 

 

 

 

 

 

 

 

 

United States

 

 

 

2,792

 

 

3,876

 

 

 

Non-U.S.

 

 

 

4,166

 

 

6,032

 

 

All other

 

 

 

2

 

 

3

 

 

Corporate total

 

 

 

64,758

 

 

101,312

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes sales-based taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intersegment Revenue

 

 

 

 

 

 

 

 

 

Upstream

 

 

 

 

 

 

 

 

 

 

United States

 

 

 

1,180

 

 

2,063

 

 

 

Non-U.S.

 

 

 

4,857

 

 

10,781

 

 

Downstream

 

 

 

 

 

 

 

 

 

 

United States

 

 

 

3,076

 

 

4,909

 

 

 

Non-U.S.

 

 

 

5,273

 

 

12,842

 

 

Chemical

 

 

 

 

 

 

 

 

 

 

United States

 

 

 

1,773

 

 

2,634

 

 

 

Non-U.S.

 

 

 

1,321

 

 

2,267

 

 

All other

 

 

 

68

 

 

67


13  


 

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)

 

 

2015

 

 

2014

 

 

 

 

(millions of dollars)

Upstream

 

 

 

 

 

 

 

United States

 

 

(52)

 

 

1,244

 

Non-U.S.

 

 

2,907

 

 

6,539

Downstream

 

 

 

 

 

 

 

United States

 

 

567

 

 

623

 

Non-U.S.

 

 

1,100

 

 

190

Chemical

 

 

 

 

 

 

 

United States

 

 

605

 

 

679

 

Non-U.S.

 

 

377

 

 

368

Corporate and financing

 

 

(564)

 

 

(543)

 

  Net Income attributable to ExxonMobil

 

 

4,940

 

 

9,100

 

 

 

 

 

 

 

Earnings per common share (dollars) 

 

 

1.17

 

 

2.10

Earnings per common share - assuming dilution (dollars)

 

1.17

 

 

2.10

 

 

 

 

 

 

 

 

 

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 2015 RESULTS

 

ExxonMobil’s first quarter 2015 earnings of $4.9 billion, or $1.17 per diluted share, demonstrate the value of the Company’s integrated businesses in a lower commodity price environment. Regardless of current market conditions, the Company remains focused on business fundamentals and competitive advantages that create long‑term shareholder value.

 

 

 

 

 

 

First Three Months

 

 

 

 

 

2015

 

 

2014

 

 

 

 

 

(millions of dollars)

Upstream earnings

 

 

 

 

 

 

 

United States

 

 

(52)

 

 

1,244

 

Non-U.S.

 

 

2,907

 

 

6,539

 

 

Total

 

 

2,855

 

 

7,783

 

Upstream earnings were $2,855 million in the first three months of 2015, down $4,928 million from the first quarter of 2014. Lower liquids and gas realizations decreased earnings by $5.5 billion. Higher volumes and mix effects increased earnings by $340 million, reflecting growth from new developments. All other items, including favorable tax effects, increased earnings by $250 million.

 

On an oil‑equivalent basis, production increased 2.3 percent from the first quarter of 2014. Liquids production totaled 2.3 million barrels per day, up 129,000 barrels per day, while natural gas production was 11.8 billion cubic feet per day, down 188 million cubic feet per day from 2014. Project ramp‑up and entitlement effects were partly offset by field decline and maintenance activities.

 

The U.S. Upstream operations recorded a loss of $52 million, down $1,296 million from the first quarter of 2014. Non-U.S. Upstream earnings were $2,907 million, down $3,632 million from the prior year.

 


14  


 

 

 

 

First Quarter

Upstream additional information

 

(thousands of barrels daily)

Volumes reconciliation (Oil-equivalent production) (1) 

 

 

 

 

2014

 

 

 

4,151

 

 

Entitlements - Net Interest

 

 

 

(35)

 

 

Entitlements - Price / Spend / Other

 

 

 

176

 

 

Quotas

 

 

 

 -  

 

 

Divestments

 

 

 

(38)

 

 

Growth / Other

 

 

 

(6)

 

2015

 

 

 

4,248

 

 

 

 

 

 

 

 

(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.

  


15  


 

 

 

 

 

 

First Three Months

 

 

 

 

 

2015

 

 

2014

 

 

 

 

 

(millions of dollars)

Downstream earnings

 

 

 

 

 

 

 

United States

 

 

567

 

 

623

 

Non-U.S.

 

 

1,100

 

 

190

 

 

Total

 

 

1,667

 

 

813

 

Downstream earnings were $1,667 million for the first three months of 2015, up $854 million from the first quarter of 2014. Stronger margins increased earnings by $1 billion. Volume and mix effects increased earnings by $70 million. All other items, primarily higher maintenance expense, decreased earnings by $260 million. Petroleum product sales of 5.8 million barrels per day were flat with the prior year’s first quarter.

 

Earnings from the U.S. Downstream were $567 million, down $56 million from the first quarter of 2014. Non-U.S. Downstream earnings of $1,100 million were $910 million higher than last year.

  

 

 

 

 

 

 

First Three Months

 

 

 

 

 

2015

 

 

2014

 

 

 

 

 

(millions of dollars)

Chemical earnings

 

 

 

 

 

 

 

United States

 

 

605

 

 

679

 

Non-U.S.

 

 

377

 

 

368

 

 

Total

 

 

982

 

 

1,047

 

Chemical earnings of $982 million for the first three months of 2015 were $65 million lower than the first quarter of 2014. Improved margins increased earnings by $240 million. Favorable volume mix effects increased earnings by $30 million. All other items, primarily unfavorable foreign exchange effects, decreased earnings by $340 million. First quarter prime product sales of 6.1 million metric tons were 59,000 metric tons lower than last year's first quarter.

 

 

 

 

 

 

First Three Months

 

 

 

 

 

2015

 

 

2014

 

 

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

Corporate and financing earnings

 

 

(564)

 

 

(543)

 

Corporate and financing expenses were $564 million for the first three months of 2015, essentially flat with the first quarter of 2014.

  


16  


 

LIQUIDITY AND CAPITAL RESOURCES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Three Months

 

 

 

 

 

2015

 

 

2014

 

 

 

 

 

(millions of dollars)

Net cash provided by/(used in)

 

 

 

 

 

 

 

Operating activities

 

 

7,998

 

 

15,103

 

Investing activities

 

 

(6,352)

 

 

(6,306)

 

Financing activities

 

 

(854)

 

 

(7,816)

Effect of exchange rate changes

 

 

(224)

 

 

(24)

Increase/(decrease) in cash and cash equivalents

 

 

568

 

 

957

 

 

 

 

 

 

 

 

 

Cash and cash equivalents (at end of period)

 

 

5,184

 

 

5,601

Cash and cash equivalents – restricted (at end of period)

 

 

43

 

 

204

Total cash and cash equivalents (at end of period)

 

 

5,227

 

 

5,805

 

 

 

 

 

 

 

 

 

Cash flow from operations and asset sales

 

 

 

 

 

 

 

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

 

 

7,998

 

 

15,103

 

Proceeds associated with sales of subsidiaries, property, plant & equipment,

 

 

 

 

 

 

 

and sales and returns of investments

 

 

484

 

 

1,111

 

Cash flow from operations and asset sales

 

 

8,482

 

 

16,214

 

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 provided by operating activities totaled $8.0 billion for the first three months of 2015, $7.1 billion lower than 2014. The major source of funds was net income including noncontrolling interests of $5.1 billion, a decrease of $4.3 billion from the prior year period. The adjustment for the noncash provision of $4.3 billion for depreciation and depletion increased by $0.1 billion. Changes in operational working capital decreased cash flows by $0.5 billion in 2015, primarily due to lower payables. Changes in operational working capital added $2.5 billion to cash flow in 2014, primarily due to higher payables. All other items net decreased cash by $0.9 billion in both periods. For additional details, see the Condensed Consolidated Statement of Cash Flows on page 6.

 

Investing activities for the first three months of 2015 used net cash of $6.4 billion, an increase of nearly $0.1 billion compared to the prior year. Spending for additions to property, plant and equipment of $6.8 billion was $0.5 billion lower than 2014. Proceeds from asset sales of $0.5 billion decreased $0.6 billion. Additional investment and advances decreased $0.2 billion to $0.3 billion. Other investing activities – net decreased $0.1 billion to $0.3 billion.

 

Cash flow from operations and asset sales in the first quarter of 2015 was $8.5 billion, including asset sales of $0.5 billion, and decreased $7.7 billion from the comparable 2014 period primarily due to lower earnings and working capital changes.

 

During the first quarter of 2015, the Corporation issued $8.0 billion of long-term debt and used part of the proceeds to reduce short-term debt. Net cash used in financing activities of $0.9 billion in the first three months of 2015 was $7.0 billion lower than 2014 reflecting the 2015 debt issuance and a lower level of purchases of shares of ExxonMobil stock in 2015.

  

During the first quarter of 2015, Exxon Mobil Corporation purchased 20 million shares of its common stock for the treasury at a gross cost of $1.8 billion. These purchases included $1 billion to reduce the number of shares outstanding with the balance used to acquire shares in conjunction with the company’s benefit plans and programs. Shares outstanding decreased from 4,201 million at year-end to 4,181 million at the end of the first quarter 2015. Purchases may be made in both the open market and through negotiated transactions, and may be increased, decreased or discontinued at any time without prior notice.


17  


 

The Corporation distributed to shareholders a total of $3.9 billion in the first quarter of 2015 through dividends and share purchases to reduce shares outstanding.

 

Total cash and cash equivalents of $5.2 billion at the end of the first quarter of 2015 compared to $5.8 billion at the end of the first quarter of 2014.

 

Total debt of $32.8 billion compared to $29.1 billion at year-end 2014. The Corporation's debt to total capital ratio was 15.6 percent at the end of the first quarter of 2015 compared to 13.9 percent at year-end 2014.

 

The Corporation has access to significant capacity of long-term and short-term liquidity. Internally generated funds are expected to cover the majority of financial requirements, supplemented by long-term and short-term debt.

 

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

 

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

 

TAXES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Three Months

 

 

 

 

 

 

2015

 

 

2014

 

 

 

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

 

1,560

 

 

5,857

 

 

Effective income tax rate

 

 

33

%

 

45

%

Sales-based taxes

 

 

5,530

 

 

7,416

 

All other taxes and duties

 

 

7,274

 

 

8,857

 

 

Total

 

 

14,364

 

 

22,130

 

 

Income, sales-based and all other taxes and duties totaled $14.4 billion for the first quarter of 2015, a decrease of $7.8 billion from 2014. Income tax expense decreased by $4.3 billion to $1.6 billion reflecting lower pre-tax income and a lower effective tax rate. The effective income tax rate was 33 percent compared to 45 percent in the prior year period due primarily to a lower share of earnings in higher tax jurisdictions. Sales-based taxes and all other taxes and duties decreased by $3.5 billion to $12.8 billion as a result of lower sales realizations.

 

CAPITAL AND EXPLORATION EXPENDITURES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Three Months

 

 

 

 

 

2015

 

 

2014

 

 

 

 

 

(millions of dollars)

 

 

 

 

 

 

 

 

 

 

Upstream (including exploration expenses)

 

 

6,417

 

 

7,264

 

Downstream

 

 

621

 

 

540

 

Chemical

 

 

654

 

 

630

 

Other

 

 

12

 

 

2

 

 

Total

 

 

7,704

 

 

8,436

 

 

Capital and exploration expenditures in the first quarter of 2015 were $7.7 billion, down 9 percent from the first quarter of 2014, in line with plan. The Corporation anticipates an average investment profile of about $34 billion per year for the next few years. 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.


18  


 

RECENTLY ISSUED ACCOUNTING STANDARDS

 

In May 2014, the Financial Accounting Standards Board issued a new standard, Revenue from Contracts with Customers. The standard establishes a single revenue recognition model for all contracts with customers, eliminates industry specific requirements and expands disclosure requirements. The standard is required to be adopted beginning January 1, 2017. ExxonMobil is evaluating the standard and its effect on the Corporation’s financial statements. 

 

FORWARD-LOOKING STATEMENTS

 

Statements relating to future plans, projections, events or conditions are forward-looking statements. Actual results, including project plans, costs, timing, and capacities; capital and exploration expenditures; resource recoveries; and share purchase levels, could differ materially due to factors including: changes in oil or gas prices or other market or economic conditions affecting the oil and gas industry, including the scope and duration of economic recessions; the outcome of exploration and development efforts; changes in law or government regulation, including tax and environmental requirements; the outcome of commercial negotiations; changes in technical or operating conditions; 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 2014 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, 2015, does not differ materially from that discussed under Item 7A of the registrant's Annual Report on Form 10-K for 2014.

 

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, 2015. 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.


19  


 

PART II.  OTHER INFORMATION

 

Item 1.  Legal Proceedings

  

Regarding the criminal charges filed against XTO Energy Inc. (XTO) by the Pennsylvania Attorney General’s Office pertaining to XTO’s Marquardt Well Site in Penn Township, Pennsylvania, reported most recently in the Corporation’s 2013 Form 10-K, in pre-trial proceedings on April 14, 2015, the Pennsylvania Court of Common Pleas issued an order denying XTO’s motion to dismiss the case.

 

With respect to the enforcement action filed by the United States, on behalf of the United States Environmental Protection Agency (USEPA), and the State of Arkansas, on behalf of the Arkansas Department of Environmental Quality, against ExxonMobil Pipeline Company (EMPCo) related to the discharge of crude oil from the Pegasus Pipeline in Mayflower, Faulkner County, Arkansas, previously reported in the Corporation’s Forms 10-Q for the first, second, and third quarters of 2013, and the first and second quarters of 2014, and in its 2014 Form 10-K, EMPCo has reached an agreement with the United States and the State of Arkansas on a Consent Decree to resolve the matter. The Consent Decree, if approved by the court, would require EMPCo to pay a civil penalty to the United States of $3.19 million and to pay the State of Arkansas $1.88 million consisting of a $1 million civil penalty, $600,000 towards a supplemental environmental project, and $280,000 to reimburse expenses of the Arkansas Attorney General’s Office. In addition, the Consent Decree would require EMPCo to conduct enhanced training, stage additional spill response equipment, and enhance integrity treatment of the pipeline. The Consent Decree was lodged with the court on April 22, 2015. A 30-day public comment period began on April 28, 2015, when the Consent Decree was published in the Federal Register.

 

As reported most recently in the Corporation’s 2014 Form 10-K, in December 2014, XTO agreed to a settlement with the Department of Justice, USEPA and the West Virginia Department of Environmental Protections (WVDEP) concerning administrative orders alleging Clean Water Act violations issued by the USEPA with regard to eight XTO locations in West Virginia, five of which were voluntarily disclosed by XTO to the USEPA. Pursuant to the settlement, XTO will pay a civil penalty of $2.3 million and has entered into a Consent Decree with the Department of Justice, USEPA and WVDEP. The Consent Decree requires XTO to prepare and submit restoration plans for approval by USEPA and WVDEP and conduct approximately $3.0 million in restoration and mitigation activities at the impacted locations or at alternative locations approved by the USEPA and WVDEP. On April 24, 2015, the United States District Court for the Northern District of West Virginia approved the Consent Decree.

 

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


20  


 

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

 

 

 

 

 

 

 

 

 

 

 

 

Issuer Purchase of Equity Securities for Quarter Ended March 31, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Number of

 

Maximum Number

 

 

 

 

 

 

 

 

Shares Purchased

 

of Shares that May

 

 

 

 

Total Number

 

Average

 

as Part of Publicly

 

Yet Be Purchased

 

 

 

 

of Shares

 

Price Paid

 

Announced Plans

 

Under the Plans or

Period

 

 

Purchased

 

per Share

 

or Programs

 

Programs

 

 

 

 

 

 

 

 

 

 

 

January 2015

 

6,510,349

 

$90.44

 

6,510,349

 

 

February 2015

 

6,184,584

 

$90.56

 

6,184,584

 

 

March 2015

 

7,411,392

 

$85.24

 

7,411,392

 

 

 

Total

 

 

20,106,325

 

$88.56

 

20,106,325

 

(See Note 1)

 

Note 1 - On August 1, 2000, the Corporation announced its intention to resume purchases of shares of its common stock for the treasury both to offset shares issued in conjunction with company benefit plans and programs and to gradually reduce the number of shares outstanding. The announcement did not specify an amount or expiration date. The Corporation has continued to purchase shares since this announcement and to report purchased volumes in its quarterly earnings releases. In its most recent earnings release dated April 30, 2015, the Corporation stated that second quarter 2015 share purchases to reduce shares outstanding are anticipated to equal $1 billion. Purchases may be made in both the open market and through negotiated transactions, and purchases may be increased, decreased or discontinued at any time without prior notice.

 

 

Item 6.  Exhibits

 

Exhibit

 

Description

 

 

 

31.1

 

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

31.2

 

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

31.3

 

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

32.1

 

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

32.2

 

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

32.3

 

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

101

 

Interactive Data Files.

  

 

The registrant has not filed with this report copies of the instruments defining the rights of holders of long-term debt of the registrant and its subsidiaries for which consolidated or unconsolidated financial statements are required to be filed. The registrant agrees to furnish a copy of any such instrument to the Securities and Exchange Commission upon request.


21  


 

EXXON MOBIL CORPORATION

 

SIGNATURE

 

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

 

EXXON MOBIL CORPORATION

 

Date: May 6, 2015 

By:

/s/  DAVID S. ROSENTHAL

 

 

David S. Rosenthal

 

 

Vice President, Controller and

 

 

Principal Accounting Officer

 

 

 

  


22  


 

INDEX TO EXHIBITS

 

 

Exhibit

 

Description

 

 

 

31.1

 

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

31.2

 

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

31.3

 

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

32.1

 

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

32.2

 

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

32.3

 

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

101

 

Interactive Data Files.

  

 

The registrant has not filed with this report copies of the instruments defining the rights of holders of long-term debt of the registrant and its subsidiaries for which consolidated or unconsolidated financial statements are required to be filed. The registrant agrees to furnish a copy of any such instrument to the Securities and Exchange Commission upon request.


23