xom-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

☐ 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 incorporation or organization)						(I.R.S. Employer 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)

_______________________

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common Stock, without par value

XOM

New York Stock Exchange

0.142% Notes due 2024

XOM24B

New York Stock Exchange

0.524% Notes due 2028

XOM28

New York Stock Exchange

0.835% Notes due 2032

XOM32

New York Stock Exchange

1.408% Notes due 2039

XOM39A

New York Stock Exchange

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 every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

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


Large accelerated filer	☑	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.


Class						Outstanding as of September 30, 2022
Common stock, without par value						4,118,293,421

EXXON MOBIL CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Statement of Income - Three and nine months ended September 30, 2022 and 2021			3

Condensed Consolidated Statement of Comprehensive Income - Three and nine months ended September 30, 2022 and 2021			4

Condensed Consolidated Balance Sheet - As of September 30, 2022 and December 31, 2021			5

Condensed Consolidated Statement of Cash Flows - Nine months ended September 30, 2022 and 2021			6

Condensed Consolidated Statement of Changes in Equity - Three months ended September 30, 2022 and 2021			7

Condensed Consolidated Statement of Changes in Equity - Nine months ended September 30, 2022 and 2021			8



Notes to Condensed Consolidated Financial Statements			9

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			18

Item 3. Quantitative and Qualitative Disclosures About Market Risk			34

Item 4. Controls and Procedures			34


PART II. OTHER INFORMATION

Item 1. Legal Proceedings			35



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			36

Item 6. Exhibits			36

Index to Exhibits			37

Signature			38

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS



CONDENSED CONSOLIDATED STATEMENT OF INCOME


(millions of dollars, unless noted)	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
Revenues and other income
Sales and other operating revenue	106,512	71,892	305,511	195,387
Income from equity affiliates	4,632	1,670	10,858	4,579
Other income	926	224	1,882	709
Total revenues and other income	112,070	73,786	318,251	200,675
Costs and other deductions
Crude oil and product purchases	60,197	39,745	178,198	109,675
Production and manufacturing expenses	11,317	8,719	32,244	25,252
Selling, general and administrative expenses	2,324	2,287	7,263	7,060
Depreciation and depletion (including impairments)	5,642	4,990	18,976	14,946
Exploration expenses, including dry holes (1)	218	190	677	530
Non-service pension and postretirement benefit expense	154	146	382	686
Interest expense	209	214	591	726
Other taxes and duties	6,587	7,889	21,009	22,295
Total costs and other deductions	86,648	64,180	259,340	181,170
Income (loss) before income taxes	25,422	9,606	58,911	19,505
Income taxes	5,224	2,664	14,389	4,986
Net income (loss) including noncontrolling interests	20,198	6,942	44,522	14,519
Net income (loss) attributable to noncontrolling interests	538	192	1,532	349
Net income (loss) attributable to ExxonMobil	19,660	6,750	42,990	14,170

Earnings (loss) per common share (dollars)	4.68	1.57	10.17	3.31

Earnings (loss) per common share - assuming dilution (dollars)	4.68	1.57	10.17	3.31

(1)

Includes $74 million related to the write-off of exploratory well costs in 2022 that were previously capitalized for greater than one year at December 31, 2021.

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



CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


(millions of dollars)	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021		2022	2021
Net income (loss) including noncontrolling interests	20,198	6,942		44,522	14,519

Other comprehensive income (loss) (net of income taxes)
Foreign exchange translation adjustment	(3,361)	(1,625)		(5,157)	(1,053)

Postretirement benefits reserves adjustment (excluding amortization)	108	184		368	305
Amortization and settlement of postretirement benefits reserves adjustment included in net periodic benefit costs	128	196		323	789
Total other comprehensive income (loss)	(3,125)	(1,245)		(4,466)	41
Comprehensive income (loss) including noncontrolling interests	17,073	5,697		40,056	14,560
Comprehensive income (loss) attributable to noncontrolling interests	199	57		1,105	381
Comprehensive income (loss) attributable to ExxonMobil	16,874	5,640		38,951	14,179

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



CONDENSED CONSOLIDATED BALANCE SHEET


(millions of dollars, unless noted)	September 30, 2022	December 31, 2021

ASSETS
Current assets
Cash and cash equivalents	30,407	6,802
Cash and cash equivalents – restricted	57	—
Notes and accounts receivable – net	42,411	32,383
Inventories
Crude oil, products and merchandise	20,078	14,519
Materials and supplies	4,018	4,261
Other current assets	2,318	1,189
Total current assets	99,289	59,154
Investments, advances and long-term receivables	50,235	45,195
Property, plant and equipment – net	203,102	216,552
Other assets, including intangibles – net	17,526	18,022
Total Assets	370,152	338,923

LIABILITIES
Current liabilities
Notes and loans payable	6,182	4,276
Accounts payable and accrued liabilities	62,550	50,766
Income taxes payable	5,325	1,601
Total current liabilities	74,057	56,643
Long-term debt	39,246	43,428
Postretirement benefits reserves	16,799	18,430
Deferred income tax liabilities	21,274	20,165
Long-term obligations to equity companies	2,647	2,857
Other long-term obligations	23,086	21,717
Total Liabilities	177,109	163,240

Commitments and contingencies (Note 3)

EQUITY
Common stock without par value
(9,000 million shares authorized, 8,019 million shares issued)	16,106	15,746
Earnings reinvested	423,877	392,059
Accumulated other comprehensive income	(17,803)	(13,764)
Common stock held in treasury
(3,901 million shares at September 30, 2022 and 3,780 million shares at December 31, 2021)	(236,080)	(225,464)
ExxonMobil share of equity	186,100	168,577
Noncontrolling interests	6,943	7,106
Total Equity	193,043	175,683
Total Liabilities and Equity	370,152	338,923

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



CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW


(millions of dollars)	Nine Months Ended September 30,
	2022	2021

CASH FLOW FROM OPERATING ACTIVITIES
Net income (loss) including noncontrolling interests	44,522	14,519
Depreciation and depletion (including impairments)	18,976	14,946

Changes in operational working capital, excluding cash and debt	6	2,232
All other items – net	(4,328)	(692)
Net cash provided by operating activities	59,176	31,005

CASH FLOW FROM INVESTING ACTIVITIES
Additions to property, plant and equipment	(12,624)	(7,987)
Proceeds from asset sales and returns of investments	3,914	575
Additional investments and advances	(915)	(1,055)
Other investing activities including collection of advances	238	342
Net cash used in investing activities	(9,387)	(8,125)

CASH FLOW FROM FINANCING ACTIVITIES
Additions to long-term debt	55	46
Reductions in long-term debt	—	(4)
Additions to short-term debt	—	12,197
Reductions in short-term debt	(3,895)	(24,066)
Additions/(reductions) in debt with three months or less maturity	1,638	997
Contingent consideration payments	(58)	(28)
Cash dividends to ExxonMobil shareholders	(11,172)	(11,161)
Cash dividends to noncontrolling interests	(191)	(166)
Changes in noncontrolling interests	(1,074)	(278)
Common stock acquired	(10,480)	(1)
Net cash used in financing activities	(25,177)	(22,464)

Effects of exchange rate changes on cash	(950)	(12)
Increase/(decrease) in cash and cash equivalents	23,662	404
Cash and cash equivalents at beginning of period	6,802	4,364
Cash and cash equivalents at end of period	30,464	4,768

SUPPLEMENTAL DISCLOSURES
Income taxes paid	10,172	3,516
Cash interest paid
Included in cash flows from operating activities	660	818
Capitalized, included in cash flows from investing activities	605	478
Total cash interest paid	1,265	1,296


Noncash right of use assets recorded in exchange for lease liabilities
Operating leases	1,648	804
Finance leases	730	168

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



CONDENSED CONSOLIDATED STATEMENT OF CHANGE IN EQUITY


	ExxonMobil Share of Equity

(millions of dollars, unless noted)	Common Stock	Earnings Reinvested	Accumulated Other Comprehensive Income	Common Stock Held in Treasury	ExxonMobil Share of Equity	Non-controlling Interests	Total Equity

Balance as of June 30, 2021	16,006	383,922	(15,586)	(225,771)	158,571	6,985	165,556
Amortization of stock-based awards	99	—	—	—	99	—	99
Other	(1)	—	—	—	(1)	4	3
Net income (loss) for the period	—	6,750	—	—	6,750	192	6,942
Dividends - common shares	—	(3,720)	—	—	(3,720)	(54)	(3,774)
Other comprehensive income (loss)	—	—	(1,110)	—	(1,110)	(135)	(1,245)
Acquisitions, at cost	—	—	—	—	—	(75)	(75)
Dispositions	—	—	—	—	—	—	—
Balance as of September 30, 2021	16,104	386,952	(16,696)	(225,771)	160,589	6,917	167,506

Balance as of June 30, 2022	16,018	407,902	(15,017)	(231,587)	177,316	7,192	184,508
Amortization of stock-based awards	91	—	—	—	91	—	91
Other	(3)	—	—	—	(3)	(29)	(32)
Net income (loss) for the period	—	19,660	—	—	19,660	538	20,198
Dividends - common shares	—	(3,685)	—	—	(3,685)	(68)	(3,753)
Other comprehensive income (loss)	—	—	(2,786)	—	(2,786)	(339)	(3,125)
Acquisitions, at cost	—	—	—	(4,494)	(4,494)	(351)	(4,845)
Dispositions	—	—	—	1	1	—	1
Balance as of September 30, 2022	16,106	423,877	(17,803)	(236,080)	186,100	6,943	193,043


	Three Months Ended September 30, 2022			Three Months Ended September 30, 2021

Common Stock Share Activity (millions of shares)	Issued	Held in Treasury	Outstanding	Issued	Held in Treasury	Outstanding
Balance as of June 30	8,019	(3,851)	4,168	8,019	(3,785)	4,234
Acquisitions	—	(50)	(50)	—	—	—
Dispositions	—	—	—	—	—	—
Balance as of September 30	8,019	(3,901)	4,118	8,019	(3,785)	4,234

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



CONDENSED CONSOLIDATED STATEMENT OF CHANGE IN EQUITY


	ExxonMobil Share of Equity

(millions of dollars, unless noted)	Common Stock	Earnings Reinvested	Accumulated Other Comprehensive Income	Common Stock Held in Treasury	ExxonMobil Share of Equity	Non-controlling Interests	Total Equity

Balance as of December 31, 2020	15,688	383,943	(16,705)	(225,776)	157,150	6,980	164,130
Amortization of stock-based awards	427	—	—	—	427	—	427
Other	(11)	—	—	—	(11)	90	79
Net income (loss) for the period	—	14,170	—	—	14,170	349	14,519
Dividends - common shares	—	(11,161)	—	—	(11,161)	(166)	(11,327)

Other comprehensive income (loss)	—	—	9	—	9	32	41
Acquisitions, at cost	—	—	—	(1)	(1)	(368)	(369)
Dispositions	—	—	—	6	6	—	6
Balance as of September 30, 2021	16,104	386,952	(16,696)	(225,771)	160,589	6,917	167,506

Balance as of December 31, 2021	15,746	392,059	(13,764)	(225,464)	168,577	7,106	175,683
Amortization of stock-based awards	372	—	—	—	372	—	372
Other	(12)	—	—	—	(12)	(30)	(42)
Net income (loss) for the period	—	42,990	—	—	42,990	1,532	44,522
Dividends - common shares	—	(11,172)	—	—	(11,172)	(191)	(11,363)

Other comprehensive income (loss)	—	—	(4,039)	—	(4,039)	(427)	(4,466)
Acquisitions, at cost	—	—	—	(10,620)	(10,620)	(1,047)	(11,667)
Dispositions	—	—	—	4	4	—	4
Balance as of September 30, 2022	16,106	423,877	(17,803)	(236,080)	186,100	6,943	193,043


	Nine Months Ended September 30, 2022			Nine Months Ended September 30, 2021

Common Stock Share Activity (millions of shares)	Issued	Held in Treasury	Outstanding	Issued	Held in Treasury	Outstanding
Balance as of December 31	8,019	(3,780)	4,239	8,019	(3,786)	4,233
Acquisitions	—	(121)	(121)	—	—	—
Dispositions	—	—	—	—	1	1
Balance as of September 30	8,019	(3,901)	4,118	8,019	(3,785)	4,234

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



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 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 2021 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.

Note 2. Russia

In response to Russia’s military action in Ukraine, the Corporation announced in early 2022 that it planned to discontinue operations on the Sakhalin-1 project (“Sakhalin”) and develop steps to exit the venture. In light of this, an impairment assessment was conducted, and management determined that the carrying value of the asset group was not recoverable. As a result, the Corporation’s first quarter earnings included after-tax charges of $3.4 billion largely representing the full impairment of its operations related to Sakhalin. On a before-tax basis, the charges amounted to $4.6 billion, substantially all of which is reflected in the line captioned “Depreciation and depletion (including impairments)” on the Condensed Consolidated Statement of Income. Effective October 14, the Russian government unilaterally terminated the Corporation’s interests in Sakhalin-1, and the project has been transferred to a Russian operator. The Corporation's exit from the project results in quantities estimated at 150 million oil-equivalent barrels no longer qualifying as proved reserves, which represents less than one percent of the Corporation's 18.5 billion oil-equivalent barrels of proved reserves at year-end 2021.

Note 3. Litigation and Other Contingencies

Litigation

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

Other Contingencies

The Corporation and certain of its consolidated subsidiaries were contingently liable at September 30, 2022, 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.


	September 30, 2022

(millions of dollars)	Equity Company Obligations (1)	Other Third-Party Obligations	Total
Guarantees
Debt-related	1,239	154	1,393
Other	727	5,032	5,759
Total	1,966	5,186	7,152

(1) ExxonMobil share

Additionally, the Corporation and its affiliates have numerous long-term sales and purchase commitments in their various business activities, all of which are expected to be fulfilled with no adverse consequences material to the Corporation’s operations or financial condition. In the third quarter, the Corporation entered into a long-term purchase agreement with minimum annual payments of approximately $0.4 billion from 2025 through 2045. As of September 30, undiscounted commitments for leases not yet commenced totaled $2.5 billion for operating leases and $4.3 billion for finance leases.

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; sanctions 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.

Note 4. Other Comprehensive Income Information


ExxonMobil Share of Accumulated Other Comprehensive Income (millions of dollars)	Cumulative Foreign Exchange Translation Adjustment	Postretirement Benefits Reserves Adjustment	Total
Balance as of December 31, 2020	(10,614)	(6,091)	(16,705)
Current period change excluding amounts reclassified from accumulated other comprehensive income (1)	(1,041)	289	(752)
Amounts reclassified from accumulated other comprehensive income	—	761	761
Total change in accumulated other comprehensive income	(1,041)	1,050	9
Balance as of September 30, 2021	(11,655)	(5,041)	(16,696)

Balance as of December 31, 2021	(11,499)	(2,265)	(13,764)
Current period change excluding amounts reclassified from accumulated other comprehensive income (1)	(4,680)	335	(4,345)
Amounts reclassified from accumulated other comprehensive income	—	306	306
Total change in accumulated other comprehensive income	(4,680)	641	(4,039)
Balance as of September 30, 2022	(16,179)	(1,624)	(17,803)

(1) Cumulative Foreign Exchange Translation Adjustment includes net investment hedge gain/(loss) net of taxes of $551 million and $240 million in 2022 and 2021, respectively.


Amounts Reclassified Out of Accumulated Other Comprehensive Income - Before-tax Income/(Expense) (millions of dollars)	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021

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)	(163)	(256)	(415)	(1,020)


Income Tax (Expense)/Credit For Components of Other Comprehensive Income (millions of dollars)	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021

Foreign exchange translation adjustment	(61)	(26)	(151)	(60)
Postretirement benefits reserves adjustment (excluding amortization)	(82)	(76)	(205)	(109)
Amortization and settlement of postretirement benefits reserves adjustment included in net periodic benefit costs	(35)	(60)	(92)	(231)
Total	(178)	(162)	(448)	(400)

Note 5. Earnings Per Share


	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
Earnings per common share
Net income (loss) attributable to ExxonMobil (millions of dollars)	19,660	6,750	42,990	14,170
Weighted average number of common shares outstanding (millions of shares)	4,185	4,276	4,227	4,275
Earnings (loss) per common share (dollars) (1)	4.68	1.57	10.17	3.31
Dividends paid per common share (dollars)	0.88	0.87	2.64	2.61

(1) The calculation of earnings (loss) per common share and earnings (loss) per common share – assuming dilution are the same in each period shown.

Note 6. Pension and Other Postretirement Benefits


(millions of dollars)	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
Components of net benefit cost
Pension Benefits - U.S.
Service cost	173	228	529	661
Interest cost	130	139	388	418
Expected return on plan assets	(140)	(181)	(420)	(542)
Amortization of actuarial loss/(gain)	39	62	117	184
Amortization of prior service cost	(8)	(5)	(22)	(17)
Net pension enhancement and curtailment/settlement cost	87	75	177	468
Net benefit cost	281	318	769	1,172

Pension Benefits - Non-U.S.
Service cost	138	194	433	587
Interest cost	149	131	466	396
Expected return on plan assets	(198)	(256)	(618)	(777)
Amortization of actuarial loss/(gain)	44	104	138	319
Amortization of prior service cost	10	14	33	43
Net pension enhancement and curtailment/settlement cost	—	4	(1)	16
Net benefit cost	143	191	451	584

Other Postretirement Benefits
Service cost	30	44	108	139
Interest cost	54	55	162	166
Expected return on plan assets	(4)	(5)	(11)	(14)
Amortization of actuarial loss/(gain)	1	19	4	57
Amortization of prior service cost	(10)	(10)	(31)	(31)
Net benefit cost	71	103	232	317

Note 7. Financial Instruments and Derivatives

The estimated fair value of financial instruments and derivatives at September 30, 2022 and December 31, 2021, and the related hierarchy level for the fair value measurement was as follows:


	September 30, 2022


	Fair Value
(millions of dollars)	Level 1	Level 2	Level 3	Total Gross Assets & Liabilities	Effect of Counterparty Netting	Effect of Collateral Netting	Difference in Carrying Value and Fair Value	Net Carrying Value
Assets
Derivative assets (1)	5,972	4,379	—	10,351	(8,398)	(519)	—	1,434

Advances to/receivables from equity companies (2)(6)	—	2,374	5,325	7,699	—	—	734	8,433

Other long-term financial assets (3)	1,185	—	1,329	2,514	—	—	313	2,827

Liabilities
Derivative liabilities (4)	5,638	5,112	—	10,750	(8,398)	(185)	—	2,167
Long-term debt (5)	32,236	90	6	32,332	—	—	4,638	36,970

Long-term obligations to equity companies (6)	—	—	2,711	2,711	—	—	(64)	2,647

Other long-term financial liabilities (7)	—	—	773	773	—	—	56	829


	December 31, 2021


	Fair Value
(millions of dollars)	Level 1	Level 2	Level 3	Total Gross Assets & Liabilities	Effect of Counterparty Netting	Effect of Collateral Netting	Difference in Carrying Value and Fair Value	Net Carrying Value
Assets
Derivative assets (1)	1,422	1,523	—	2,945	(1,930)	(28)	—	987

Advances to/receivables from equity companies (2)(6)	—	3,076	5,373	8,449	—	—	(123)	8,326

Other long-term financial assets (3)	1,134	—	1,058	2,192	—	—	181	2,373

Liabilities
Derivative liabilities (4)	1,701	2,594	—	4,295	(1,930)	(306)	—	2,059
Long-term debt (5)	44,454	88	3	44,545	—	—	(2,878)	41,667

Long-term obligations to equity companies (6)	—	—	3,084	3,084	—	—	(227)	2,857

Other long-term financial liabilities (7)	—	—	902	902	—	—	58	960


(1)			Included in the Balance Sheet lines: Notes and accounts receivable - net and Other assets, including intangibles - net
(2)			Included in the Balance Sheet line: Investments, advances and long-term receivables
(3)			Included in the Balance Sheet lines: Investments, advances and long-term receivables and Other assets, including intangibles - net
(4)			Included in the Balance Sheet lines: Accounts payable and accrued liabilities and Other long-term obligations
(5)			Excluding finance lease obligations
(6)			Advances to/receivables from equity companies and long-term obligations to equity companies are mainly designated as hierarchy level 3 inputs. The fair value is calculated by discounting the remaining obligations by a rate consistent with the credit quality and industry of the company.
(7)			Included in the Balance Sheet line: Other long-term obligations. Includes contingent consideration related to a prior year acquisition where fair value is based on expected drilling activities and discount rates.

At September 30, 2022 and December 31, 2021, respectively, the Corporation had $1,826 million and $641 million of collateral under master netting arrangements not offset against the derivatives on the Consolidated Balance Sheet, primarily related to initial margin requirements.

The Corporation may use non-derivative financial instruments, such as its foreign currency-denominated debt, as hedges of its net investments in certain foreign subsidiaries. Under this method, the change in the carrying value of the financial instruments due to foreign exchange fluctuations is reported in accumulated other comprehensive income. As of September 30, 2022, the Corporation has designated $4.4 billion of its Euro-denominated long-term debt and related accrued interest as a net investment hedge of its European business. The net investment hedge is deemed to be perfectly effective.

The Corporation had undrawn short-term committed lines of credit of $549 million and undrawn long-term committed lines of credit of $351 million as of third quarter 2022. Undrawn short-term committed lines of credit amounting to $10 billion expired in the third quarter of 2022.

Derivative Instruments

The Corporation’s size, strong capital structure, geographic diversity and the complementary nature of its business segments reduce the Corporation’s enterprise-wide risk from changes in commodity prices, currency rates and interest rates. In addition, the Corporation uses commodity-based contracts, including derivatives, to manage commodity price risk and to generate returns from trading. Commodity contracts held for trading purposes are presented in the Condensed Consolidated Statement of Income on a net basis in the line “Sales and other operating revenue". The Corporation’s commodity derivatives are not accounted for under hedge accounting. At times, the Corporation also enters into currency and interest rate derivatives, none of which are material to the Corporation’s financial position as of September 30, 2022 and December 31, 2021, or results of operations for the periods ended September 30, 2022 and 2021.

Credit risk associated with the Corporation’s derivative position is mitigated by several factors, including the use of derivative clearing exchanges and the quality of and financial limits placed on derivative counterparties. The Corporation maintains a system of controls that includes the authorization, reporting and monitoring of derivative activity.

The net notional long/(short) position of derivative instruments at September 30, 2022 and December 31, 2021, was as follows:




(millions)	September 30, 2022	December 31, 2021
Crude oil (barrels)	(