Exxon Mobil
Annual Report 2017

Plain-text annual report

2017 Summary Annual Report  3 To our shareholders 4 2017 results and highlights 6 Innovating to drive success 10 Growing shareholder value 14 Leveraging integration 18 Maximizing asset value 22 Global operations 24 Upstream highlights 26 Downstream highlights 28 Chemical highlights 30 Corporate sustainability 31 Financial information 36 Frequently used terms 38 Board of Directors, Officers, and Affiliated Companies 40 Investor information 41 General information COVER PHOTO: Jose Jaquez, a maintenance supervisor in our XTO organization, stands by one of our drilling rigs in the Permian, where we plan to increase tight-oil production fivefold by 2025. exxonmobil.com/annualreport Statements of future events or conditions in this report, including projections, targets, expectations, estimates, and business plans, are forward-looking statements. Actual future financial and operating results, including demand growth and energy source mix; capacity growth; the impact of new technologies; production growth; project plans, dates, costs, and capacities; resource additions, production rates, and resource recoveries; efficiency gains; cost savings; earnings growth; integration and technology benefits; returns; and product sales could differ materially due to, for example, changes in the supply of and demand for crude oil, natural gas, and petroleum and petrochemical products and resulting price impacts; reservoir performance; timely completion of development projects; war and other political or security disturbances; changes in law or government regulation, including environmental regulations and political sanctions; the actions of competitors and customers; unexpected technological developments; general economic conditions, including the occurrence and duration of economic recessions; the outcome of commercial negotiations; the impact of fiscal and commercial terms; unforeseen technical difficulties; unanticipated operational disruptions; and other factors discussed in this report and in Item 1A of ExxonMobil’s most recent Form 10-K. We use non-GAAP concepts and financial measures throughout this publication. These measures may not be comparable to similarly titled measures used by other companies. Definitions of certain financial and operating measures and other terms used in this report – such as “resources” and “resource base” – are contained in the section titled “Frequently used terms” on pages 36 and 37. In the case of non-GAAP financial measures, such as “Return on Average Capital Employed” and “Cash Flow from Operations and Asset Sales,” the definitions also include any reconciliation or other information required by SEC Regulation G. “Factors Affecting Future Results” and “Frequently Used Terms” are also available on the “Investors” section of our website. As used in this publication, the term “industry” refers to publicly traded international energy companies, and “return(s)” (unless referring to ROCE) mean discounted cash flow returns based on current company estimates. The term “project” can refer to a variety of different activities and does not necessarily have the same meaning as in any government payment transparency reports. Unless otherwise specified, data shown is for 2017. Prior years’ data have been reclassified in certain cases to conform to the 2017 presentation basis. Energy is essential to improving people’s quality of life. Essential to economies. Essential to mobility. Essential to improving health and education. ExxonMobil has a responsibility to provide affordable, reliable energy. It’s a responsibility we take seriously. But we can’t stop there. There’s a dual challenge facing our industry: meeting growing demand for energy, while at the same time reducing environmental impacts – including the risks of climate change. It’s a challenge our industry must help solve. ExxonMobil is committed to doing our part. 1 E X X O N M O B I L 2 0 1 7 S U M M A R Y A N N U A L R E P O R T ExxonMobil’s long-term strategies and our unwavering commitment to the highest standards of integrity underpin everything we do. The company’s core business strategies provide the framework for the organization to deliver on its commitments and create shareholder value throughout the commodity price cycle. Fewest-ever recordable injuries in 2017 safety sold every minute 35years of continued 550 quarts of Mobil 1 motor oil are dividend growth for shareholders $8+ billion invested in lower-emissions energy solutions since 2000 technology Awarded more than 3,300 patents over the past decade In 2017, ExxonMobil drilled wells totaling more than 1,000 miles 2 58 million drivers fuel their vehicles at Exxon, Mobil, or Esso stations every month jobs – we employ nearly 70,000 people To our shareholders Winning in today’s energy business takes a company positioned to succeed throughout the commodity price cycle. A company able to capture value across the supply chain. One driven to keep its technological edge. A company that operates safely and responsibly, taking care of people and the environment, and addressing the risks of climate change. Yours is that company. ExxonMobil is in a prime position to generate strong returns and remain the industry leader, leveraging our strengths and outperforming our competition in growing shareholder value. We’re investing in advantaged projects to grow our world-class portfolio. Through exploration and strategic acquisitions, we’ve captured our highest-quality inventory since the Exxon and Mobil merger, including high-impact projects in Guyana and Brazil. In Papua New Guinea and Mozambique, we’re adding new low-cost supplies of future LNG. We’re also ramping up unconventional production in the U.S. Permian Basin. In our Downstream, we’re using our proprietary technology to produce higher-value products. And in our Chemical business, we’re investing in capacity and manufacturing new products to meet the needs of growing economies around the world. ExxonMobil is investing for high-value growth. Integration enables us to capture efficiencies, apply technologies, and create value that our competitors can’t. For example, we’re connecting our oil and natural gas production in the U.S. Permian Basin with our Gulf Coast refineries and chemical plants, which are producing higher-value fuels and chemicals at a cost below our competition. Our midstream facilities, including a strategic terminal we acquired, ensure our operations remain synchronized and avoid value leakage along the supply chain. The whole of ExxonMobil is worth more than the sum of our parts. ExxonMobil is uniquely committed to innovation. We employ more than 19,000 scientists and engineers, and we invest more than $1 billion annually in research and development. Our innovations in seismic imaging and advanced reservoir modeling enable us to see and capture high-quality opportunities before others can. Our Downstream investments to produce cleaner, higher-value products are benefiting from unique, proprietary catalysts and processes that drive project returns well above industry norms. Innovative products pioneered in our Chemical business are enabling a growing global middle class to enjoy a higher quality of life. Our innovation is delivering value to our customers, our communities, and you, our shareholders. Our technology investments are also building a foundation for the future – creating long-term value for society. ExxonMobil is a long-standing leader in the discovery of scalable technologies. This includes research in algae biofuels and carbon capture and storage, where we’re making important advances. We’ve also invested more than $8 billion since 2000 in lower-emissions energy solutions. Innovation underpins our growth – now and in the future. Your company continues to drive value across our global operations. We’re developing exciting, world-class opportunities while meeting the challenge of changing market conditions head-on. I’m proud of our people and confident in their abilities to deliver industry-leading performance. And I’m grateful for the confidence you’ve put in ExxonMobil. Darren Woods, Chairman and CEO 3 E X X O N M O B I L 2 0 1 7 S U M M A R Y A N N U A L R E P O R T 2017 results and highlights $19.7 billion in earnings $33.2 billion in cash flow from operations and asset sales 9% return on average capital employed 4.0 million net oil-equivalent barrels per day of production 5.5 million barrels per day of petroleum product sales 25.4 million tonnes of chemical product sales Financial highlights (millions of dollars, unless noted) Upstream Downstream Chemical Corporate and Financing Total Earnings after income taxes 13,355 5,597 4,518 (3,760) 19,710 Average capital employed(1) 174,674 22,514 27,516 (2,073) 222,631 Return on average capital employed(1) (%) 7.6 24.9 16.4 N.A. 9.0 Operating highlights Liquids production (net, thousands of barrels per day) Natural gas production available for sale (net, millions of cubic feet per day) Oil-equivalent production(2) (net, thousands of oil-equivalent barrels per day) Refinery throughput (thousands of barrels per day) Petroleum product sales(3) (thousands of barrels per day) Chemical prime product sales(3) (thousands of tonnes) 4 Capital and exploration expenditures(1) 16,695 2,524 3,771 90 23,080 2,283 10,211 3,985 4,291 5,530 25,420 (1) See Frequently used terms on pages 36 and 37. (2) Natural gas converted to oil- equivalent at 6 million cubic feet per 1,000 barrels. (3) Sales data reported net of purchases/sales contracts with the same counterparty. Note: Unless otherwise stated, production rates, project capacities, and acreage values are gross. Strategies • Innovative technologies drive success • Disciplined investments in advantaged, world-class portfolio • Integration captures value across businesses • Operational excellence maximizes asset value • Financial strength provides unmatched flexibility Business overview Business environment ExxonMobil is the world’s largest publicly traded international oil and gas company. ExxonMobil’s Outlook for Energy anticipates significant changes through 2040 to We have been an industry leader for more than 135 years. The quality, size, and boost living standards and accelerate decarbonization of the world’s energy system diversity of our integrated portfolio are evident across all three of our global to help address the risks of climate change. business segments: Upstream, Downstream, and Chemical. The integration of these three segments provides a distinct competitive advantage, period, the world’s economy will likely double, helping billions of people join the offering unmatched opportunities to grow shareholder value across business lines. middle class. By 2040, the world’s population is expected to reach 9.2 billion people. Over that With a commitment to operational excellence, disciplined investment, and technology development, we are maximizing the value of every molecule from the wellhead to the customer. Energy-efficiency improvements will help curb the growth in global energy demand to about 25 percent over the period to 2040. Efficiency gains, along with changes in the energy mix, will also help reduce the carbon intensity of global GDP by nearly 45 percent, as nuclear and renewables, led by solar and wind, contribute nearly 40 percent of incremental energy supplies to meet demand growth. Natural gas will grow the most of any energy type; oil will continue to play a leading role in the world’s energy mix, even as electric cars become more prevalent. The International Energy Agency estimates cumulative oil and natural gas investment needs may reach approximately $21 trillion between 2017 and 2040. 5 Innovating to drive our success 6 “Every day, I come to work and have the opportunity to research new ideas that one day could make a real difference. Innovation is who we are and what we do.” Sona Joseph, research analyst, Upstream Research Company Every $1 invested in our research portfolio will generate an expected value of Each year, we generate about $350 million through our technology license and usage fees $5+ 35+ years of ongoing climate-related research & technology funding 7 E X X O N M O B I L 2 0 1 7 S U M M A R Y A N N U A L R E P O R T Innovating to drive our success Technology is the foundation of ExxonMobil’s business and a key enabler to grow shareholder value. Our ongoing commitment to innovation, along with our proprietary technologies, provides a unique competitive advantage that reduces costs, improves efficiencies, creates new high-value products, and maximizes our return on projects. Our focus on innovation is not new: For more than 135 years, we have pioneered the science that enables innovative technologies such as the lithium ion battery, high-octane gasoline, 3D seismic imaging, and many others. These transformational discoveries changed our industry and the world, helping make modern society possible. Improving operational performance $1 billion invested annually in our worldwide research and development programs Since 2008, ExxonMobil scientists and engineers have received more than 3,300 patents in the United States alone. Our research programs are improving performance dehydration of natural gas inside pipes rather than in costly If brought to scale, this breakthrough could reduce the by reducing costs, enhancing output, and minimizing towers. These technologies are expected to reduce near- industry’s annual CO2 emissions by a level equivalent to environmental impacts. For example, we have developed term offshore project costs by more than $750 million. the annual energy-related emissions of about 5 million technologies that reduce corrosion by enabling the We also recently developed a high-manganese “super U.S. homes, and reduce global energy costs by up to Partnerships with more than universities over past 10 years 175 8 steel” for our Kearl mining operations that will likely save $2 billion a year. hundreds of millions of dollars over the life of the asset. In partnership with the Georgia Institute of Technology, we are exploring the use of reverse osmosis through synthetic molecular membranes to reduce the amount of energy required in our manufacturing operations. ExxonMobil employs more than scientists and engineers 19,000 Highlight: Capturing carbon dioxide Since 40 percent of global energy-related carbon emissions come from power generation, we are researching scalable and affordable carbon capture technologies that can benefit power plants and other large industrial facilities. Capturing carbon dioxide using today’s technology is complex, costly, and can reduce the power output by up to 20 percent. ExxonMobil is working with FuelCell Energy, Inc. to reduce CO2 emissions from natural gas power plants by as much as 90 percent using fuel cells, which create power instead of using it. ExxonMobil and FuelCell Energy, Inc. are piloting fuel cell technology for carbon capture. Our investments in proprietary technologies will enable Downstream project returns of greater than 20 percent. in-class hydrocracking unit that will use proprietary technology to create high-value, ultra-low-sulfur fuels and lube basestocks. This is just one example of our investments in new proprietary technologies – roughly $12 billion of projects that are expected to yield returns of more than 20 percent. Advancing energy sources and products In the Upstream, our capabilities in subsurface definition and development are enabling us to find more oil and natural gas, and then recover more from the reservoirs we find. Working with the National Center for Supercomputing Applications, for example, we developed proprietary software that quadruples the number of Our Chemical business also benefits from research and development, particularly in the area of innovative product development. For example, we developed and commercialized a polypropylene product that enables packaging manufacturers to produce rigid packages (such as plastic food containers) that have thinner walls, without sacrificing toughness. This reduces package weight and cost, and uses less material. processors used to model complex oil and natural We are also working to identify advanced biofuels – gas reservoirs, improving exploration and production a promising technology with the potential to increase results. Thanks to this innovation, we can simulate how energy supplies and reduce greenhouse gas emissions. hydrocarbons flow through the subsurface and plan We announced a breakthrough in our research with where to drill new production wells in record time. Analysis Synthetic Genomics, Inc., involving modification of that took weeks can now be completed in a single day. an algae strain that doubled its oil content without In addition, our proprietary seismic imaging technology helps us see opportunities in the subsurface that others cannot. We successfully used this technology on recent discoveries in the Black Sea and offshore Guyana. In the Downstream, technology is enabling us to expand our product offerings to meet today’s market demands. For example, in Rotterdam, we are building a new, best- significantly inhibiting the strain’s growth – a key milestone in potential scalability of the technology. ExxonMobil employs more than 2,300 PhDs 9 Growing shareholder value with a world-class portfolio 10 “The company’s dedication to safety, people, and the environment is so far beyond 9.8 billion oil-equivalent barrels of resource additions worldwide what most people think. That New investments delivering: focus really sets us apart from our competition.” Mike Dach, assistant production foreman, Permian Basin >100,000 barrels per day capacity for high-value fuels and lube basestocks >200,000 barrels per day of additional Upstream production capacity 500,000 tonnes increase in chemical manufacturing 11 E X X O N M O B I L 2 0 1 7 S U M M A R Y A N N U A L R E P O R T Growing shareholder value with a world-class portfolio ExxonMobil sees opportunity in a rapidly changing energy landscape. We are making advantaged investments across our world-class portfolio of businesses. Our focus on leading-edge technologies, coupled with industry-leading financial capacity, has enabled us to develop our best investment portfolio in decades. These investments leverage our integrated businesses and world-class operations to capitalize on opportunities across the entire value chain. High-impact new opportunities In the Upstream, ExxonMobil is pursuing high-quality exploration and production projects. In Guyana, for example, we hold more than 11 million acres offshore, where we have made six discoveries to date. We have identified additional leads, and exploration and development activities will continue throughout 2018. to our position in the Permian Basin through a series of Our successful exploration campaign offshore Guyana In Brazil, we acquired interest in the more-than-2-billion- acquisitions and acreage trades, bringing our total Permian continued through 2017, with six discoveries to date. barrel Carcara field. We also captured 10 exploration resource base to more than 9 billion oil-equivalent barrels. blocks in bid round 14, including acreage with significant Our Permian position now delivers lower-cost production, potential in the pre-salt play, one of the fastest- growing deepwater plays in the world. Exploration and development activities are planned to begin in 2018. In the United States, we are one of the most active operators in the Permian Basin in West Texas and eastern New Mexico. In 2017, we added nearly 275,000 net acres 12 $50 billion investment in the United States over the next five years which is available as feedstock to our U.S. Gulf Coast refineries and chemical plants. Our Upstream growth opportunities are geographically diverse and will yield attractive returns, even in a low-price environment. We achieve this by applying industry- leading capabilities, key technologies, and proprietary practices that improve drilling performance, reduce field development costs, and deliver operational efficiencies. Our growth opportunities will yield attractive returns, even in a low-price environment. Our entry into the deepwater Area 4 block offshore In Rotterdam, a new hydrocracking unit – using our Mozambique, containing an estimated 85 trillion gross proprietary technology to produce high-value, ultra- cubic feet of natural gas in-place, was also completed low-sulfur fuels and Group II lube basestocks – will also in 2017. This resource will support an ExxonMobil-led, begin operating in 2018. Furthermore, we announced multi-train LNG development, with potential capacity an expansion at our Singapore refinery to produce the ultimately exceeding 40 million tonnes per year. company’s EHC Group II basestocks, which are used Capitalizing on LNG expertise Extracting additional value across a range of industries. Completion is anticipated in 2019. Our global LNG position is unmatched in the industry. In the Downstream, we are investing in technology We are also enhancing our ability to handle light crude We have interest in 17 LNG trains around the world, with and facilities to produce higher-value products to meet from the Permian at our refineries in Baton Rouge net interest capacity of 22 million tonnes annually. the growing demand for enhanced fuels and premium and Baytown. We enhanced our leading LNG position with two major deals in 2017. Our acquisition of InterOil Corporation provides access to multiple discovered fields and additional lubricants. Capturing a larger share of these growing markets enables us to realize higher overall margins from our existing sites. Investing to meet chemical demand Global demand for chemicals continues to create exploration acreage in Papua New Guinea. These high- In 2018, our new coker unit at the Antwerp refinery in opportunities for value growth. To meet that demand, quality assets, coupled with growing resource discoveries Belgium will begin upgrading high-sulfur fuel oil into we are investing more than $10 billion over the next on existing acreage, provide a foundation for a low-cost, various forms of cleaner-burning diesel and distillates. five years in both new and expanded facilities on the multi-train expansion of existing LNG facilities. Highlight: Optimizing concept selection Our concept selection process creates development plans that pair the right facility with the right concept to drive down unit cost. We employ this process on all of our projects with the aim to maximize value over a development’s life cycle. U.S. Gulf Coast, leveraging logistically advantaged oil and natural gas to create the chemical building blocks for end products used around the world. At our Singapore chemical complex, we are expanding capacity with our recent acquisition of Jurong Aromatics. We are starting up new facilities that will manufacture higher-performance products. These enhancements to our complex enable us to better serve the major growth market in the Asia Pacific region. 13 Leveraging integration to grow value across businesses 14 “We make sure every molecule in a barrel of crude is used. Our integrated model means we can get the absolute most out of everything we process. Seeing all along the value chain helps us respond to changes in consumer demands.” ~80% 650,000 Sarah Loh, cat light ends contact engineer, barrels per day of refined products Baton Rouge refinery upgraded at integrated sites of global refining capacity is fully integrated with chemical or lube basestock manufacturing More than 50% of Downstream earnings come from lubricants and chemical integration 15 E X X O N M O B I L 2 0 1 7 S U M M A R Y A N N U A L R E P O R T Leveraging integration to grow value across businesses ExxonMobil’s integrated approach proves the adage, “The whole is more than the sum of its parts.” Our Upstream, Downstream, and Chemical businesses work together to create additional value by sharing knowledge, technology, expertise, and best practices across business lines. This collaboration leads to better-informed decisions, more efficient operations, and greater flexibility in responding to changing market conditions. Portfolio spans the value chain Our U.S. operations demonstrate how integration drives value. Our Upstream businesses produce oil and natural gas in the Permian and other basins. These volumes are transported via our midstream assets to our refineries Our world-class workforce effectively manages the complexity of our advantaged manufacturing facilities. and chemical complexes along the Gulf Coast and in the Midwest. From there, they are upgraded to higher- points or when short-term market opportunities Integration at ExxonMobil is a competitive advantage value fuels, products, and feedstocks through the fuels, develop. We can take advantage of logistics flexibility to that enables us to improve returns by responding quickly lubricants, and chemical value chains. ensure no value is lost to third parties. Simply put, we are to changing market conditions. This level of flexibility is By maximizing integration across the full value chain, we are also able to capture incremental value at transfer uniquely positioned in industry, capturing an additional difficult to replicate. $700 million of earnings per year through integration. >35,000 employees collaborate at our cross-functional sites worldwide 16 We also leverage our global knowledge and expertise Growing value and capturing savings to inform investment decisions in each business line. Nearly 80 percent of our refining capacity is integrated For example, insights from our Upstream teams helped with chemical or lubricant manufacturing facilities. guide expansion plans and project designs for our U.S. At these sites, we capture savings by sharing resources, Gulf Coast chemical facilities – growth supported by the using interconnected facilities, and coordinating operating integration with our rapidly growing production in practices. Integration also increases margins by allowing the Permian. us to direct feedstocks to the highest-value products. ExxonMobil leverages project management expertise across all businesses, employing innovative technologies, supporting capital efficiency, and driving best practices. At the LaBarge natural gas field, extensive Downstream 10-year average return on average capital employed(1)(2) experience has been applied to implement a multi- variable control system at the Shute Creek treating facility, increasing production and improving the purity of products. Multivariable control allows the plant to run closer to capacity and specification limits by optimizing across several operational parameters simultaneously. 17.6% 12.6% ExxonMobil Chevron Shell Total BP 9.2% 9.1% 7.0% (1) See Frequently used terms on pages 36 and 37. (2) Competitor data estimated on a consistent basis with ExxonMobil and based on public information. Shared knowledge and capabilities At our proposed joint venture project with SABIC near Highlight: Finding opportunities to grow Our collaborative approach increases margins by lowering Corpus Christi, Texas, we are planning to use an approach the cost of our feedstocks and growing the value of our our Upstream has implemented with great success in products. For example, at our Baytown manufacturing several projects around the world. We are constructing complex, lubricants and chemical integration contributes portions of the new facility at other locations and bringing more than 70 percent of earnings. them on site fully built. This process significantly speeds Another example is at our integrated facility in Singapore, where we have a state-of-the-art steam cracker that up construction, while also reducing costs by more than $1 billion. produces chemicals directly from crude oil – an industry This type of cross-functional sharing enables our project first. We can also process a range of liquid and natural management professionals to influence and learn from gas feedstocks at the site, optimizing them for maximum large, complex projects, while further strengthening our value. In response to growing Asian demand for premium capabilities and providing flexibility for support of future products, we recently added world-scale Mobil 1 lubricant activities. It also supports standardization and efficiency, blending facilities. ensuring best practices are broadly shared. One benefit of our integration strategy is the ability to capitalize on business opportunities by expanding existing sites, rather than building new ones. This results in significant cost savings and lowers our environmental impact. For example, on the U.S. Gulf Coast, we are expanding manufacturing of high-value products at our existing sites, with a savings of more than $1 billion compared to new construction. 136 cross-functional sites located in 39 countries around the world Our Houston campus brings together nearly 10,000 of our employees, fostering improved collaboration, creativity, and innovation, and accelerating the discovery of new resources, technologies, and products. 17 Maximizing asset value through operational excellence Leading safety performance Downstream and Chemical reliability improvement since 2015 >20% 30% more efficient execution of complex Upstream projects vs. competitor average “ExxonMobil is like a family – and in this environment, it’s critical that everyone is looking out for one another to ensure that every job is done safely, each and every day.” Sean Phillips, utilities technician, Mont Belvieu plastics plant 18 19 E X X O N M O B I L 2 0 1 7 S U M M A R Y A N N U A L R E P O R T Maximizing asset value through operational excellence Innovation enables us to invest in high-quality opportunities to enhance our asset portfolio. Integration helps us maximize returns across the Upstream, Downstream, and Chemical businesses. Our relentless focus on operational excellence enables us to get the most out of each and every facility, every hour, every day. Safety is good business A safe company is a well-run company. Achieving safe and environmentally responsible operations across a global enterprise requires a significant commitment from everyone at all levels of the organization. Success in safety Safety and operations integrity Lost-time injuries and illnesses rate: ExxonMobil workforce(1) U.S. petroleum industry benchmark(2) (incidents per 200,000 work hours) 0.20 0.15 0.10 0.05 0 2008 09 10 11 12 13 14 15 16 2017 (1) Employees and contractors. Includes XTO Energy Inc. data beginning in 2011. (2) Workforce safety data from participating American Petroleum Institute companies (2017 industry data not available at time of publication). 20 Our employees’ efforts to maximize facility capacity and improve reliability have increased the capacity of the PNG LNG facility more than 20 percent and made it one of the most reliable plants in the world. is the result of a disciplined, rigorous approach, which initiative that brought together expertise from all parts of also helps drive more reliable operations and improves our businesses to build a unique, integrated approach to financial results. process safety. In 2017, we had the fewest recordable injuries in our company’s history. Our focus on identifying and eliminating high-potential-consequence events is making a difference. We also continued to achieve outstanding process safety performance, driven by a cross-functional Nobody Gets Hurt Workers are empowered to take action immediately We deploy innovative techniques and technologies, many proven in the most challenging conditions and circumstances, to drive improvements. LNG facilities have enabled us to increase production 20 percent above the original facility capacity. Our Upstream, Downstream, and Chemical businesses are among the industry leaders in reliability. Project development and execution excellence Our project management skills – safely staying on time and on budget – are a major competitive advantage, especially in complex environments. We use proven systems and processes to guide the planning, design, and Our operational guidelines enable field personnel to execution of projects, enabling us to reduce costs better understand the most critical safeguards and focus and cycle times. their efforts accordingly. Thanks to this strategy, we have sustained fewer operational upsets and releases to the environment, and we continued to exhibit strong process safety performance in 2017. Maximizing capacity and minimizing downtime We apply the same attention, focus, and commitment to reliability as we do safety. In fact, the two go hand in hand. Fewer reliability upsets reduces the potential for safety One example is the use of phased developments that help us capture value sooner and apply learning-curve benefits as we advance additional phases of projects. Premier execution of challenging, complex projects (leading efficiency of major ExxonMobil start-ups over past 15 years) Employees and contractors collaborate to ensure Nobody Gets Hurt during drilling operations. Another example is leveraging existing infrastructure Development cost per oil-equivalent barrel whenever possible, such as using subsea tie-backs to Competitor cost average ExxonMobil Arctic ExxonMobil LNG 100% existing platforms to reduce costs, as we do off the coast of West Africa. incidents. Reliability is also a key driver to profitability. ExxonMobil Deepwater Finally, we deploy innovative techniques and technologies, Maximizing asset uptime and productivity leads to improved output and higher margins. Schedule (full funding to start-up) Competitor schedule average many proven in the most challenging conditions and 100% circumstances. We leverage our project management For example, introducing a multivariable control system – a technology originally used in our Downstream ExxonMobil Arctic ExxonMobil LNG ExxonMobil Deepwater operations – and removing bottlenecks at our PNG Source: ExxonMobil and Wood Mackenzie experience across all businesses to ensure the best people are leading our efforts, and transferring their knowledge and skills to others in the organization. 21 E X X O N M O B I L 2 0 1 7 S U M M A R Y A N N U A L R E P O R T Global operations As the world’s largest publicly held international oil and gas company, ExxonMobil has a diverse portfolio of high-quality projects and opportunities across our Upstream, Downstream, and Chemical businesses. Upstream: We have an active oil and gas presence in 38 countries. We use our unique expertise in exploring, developing, marketing, and producing global hydrocarbon resources to maximize value. Downstream: We are one of the world’s largest fuels and lubricants businesses. Our portfolio includes refining and lubricant blending facilities in 25 countries. We are one of the largest integrated refiners and manufacturers of fuels and lube basestocks, as well as a leading manufacturer of petroleum products and finished lubricants. Chemical: ExxonMobil is one of the most profitable chemical companies, with operations in 16 countries. Our unique portfolio of high-performance products delivers strong returns across the business cycle. 22 4.0 million oil-equivalent barrels of net oil and gas production per day(1) 5.5 million barrels of petroleum product sales per day(2) 25.4 million tonnes of chemical prime product sales(2) (1) Natural gas converted to oil-equivalent barrels using 6 million cubic feet per 1,000 barrels. (2) Sales data reported net of purchases/sales contracts with the same counterparty. 23 Countries with ExxonMobil operations Upstream Downstream Chemical Locations as of December 31, 2017 E X X O N M O B I L 2 0 1 7 S U M M A R Y A N N U A L R E P O R T Upstream $13.4 billion in earnings 2.8 Boeb proved reserve additions(1) More than 20% annual growth in net tight-oil production since 2010 9.8 billion oil-equivalent barrels of resource base additions Major project start-ups added >200,000 barrels per day of production capacity 53 million new exploration acres captured “We’re excited about the potential of the liquids-rich Permian. It’s a low-cost resource, and we’ve built an outstanding position in the basin. Thanks to our strategically located midstream assets and the proximity of our refineries along the U.S. Gulf Coast, we’re poised for growth and set up to maximize our return on investment for years to come.” Sara Ortwein, president XTO Energy Inc. Upstream statistical recap Earnings (millions of dollars) Liquids production (net, thousands of barrels per day) Natural gas production available for sale (net, millions of cubic feet per day) Oil-equivalent production(2) (net, thousands of barrels per day) Proved reserves replacement ratio(1)(3) (percent) Resource additions(3) (millions of oil-equivalent barrels) Average capital employed(3) (millions of dollars) Return on average capital employed(3) (percent) Capital and exploration expenditures(3) (millions of dollars) 2017 2016 2015 2014 2013 13,355 2,283 10,211 3,985 189 9,763 174,674 7.6 16,695 196 2,365 7,101 2,345 27,548 2,111 26,841 2,202 10,127 4,053 – 2,453 170,055 0.1 14,542 10,515 4,097 69 1,378 169,954 4.2 25,407 11,145 3,969 111 3,206 164,965 16.7 32,727 11,836 4,175 106 6,595 152,969 17.5 38,231 (1) Proved reserves exclude asset sales. (2) Natural gas converted to oil-equivalent at 6 million cubic feet per 1,000 barrels. (3) See Frequently used terms on pages 36 and 37. 24 Increase Upstream earnings by… 1 2 3 increasing Permian tight-oil production fivefold to nearly 600 Koebd net by 2025 rapidly progressing three near-term developments in Guyana to deliver ~450 Koebd production by 2025 starting up new LNG projects in Mozambique and PNG, with potential to add more than 20 Mta of capacity by 2025 Strategies • Enhance industry-leading portfolio • Deliver lowest-cost-of-supply projects • Grow tight-liquids production to more than 800 Koebd net by 2025 Business overview Our Upstream business is a global leader in exploration, development, production, natural gas marketing, and energy research. We maintain a large, diverse portfolio of opportunities to provide profitable long-term value growth. Between a highly successful exploration program and recent strategic acquisitions, we added 9.8 billion oil-equivalent barrels to our resource base in 2017. We plan to grow our tight-oil production in the U.S. Permian Basin fivefold. We also plan to grow our business in Brazil, with both exploration and development activities planned to start in 2018. We also have LNG that is among the lowest cost in the industry, with developing projects in Mozambique and Papua New Guinea. Our capital discipline and proven project management systems – incorporating best practices from across our global operations – enable us to create and drive value. From the initial discovery phase through production start-up, we benefit from our extensive multidisciplinary teamwork, industry-leading technology, rigorous management practices, and proven operational expertise. Business environment Meeting the world’s growing demand for energy presents a tremendous challenge that requires a long- term view, significant investment, and continued innovation. Global demand for oil is expected to rise by about 20 percent from 2016 to 2040, continuing to be the primary source of energy for transportation and as a feedstock for chemicals. Demand for natural gas is expected to grow nearly 40 percent over the same period, led by increasing use to help meet rising electricity demand with lower-emission fuels. To meet this demand, increased supplies of both oil and natural gas will be needed, much of which will come from unconventional reservoirs. We expect global LNG volumes to more than double by 2040, mainly to supply the Asian and European markets. Our focus is on improving our long-term profitability by investing in low-cost-of-supply, higher-margin barrels, maximizing the value of our current capacity, and reducing costs through productivity and efficiency gains. 2525 Downstream $5.6 billion in earnings 130% increase in synthetic lubricants sales in the past decade 2 market entries with branded sales in Mexico and Indonesia 20,000 miles between oil changes using Mobil 1 Annual Protection synthetic lubricant 25% return on average capital employed 2018 start-ups projected to add 100,000 barrels per day of upgraded products “Our integrated Fuels & Lubricants organization provides high-value products and services to our customers – backed by our world-class manufacturing and supply chain – which lead the industry in efficiency. Our commitment to innovation, technology, brand, and sustainability continues to deliver greater value for our customers and shareholders.” Bryan Milton, president ExxonMobil Fuels & Lubricants Company Downstream statistical recap Earnings (millions of dollars) Refinery throughput (thousands of barrels per day) Petroleum product sales(1) (thousands of barrels per day) Average capital employed(2) (millions of dollars) Return on average capital employed(2) (percent) Capital expenditures(2) (millions of dollars) 2017 2016 2015 2014 2013 5,597 4,291 5,530 4,201 4,269 5,482 6,557 4,432 5,754 3,045 4,476 5,875 3,449 4,585 5,887 22,514 21,804 23,253 23,977 24,430 24.9 2,524 19.3 2,462 28.2 2,613 12.7 3,034 14.1 2,413 (1) Petroleum product sales data reported net of purchases/sales contracts with the same counterparty. (2) See Frequently used terms on pages 36 and 37. 26 EXXONMOBIL 2017 SUMMARY ANNUAL REPORTIncrease Downstream earnings by… 1 2 3 upgrading 200 Kbd of fuel oil to higher-quality distillates, lube basestocks, and chemicals by 2025 growing our industry-leading lube basestock and synthetic lubricant businesses by 2025 capturing full value-chain benefits of our Permian and U.S. Gulf Coast facilities by 2025 Strategies • Maintain best-in-class operational excellence • Provide high-quality products and services to our customers • Capitalize on integration and maximize value from technology Business overview Our Downstream business is one of the world’s largest refiners and lubricants manufacturers. Our 22 refineries – 17 of which are co-located with chemical or lubricant facilities – enable us to manufacture higher-value fuels, lubricants, and chemical products more efficiently than our competitors. We are highgrading our product slate to maximize the value of every molecule. Our long-standing record of technology leadership underpins the development of the products our customers demand. Our integrated business model across the entire value chain enables us to benefit from lower-cost feedstocks than our competitors. Our proprietary process and catalyst technologies help convert those feedstocks into the fuels and lubricants marketed under our world-renowned Exxon, Mobil, Mobil 1, and Esso brands. That full value-chain integration is expected to generate an additional $1 billion in the U.S. Permian alone. Business environment By 2040, demand for transportation fuel is expected to increase by nearly 30 percent, driven by commercial transportation in developing countries. Demand for diesel fuel is expected to increase by more than 30 percent, while worldwide gasoline demand is expected to level off, as declining demand for light-duty transportation fuel in developed countries is offset by growth in developing nations. Lubricant demand is also expected to grow, particularly in Asia. Within the high-value synthetic lubricants sector, where we have a leading market position, demand is expected to outpace industry growth significantly. We selectively invest in sites and value chains that generate the highest returns. Our integrated business model, world-class assets, and feedstock flexibility have positioned us to be a market leader across the business cycle. 27 E X X O N M O B I L 2 0 1 7 S U M M A R Y A N N U A L R E P O R T Chemical $4.5 billion in earnings 1.3 million tonnes of new polyethylene capacity at Mont Belvieu, Texas $3.8 billion investment in specialty businesses and advantaged feed 6.8 million tonnes of performance products sales 16% return on average capital employed 3.5 million tonnes Singapore aromatics capacity post- Jurong Aromatics acquisition “We’re accelerating our investments to capitalize on chemical demand growth, much of which is coming from Asia. We will be adding new facilities in North America and Asia with a focus on manufacturing the sustainable performance products our customers want. Our aggressive growth program will leverage the strength of the Corporation in executing large-scale capital projects.” John Verity, president ExxonMobil Chemical Company Chemical statistical recap Earnings (millions of dollars) Prime product sales(1) (thousands of tonnes) Average capital employed(2) (millions of dollars) Return on average capital employed(2) (percent) Capital expenditures(2) (millions of dollars) 2017 2016 2015 2014 2013 4,518 25,420 27,516 16.4 3,771 4,615 24,925 24,844 18.6 2,207 4,418 24,713 23,750 18.6 2,843 4,315 24,235 22,197 19.4 2,741 3,828 24,063 20,665 18.5 1,832 (1) Prime product sales data reported net of purchases/sales contracts with the same counterparty. (2) See Frequently used terms on pages 36 and 37. 28 Increase Chemical earnings by… 1 2 3 starting up 13 new facilities and increasing production by 10 million tonnes per year by 2025 aggressively growing sales of high-value performance products by 50% by 2025 expanding technology portfolio with a focus on sustainability leadership by 2025 Strategies • Strengthen existing businesses and integrated complexes • Leverage unique competitive position for performance products growth • Embed sustainability leadership into business Business overview Our Chemical business is one of the largest, most successful chemical companies in the world. Investment in technology and new capacity enables us to capitalize on growing chemical demand worldwide. We are investing in two world-class steam crackers on the U.S. Gulf Coast. We are expanding our capacity in Singapore to meet the needs of growing economies in Asia. Leveraging our strength in technology, we are highgrading our product portfolio to focus on high-performance, high-margin products. We process feedstock from our Upstream and Downstream operations, and from third parties, with world- scale manufacturing facilities strategically located around the globe. We focus on product lines that benefit from our scale and technology advantages, resulting in lower costs. We have a strong market position in every business line, particularly in high-performance products, and are well positioned to generate attractive returns throughout the business cycle. Business environment Global chemical demand has doubled since 2000, well above economic and energy demand. Over the next two to three decades, we expect this demand to continue to grow at about 4 percent annually. Nearly three-quarters of that increased demand will be in Asia. Rising prosperity and a growing middle class in the region will drive expanded purchases of packaged goods, appliances, cars, and other consumable items, many of which are manufactured from the chemicals we produce. We are committed to helping our customers reduce their impact on the environment. We are leading the way in the development of advanced polymer materials that make cars lighter and more fuel efficient, and improving plastic packaging that reduces the energy needed to ship goods around the world. 29 E X X O N M O B I L 2 0 1 7 S U M M A R Y A N N U A L R E P O R T Corporate sustainability At ExxonMobil, we help deliver the energy the world Environment totaled more than $8 billion. We are deploying energy- needs. In doing so, we also consider the impact of We conduct business in a manner that addresses the efficient technologies such as cogeneration, as well as our operations on local economies, communities, and environmental and economic needs of the communities technologies to reduce methane emissions and flaring. the environment. Our approach to sustainability is in which we operate. We work to mitigate risks We are also researching next-generation energy sources focused on six key areas: and improve our environmental performance. Our such as algae biofuels and advanced carbon capture • Safety, health, and the workplace • Managing climate change risks • Environmental performance • Community engagement, human rights, and strategic investments • Local development and supply chain management • Corporate governance approach is grounded in a scientific understanding using fuel cells. of the environmental effects of our operations and a commitment to develop, maintain, and operate Local economic growth and development projects using appropriate standards. We support Providing sustainable economic benefits and ensuring organizations focused on biodiversity protection local participation in our business are important and land conservation. We also engage with local elements in creating shared value for our host countries stakeholders to understand their perspectives. and local communities. Our approach focuses on Climate change training and employing a local workforce, supporting local suppliers, and improving the livelihood of As a partner in community health, education, and Providing affordable energy to support prosperity while communities through local investments. In 2017, our economic development, we also aim to support many reducing environmental impacts – including the risks supplier diversity program continued to expand globally of the areas set forth in the United Nations Sustainable of climate change – is our industry’s dual challenge. It with women- and indigenous-owned businesses. Development Goals. will take business, government, and individuals working together to make meaningful progress. We support Community and social impact the Paris Agreement as an important framework for Our multifaceted approach to engaging with addressing this challenge. We continue to take action to communities helps us create and maintain productive mitigate our emissions and help consumers lessen their relationships with our neighbors. We are committed greenhouse gas impact. Since 2000, our investments to managing our social and environmental impacts that provide lower-emission energy solutions have responsibly, upholding respect for human rights, The ExxonMobil Foundation is collaborating with Mercy Corps, Technoserve, and the Center for Global Development to measure the effect of mobile banking and training on women’s economic empowerment in Indonesia and Tanzania. and making social investments tailored to the needs of individual communities. We focus many of our community investment efforts on three signature initiatives: improving education, combating malaria, and advancing economic opportunities for women. 30 Financial information Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Exxon Mobil Corporation We have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Exxon Mobil Corporation and its subsidiaries as of December 31, 2017 and 2016, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2017 (not presented herein) appearing in the ExxonMobil 2017 Financial Statements and Supplemental Information booklet enclosed with the proxy materials for the 2018 annual meeting of shareholders of Exxon Mobil Corporation and have issued our report thereon dated February 28, 2018, which included an unqualified opinion on those consolidated financial statements and a paragraph describing the change in the manner in which the Corporation accounts for certain sales and value-added taxes. In our opinion, the information set forth in the accompanying condensed consolidated financial statements (pages 33–35) is fairly stated, in all material respects, in relation to the consolidated financial statements from which it has been derived. Dallas, Texas February 28, 2018 Summary of Accounting Policies and Practices The Corporation’s accounting and financial reporting fairly reflect its straightforward business model involving the extracting, refining, and marketing of hydrocarbons and hydrocarbon-based products. The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (GAAP) requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from these estimates. The summary financial statements include the accounts of those subsidiaries the Corporation controls. They also include the Corporation’s share of the undivided interest in certain Upstream assets, liabilities, revenues, and expenses. Amounts representing the Corporation’s interest in the net assets and net income of entities that it does not control are included in “Investments, advances, and long-term receivables” on the Balance Sheet and “Income from equity affiliates” on the Income Statement. The “functional currency” for translating the accounts of the majority of Downstream and Chemical operations outside the United States is the local currency. The local currency is also used for Upstream operations that are relatively self-contained and integrated within a particular country. The U.S. dollar is used for operations in countries with a history of high inflation and certain other countries. Revenues associated with sales of crude oil, natural gas, petroleum, and chemical products are recognized when the products are delivered and title passes to the customer. Beginning in 2017, for all periods presented, the Corporation reports certain sales and value-added taxes imposed on and concurrent with revenue-producing transactions with customers and collected on behalf of governmental authorities on a net basis in the Consolidated Statement of Income (excluded from both revenues and costs). Inventories of crude oil, products, and merchandise are carried at the lower of current market value or cost (generally determined under the last-in, first-out method – LIFO). Inventories of materials and supplies are valued at cost or less. The Corporation makes use of derivative instruments. When derivatives are used, they are recorded at fair value, and gains and losses arising from changes in their fair value are recognized in earnings. The Corporation’s exploration and production activities are accounted for under the “successful efforts” method. Depreciation, depletion, and amortization are primarily determined under either the unit-of-production method or the straight-line method. Unit- of-production rates are based on the amount of proved developed reserves of oil, natural gas, and other minerals that are estimated to be recoverable from existing facilities. The straight-line method is based on estimated asset service life. The Corporation incurs retirement obligations for certain assets at the time they are installed. The fair values of these obligations are recorded as liabilities on a discounted basis and are accreted over time for the change in their present value. The costs associated with these liabilities are capitalized as part of the related assets and depreciated. Liabilities for environmental costs are recorded when it is probable that obligations have been incurred and the amounts can be reasonably estimated. The Corporation recognizes the underfunded or overfunded status of defined benefit pension and other postretirement plans as a liability or asset in the balance sheet with the offset in equity, net of deferred taxes. A variety of claims have been made against ExxonMobil and certain of its consolidated subsidiaries in a number of pending lawsuits and tax disputes. For further information on litigation and tax contingencies, see Notes 16 and 19 to the Consolidated Financial Statements in ExxonMobil’s 2017 Financial Statements and Supplemental Information booklet. The Corporation awards share-based compensation to employees in the form of restricted stock and restricted stock units. Compensation expense is measured by the price of the stock at the date of grant and is recognized in income over the requisite service period. Further information on the Corporation’s accounting policies, estimates, and practices can be found in ExxonMobil’s 2017 Financial Statements and Supplemental Information booklet (Critical Accounting Estimates and Note 1 to the Consolidated Financial Statements). 3131 E X X O N M O B I L 2 0 1 7 S U M M A R Y A N N U A L R E P O R T E X X O N M O B I L 2 0 1 7 S U M M A R Y A N N U A L R E P O R T Financial highlights (millions of dollars, unless noted) Net income attributable to ExxonMobil Cash flow from operations and asset sales(1) Capital and exploration expenditures(1) Research and development costs Total debt at year end Average capital employed(1) Market valuation at year end Regular employees at year end (thousands) Key financial ratios Return on average capital employed(1) (percent) Earnings to average ExxonMobil share of equity (percent) Debt to capital(2) (percent) Net debt to capital(3) (percent) Current assets to current liabilities (times) Fixed-charge coverage (times) Dividend and shareholder return information Dividends per common share (dollars) Dividends per share growth (annual percent) Number of common shares outstanding (millions) Average Average – assuming dilution Year end Total shareholder return(1) (annual percent) Common stock acquired (millions of dollars) Market quotations for common stock (dollars) High Low Average daily close Year-end close (1) See Frequently used terms on pages 36 and 37. (2) Debt includes short-term and long-term debt. Capital includes short-term and long-term debt and total equity. (3) Debt net of cash and cash equivalents, excluding restricted cash. 3232 2017 2016 2015 19,710 33,169 23,080 1,063 42,336 222,631 354,561 69.6 7,840 26,357 19,304 1,058 42,762 212,226 374,438 71.1 16,150 32,733 31,051 1,008 38,687 208,755 323,928 73.5 2017 9.0 11.1 17.9 16.8 0.82 13.2 2017 3.06 2.7 4,256 4,256 4,239 (3.8) 747 91.34 76.05 81.86 83.64 2016 3.9 4.6 19.7 18.4 0.87 5.7 2016 2.98 3.5 4,177 4,177 4,148 19.8 977 95.55 71.55 86.22 90.26 2015 7.9 9.4 18.0 16.5 0.79 17.6 2015 2.88 6.7 4,196 4,196 4,156 (12.6) 4,039 93.45 66.55 82.83 77.95 Summary statement of income (millions of dollars) Revenues and other income Sales and other operating revenue(1) Income from equity affiliates Other income Total revenues and other income Costs and other deductions Crude oil and product purchases Production and manufacturing expenses Selling, general and administrative expenses Depreciation and depletion Exploration expenses, including dry holes Interest expense Other taxes and duties Total costs and other deductions Income before income taxes Income taxes Net income including noncontrolling interests Net income attributable to noncontrolling interests Net income attributable to ExxonMobil Earnings per common share (dollars) Earnings per common share – assuming dilution (dollars) 2017 2016 2015 237,162 5,380 1,821 244,363 128,217 34,128 10,956 19,893 1,790 601 30,104 225,689 18,674 (1,174) 19,848 138 19,710 4.63 4.63 200,628 4,806 2,680 208,114 104,171 31,927 10,799 22,308 1,467 453 29,020 200,145 7,969 (406) 8,375 535 7,840 1.88 1.88 239,854 7,644 1,750 249,248 130,003 35,587 11,501 18,048 1,523 311 30,309 227,282 21,966 5,415 16,551 401 16,150 3.85 3.85 (1) Effective December 31, 2017, the Corporation revised its accounting policy election related to the reporting of sales-based taxes. For more information, please refer to Note 2 in ExxonMobil’s 2017 Financial Statements and Supplemental Information booklet. The information in the Summary statement of income (for 2015 to 2017), the Summary balance sheet (for 2016 and 2017), and the Summary statement of cash flows (for 2015 to 2017), shown on pages 33 through 35, corresponds to the information in the Consolidated statement of income, the Consolidated balance sheet, and the Consolidated statement of cash flows in ExxonMobil’s 2017 Financial Statements and Supplemental Information booklet. See also Management’s discussion and analysis of financial condition and results of operations and Other information in ExxonMobil’s 2017 Financial Statements and Supplemental Information booklet. 3333 E X X O N M O B I L 2 0 1 7 S U M M A R Y A N N U A L R E P O R T E X X O N M O B I L 2 0 1 7 S U M M A R Y A N N U A L R E P O R T Summary balance sheet at year end (millions of dollars) Assets Current assets Cash and cash equivalents Notes and accounts receivable, less estimated doubtful amounts Inventories Crude oil, products and merchandise Materials and supplies Other current assets Total current assets Investments, advances and long-term receivables Property, plant and equipment, at cost, less accumulated depreciation and depletion Other assets, including intangibles, net Total assets Liabilities Current liabilities Notes and loans payable Accounts payable and accrued liabilities Income taxes payable Total current liabilities Long-term debt Postretirement benefits reserves Deferred income tax liabilities Long-term obligations to equity companies Other long-term obligations Total liabilities Commitments and contingencies(1) Equity Common stock without par value Earnings reinvested Accumulated other comprehensive income Common stock held in treasury ExxonMobil share of equity Noncontrolling interests Total equity Total liabilities and equity 2017 2016 3,177 25,597 12,871 4,121 1,368 47,134 39,160 252,630 9,767 348,691 17,930 36,796 3,045 57,771 24,406 21,132 26,893 4,774 19,215 154,191 14,656 414,540 (16,262) (225,246) 187,688 6,812 194,500 348,691 3,657 21,394 10,877 4,203 1,285 41,416 35,102 244,224 9,572 330,314 13,830 31,193 2,615 47,638 28,932 20,680 34,041 5,124 20,069 156,484 12,157 407,831 (22,239) (230,424) 167,325 6,505 173,830 330,314 (1) For more information, please refer to Note 16 in ExxonMobil’s 2017 Financial Statements and Supplemental Information booklet. The information in the Summary statement of income (for 2015 to 2017), the Summary balance sheet (for 2016 and 2017), and the Summary statement of cash flows (for 2015 to 2017), shown on pages 33 through 35, corresponds to the information in the Consolidated statement of income, the Consolidated balance sheet, and the Consolidated statement of cash flows in ExxonMobil’s 2017 Financial Statements and Supplemental Information booklet. See also Management’s discussion and analysis of financial condition and results of operations and Other information in ExxonMobil’s 2017 Financial Statements and Supplemental Information booklet. 3434 Summary statement of cash flows (millions of dollars) Cash flows from operating activities Net income including noncontrolling interests Adjustments for noncash transactions Depreciation and depletion Deferred income tax charges/(credits) Postretirement benefits expense in excess of/(less than) net payments Other long-term obligation provisions in excess of/(less than) payments Dividends received greater than/(less than) equity in current earnings of equity companies Changes in operational working capital, excluding cash and debt Reduction/(increase) – Notes and accounts receivable – Inventories – Other current assets Increase/(reduction) – Accounts and other payables Net (gain) on asset sales All other items – net Net cash provided by operating activities Cash flows from investing activities Additions to property, plant and equipment Proceeds associated with sales of subsidiaries, property, plant and equipment, and sales and returns of investments Decrease/(increase) in restricted cash and cash equivalents Additional investments and advances Other investing activities including collection of advances Net cash used in investing activities Cash flows from financing activities Additions to long-term debt Reductions in long-term debt Additions to short-term debt Reductions in short-term debt Additions/(reductions) in commercial paper, and debt with three months or less maturity Cash dividends to ExxonMobil shareholders Cash dividends to noncontrolling interests Changes in noncontrolling interests Tax benefits related to stock-based awards Common stock acquired Common stock sold Net cash used in financing activities Effects of exchange rate changes on cash Increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 2017 2016 2015 19,848 19,893 (8,577) 1,135 (610) 131 (3,954) (1,682) (117) 5,104 (334) (771) 30,066 (15,402) 3,103 – (5,507) 2,076 (15,730) 60 – 1,735 (5,024) 2,181 (13,001) (184) (150) – (747) – (15,130) 314 (480) 3,657 3,177 8,375 22,308 (4,386) (329) (19) (579) (2,090) (388) 171 915 (1,682) (214) 22,082 (16,163) 4,275 – (1,417) 902 (12,403) 12,066 – – (314) (7,459) (12,453) (162) – – (977) 6 (9,293) (434) (48) 3,705 3,657 16,551 18,048 (1,832) 2,153 (380) (691) 4,692 (379) 45 (7,471) (226) (166) 30,344 (26,490) 2,389 42 (607) 842 (23,824) 8,028 (26) – (506) 1,759 (12,090) (170) – 2 (4,039) 5 (7,037) (394) (911) 4,616 3,705 The information in the Summary statement of income (for 2015 to 2017), the Summary balance sheet (for 2016 and 2017), and the Summary statement of cash flows (for 2015 to 2017), shown on pages 33 through 35, corresponds to the information in the Consolidated statement of income, the Consolidated balance sheet, and the Consolidated statement of cash flows in ExxonMobil’s 2017 Financial Statements and Supplemental Information booklet. See also Management’s discussion and analysis of financial condition and results of operations and Other information in ExxonMobil’s 2017 Financial Statements and Supplemental Information booklet. 3535 E X X O N M O B I L 2 0 1 7 S U M M A R Y A N N U A L R E P O R T E X X O N M O B I L 2 0 1 7 S U M M A R Y A N N U A L R E P O R T Frequently used terms Listed below are definitions of several of ExxonMobil’s key business and financial performance measures and other terms. These definitions are provided to facilitate understanding of the terms and their calculation. In the case of financial measures that we believe constitute “non-GAAP financial measures” under Securities and Exchange Commission Regulation G, we provide a reconciliation to the most comparable Generally Accepted Accounting Principles (GAAP) measure and other information required by that rule. Total shareholder return (TSR) • Measures the change in value of an investment in stock over a specified period of time, assuming dividend reinvestment. We calculate shareholder return over a particular measurement period by: dividing (1) the sum of (a) the cumulative value of dividends received during the measurement period, assuming reinvestment, plus (b) the difference between the stock price at the end and at the beginning of the measurement period; by (2) the stock price at the beginning of the measurement period. For this purpose, we assume dividends are reinvested in stock at market prices at approximately the same time actual dividends are paid. Shareholder return is usually quoted on an annualized basis. Capital and exploration expenditures (Capex) • Represents the combined total of additions at cost to property, plant and equipment, and exploration expenses on a before-tax basis from the Summary statement of income. ExxonMobil’s Capex includes its share of similar costs for equity companies. Capex excludes assets acquired in nonmonetary exchanges (effective 2013), the value of ExxonMobil shares used to acquire assets, and depreciation on the cost of exploration support equipment and facilities recorded to property, plant and equipment when acquired. While ExxonMobil’s management is responsible for all investments and elements of net income, particular focus is placed on managing the controllable aspects of this group of expenditures. Proved reserves • Proved reserve figures in this publication are determined in accordance with SEC definitions in effect at the end of each applicable year, except that in statements covering reserve replacement for years prior to 2009, reserves include oil sands and equity company reserves, which at the time were excluded from SEC reserves. Proved reserves replacement ratio • The reserves replacement ratio is calculated for a specified period utilizing the applicable proved oil-equivalent reserves additions divided by oil-equivalent production. See “Proved reserves” above. Resources, resource base, and recoverable resources • Along with similar terms used in this report, these refer to the total remaining estimated quantities of oil and natural gas that are expected to be ultimately recoverable. ExxonMobil refers to new discoveries and acquisitions of discovered resources as resource additions. The resource base includes quantities of oil and natural gas that are not yet classified as proved reserves, but that are expected to be ultimately moved into the proved reserves category and produced in the future. The term “resource base” is not intended to correspond to SEC definitions such as “probable” or “possible” reserves. The term “in-place” refers to those quantities of oil and natural gas estimated to be contained in known accumulations and includes recoverable and unrecoverable amounts. Exploration resource addition cost Exploration portion of Upstream Capex (millions of dollars) Exploration resource additions (millions of oil-equivalent barrels) Exploration resource addition cost per OEB (dollars) 2017 6,271 3,375 1.86 2016 1,826 2,318 0.79 2015 2,680 1,138 2.36 2014 3,689 2,942 1.25 2013 7,155 5,703 1.25 Exploration resource addition cost per oil-equivalent barrel is a performance measure that is calculated using the Exploration portion of Upstream capital and exploration expenditures (Capex) divided by exploration resource additions (in oil-equivalent barrels – OEB). ExxonMobil refers to new discoveries, and the non-proved portion of discovered resources that were acquired, as exploration resource additions. Exploration resource additions include quantities of oil and natural gas that are not yet classified as proved reserves, but which ExxonMobil believes will likely be moved into the proved reserves category and produced in the future. The impact of the nonmonetary portion of asset exchanges is excluded in 2014, 2016, and 2017. Return on average capital employed (ROCE) (millions of dollars) Net income attributable to ExxonMobil Financing costs (after tax) Gross third-party debt ExxonMobil share of equity companies All other financing costs – net Total financing costs Earnings excluding financing costs Average capital employed Return on average capital employed – corporate total 2017 19,710 (709) (204) 515 (398) 20,108 222,631 9.0% 2016 7,840 (683) (225) 423 (485) 8,325 212,226 3.9% 2015 16,150 (362) (170) 88 (444) 16,594 208,755 7.9% 2014 32,520 (140) (256) (68) (464) 32,984 203,110 16.2% 2013 32,580 (163) (239) 83 (319) 32,899 191,575 17.2% ROCE is a performance measure ratio. From the perspective of the business segments, ROCE is annual business segment earnings divided by average business segment capital employed (average of beginning and end-of-year amounts). These segment earnings include ExxonMobil’s share of segment earnings of equity companies, consistent with our capital employed definition, and exclude the cost of financing. The Corporation’s total ROCE is net income attributable to ExxonMobil, excluding the after- tax cost of financing, divided by total corporate average capital employed. The Corporation has consistently applied its ROCE definition for many years and views it as the best measure of historical capital productivity in our capital-intensive, long-term industry, both to evaluate management’s performance and to demonstrate to shareholders that capital has been used wisely over the long term. Additional measures, which are more cash-flow based, are used to make investment decisions. See page 4 for segment information relevant to ROCE. 3636 Capital employed at year end (millions of dollars) Business uses: asset and liability perspective Total assets Less liabilities and noncontrolling interests share of assets and liabilities Total current liabilities excluding notes and loans payable Total long-term liabilities excluding long-term debt Noncontrolling interests share of assets and liabilities Add ExxonMobil share of debt-financed equity company net assets Total capital employed Total corporate sources: debt and equity perspective Notes and loans payable Long-term debt ExxonMobil share of equity Less noncontrolling interests share of total debt Add ExxonMobil share of equity company debt Total capital employed 2017 2016 2015 2014 2013 348,691 330,314 336,758 349,493 346,808 (39,841) (72,014) (8,298) 3,929 232,467 17,930 24,406 187,688 (1,486) 3,929 232,467 (33,808) (79,914) (8,031) 4,233 212,794 13,830 28,932 167,325 (1,526) 4,233 212,794 (35,214) (86,047) (8,286) 4,447 211,658 18,762 19,925 170,811 (2,287) 4,447 211,658 (47,165) (92,143) (9,099) 4,766 205,852 17,468 11,653 174,399 (2,434) 4,766 205,852 (55,916) (87,698) (8,935) 6,109 200,368 15,808 6,891 174,003 (2,443) 6,109 200,368 Capital employed is a measure of net investment. When viewed from the perspective of how the capital is used by the businesses, it includes ExxonMobil’s net share of property, plant and equipment and other assets, less liabilities, excluding both short-term and long-term debt. When viewed from the perspective of the sources of capital employed in total for the Corporation, it includes ExxonMobil’s share of total debt and equity. Both of these views include ExxonMobil’s share of amounts applicable to equity companies, which the Corporation believes should be included to provide a more comprehensive measure of capital employed. Cash flow from operations and asset sales (millions of dollars) Net cash provided by operating activities Proceeds associated with sales of subsidiaries, property, plant and equipment, and sales and returns of investments Cash flow from operations and asset sales 2017 30,066 3,103 33,169 2016 22,082 4,275 26,357 2015 30,344 2,389 32,733 2014 45,116 4,035 49,151 2013 44,914 2,707 47,621 Cash flow from operations and asset sales is the sum of the net cash provided by operating activities and proceeds associated with sales of subsidiaries, property, plant and equipment, and sales and returns of investments from the Summary statement of cash flows. This cash flow reflects the total sources of cash from both operating the Corporation’s assets and from the divesting of assets. The Corporation employs a long-standing and regular disciplined review process to ensure that all assets are contributing to the Corporation’s strategic objectives. Assets are divested when they are no longer meeting these objectives or are worth considerably more to others. Because of the regular nature of this activity, 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. Free cash flow (millions of dollars) Net cash provided by operating activities Additions to property, plant and equipment Proceeds associated with sales of subsidiaries, property, plant and equipment, and sales and returns of investments Additional investments and advances Other investing activities including collection of advances Free cash flow 2017 2016 2015 2014 2013 30,066 (15,402) 3,103 (5,507) 2,076 14,336 22,082 (16,163) 4,275 (1,417) 902 9,679 30,344 (26,490) 2,389 (607) 842 6,478 45,116 (32,952) 4,035 (1,631) 3,346 17,914 44,914 (33,669) 2,707 (4,435) 1,124 10,641 Free cash flow is cash flow from operations and asset sales less additions to property, plant and equipment, and additional investments and advances, plus other investing activities, including collection of advances. This measure is useful when evaluating cash available for financing activities, including shareholder distributions, after investment in the business. Distributions to shareholders (millions of dollars) Dividends paid to ExxonMobil shareholders Cost of shares acquired to reduce shares outstanding Distributions to ExxonMobil shareholders Memo: Gross cost of shares acquired to offset shares or units settled in shares issued under benefit plans and programs 2017 13,001 – 13,001 747 2016 12,453 – 12,453 977 2015 12,090 3,000 15,090 1,039 2014 11,568 12,000 23,568 1,183 2013 10,875 15,000 25,875 998 The Corporation distributes cash to shareholders in the form of both dividends and share purchases. Shares are acquired both to reduce shares outstanding and to offset shares or units settled in shares issued in conjunction with company benefit plans and programs. For purposes of calculating distributions to shareholders, the Corporation only includes the cost of those shares acquired to reduce shares outstanding. 3737 E X X O N M O B I L 2 0 1 7 S U M M A R Y A N N U A L R E P O R T E X X O N M O B I L 2 0 1 7 S U M M A R Y A N N U A L R E P O R T Board of Directors, Officers, and Affiliated Companies* Back row, left to right Michael J. Boskin T.M. Friedman Professor of Economics and Senior Fellow, Hoover Institution, Stanford University Darren W. Woods Chairman of the Board and Chief Executive Officer Angela F. Braly Former Chairman of the Board, President, and Chief Executive Officer, WellPoint, Inc. (health care) Kenneth C. Frazier Chairman of the Board, President, and Chief Executive Officer, Merck & Company (pharmaceuticals) Steven A. Kandarian Chairman of the Board, President, and Chief Executive Officer, MetLife Inc. (insurance) Douglas R. Oberhelman Former Chairman of the Board, Caterpillar Inc. (heavy equipment) Samuel J. Palmisano Former Chairman of the Board, International Business Machines Corporation (computer hardware, software, business consulting, and IT services) Ursula M. Burns Former Chairman of the Board, Xerox Corporation (document solutions and services) Front row, left to right Steven S Reinemund Presiding Director; Executive in Residence, Wake Forest University; Retired Executive Chairman of the Board, PepsiCo (consumer food products) Susan K. Avery President Emerita, Woods Hole Oceanographic Institution (nonprofit ocean research, exploration, and education) William C. Weldon Former Chairman of the Board, Johnson & Johnson (pharmaceuticals) * As of February 1, 2018 3838 Standing Committees of the Board Officers Functional and Service Organizations Audit Committee U.M. Burns (Chair) D.R. Oberhelman W.C. Weldon Board Affairs Committee K.C. Frazier (Chair) S.K. Avery S.J. Palmisano S.S Reinemund Compensation Committee S.J. Palmisano (Chair) M.J. Boskin A.F. Braly K.C. Frazier S.A. Kandarian Finance Committee D.W. Woods (Chair) U.M. Burns D.R. Oberhelman W.C. Weldon Public Issues and Contributions Committee M.J. Boskin (Chair) S.K. Avery A.F. Braly S.A. Kandarian S.S Reinemund Executive Committee D.W. Woods (Chair) M.J. Boskin K.C. Frazier S.J. Palmisano S.S Reinemund D.W. Woods Chairman of the Board (1) M.W. Albers Senior Vice President (1) N.A. Chapman Senior Vice President (1) M.J. Dolan Senior Vice President (1) A.P. Swiger Senior Vice President (1) J.P. Williams, Jr. Senior Vice President (1) B.W. Corson Vice President and President – ExxonMobil Upstream Ventures (1) N.W. Duffin Vice President (1) R.M. Ebner Vice President and General Counsel (1) M.A. Farrant Vice President – Human Resources R.S. Franklin Vice President (1) S.M. Greenlee Vice President (1) S.M. McCarron Vice President – Public and Government Affairs B.W. Milton Vice President (1) D.S. Rosenthal Vice President and Controller (1) R.N. Schleckser Vice President and Treasurer (1) J.M. Spellings, Jr. Vice President and General Tax Counsel (1) J.R. Verity Vice President (1) D.G. Wascom Vice President – Operational Excellence and Safety, Security, Health & Environment T.J. Wojnar, Jr. Vice President – Corporate Strategic Planning (1) J.J. Woodbury Vice President – Investor Relations and Secretary (1) Upstream N.W. Duffin R.S. Franklin President, ExxonMobil Production Company (1) President, ExxonMobil Gas & Power Marketing Company (1) S.M. Greenlee President, ExxonMobil Exploration Company (1) L.M. Mallon President, ExxonMobil Development Company (1) S.N. Ortwein President, XTO Energy Inc.(1) T.W. Schuessler President, ExxonMobil Upstream Research Company Downstream B.W. Milton B.H. March Chemical J.R. Verity Other L.D. DuCharme President, ExxonMobil Fuels & Lubricants Company (1) President, ExxonMobil Research and Engineering Company President, ExxonMobil Chemical Company (1) President, ExxonMobil Global Services Company (1) Required to file reports under Section 16 of the Securities Exchange Act of 1934. 39 E X X O N M O B I L 2 0 1 7 S U M M A R Y A N N U A L R E P O R T Investor information Shareholder services Dividend direct deposit Shareholder inquiries should be addressed to ExxonMobil Shareholder Services at Computershare Trust Company, N.A., ExxonMobil’s transfer agent: ExxonMobil Shareholder Services c/o Computershare P.O. Box 505000 Louisville, KY 40233 1-800-252-1800 (Within the United States and Canada) 1-781-575-2058 (Outside the United States and Canada) An automated voice-response system is available 24 hours a day, 7 days a week. Service representatives are available Monday through Friday 8:00 a.m. to 8:00 p.m. Eastern Time. Registered shareholders can access information about their ExxonMobil stock accounts via the Internet at computershare.com/exxonmobil. Stock purchase and dividend reinvestment plan Computershare Trust Company, N.A., sponsors a stock purchase and dividend reinvestment plan, the Computershare Investment Plan for Exxon Mobil Corporation Common Stock. For more information and plan materials, go to computershare.com/exxonmobil or call or write ExxonMobil Shareholder Services. Shareholders may have their dividends deposited directly into their U.S. bank accounts. If you would like to elect this option, go to computershare.com/ exxonmobil or call or write ExxonMobil Shareholder Services for an authorization form. Corporate governance Our Corporate Governance Guidelines and related materials are available by selecting “Investors” on our website at exxonmobil.com. Electronic delivery of documents Registered shareholders can receive the following documents online, instead of by mail, by contacting ExxonMobil Shareholder Services: • Annual meeting materials • Tax documents • Account statements Beneficial shareholders should contact their bank or broker for electronic receipt of proxy voting materials. ExxonMobil publications The following publications are available without charge to shareholders and can be found at exxonmobil.com. Requests for printed copies should be directed to ExxonMobil Shareholder Services. • Summary Annual Report • Annual Report on Form 10-K • Financial & Operating Review • Corporate Citizenship Report • Outlook for Energy: A View to 2040 • Energy & Carbon Summary Exxon Mobil Corporation has numerous affiliates, many with names that include ExxonMobil, Exxon, Mobil, Esso, and XTO. For convenience and simplicity, those terms and terms such as Corporation, company, our, we, and its are sometimes used as abbreviated references to specific affiliates or affiliate groups. Abbreviated references describing global or regional operational organizations, and global or regional business lines are also sometimes used for convenience and simplicity. Similarly, ExxonMobil has business relationships with thousands of customers, suppliers, governments, and others. For convenience and simplicity, words such as venture, joint venture, partnership, co-venturer, and partner are used to indicate business and other relationships involving common activities and interests, and those words may not indicate precise legal relationships. Included in this Summary Annual Report are financial and operating highlights and summary financial statements. For complete financial statements, including notes, please refer to ExxonMobil’s 2017 Financial Statements and Supplemental Information booklet included in the Summary Annual Report mailing. The Financial Statements and Supplemental Information booklet also includes Management’s discussion and analysis of financial condition and results of operations. The “Investors” section of ExxonMobil’s website (exxonmobil.com) contains the Proxy Statement and other company publications, including ExxonMobil’s Financial & Operating Review. These publications provide additional detail about the company’s global operations. The following are trademarks, service marks, or proprietary process names of Exxon Mobil Corporation or one of its affiliates: ExxonMobil, Esso, Exxon, Mobil, Mobil 1, Mobil Jet, EHC, Santoprene, Synergy, Vistalon, Energy lives here, and Protect Tomorrow. Today. The following third-party trademarks or service marks referenced in the text of the report are owned by the entities indicated: PWC + Design (The Trustees of the PWC Business Trust). 40 General information Corporate headquarters Exxon Mobil Corporation 5959 Las Colinas Boulevard Irving, TX 75039-2298 Additional copies may be obtained by writing or phoning: Phone: 972-940-6000 Fax: 972-940-6748 Email: shareholderrelations@exxonmobil.com Shareholder relations Exxon Mobil Corporation P.O. Box 140369 Irving, TX 75014-0369 Market information The New York Stock Exchange is the principal exchange on which Exxon Mobil Corporation common stock (symbol XOM) is traded. Annual meeting The 2018 Annual Meeting of Shareholders will be held at 9:30 a.m. Central Time on Wednesday, May 30, 2018, at: The Morton H. Meyerson Symphony Center 2301 Flora Street Dallas, TX 75201 An audio webcast with a slide presentation will be provided at exxonmobil.com. Information about the webcast will be available one week prior to the event. ExxonMobil on the Internet A quick, easy way to get information about ExxonMobil ExxonMobil publications and important shareholder information are available at exxonmobil.com: • Publications • Stock Quote • Dividend Information • Contact Information • Speeches • News Releases • Investor Presentations • Corporate Governance exxonmobil.com/annualreport 41 . A . S . U N I D E T N I R P N O I T A R O P R O C L I B O M N O X X E 8 1 0 2 © N G I S E D E N O T S T E H W 002CSN8BFE Exxon Mobil Corporation Corporate Headquarters 5959 Las Colinas Blvd. Irving, Texas 75039-2298 exxonmobil.com Printed in U.S.A. 

Continue reading text version or see original annual report in PDF format above