Exxon Mobil
Annual Report 2018

Plain-text annual report

N O T E : S P I N E W I D T H (X ) T O B E D E T E R M I N E D B Y P R I N T E R , T E X T T O C E N T E R O N X . S P I N E T E X T M AY N O T B E P O S S I B L E I F T H I N B O O K . FSC/Recycle Info (by printer) 002CSN9B53 Exxon Mobil Corporation Corporate headquarters 5959 Las Colinas Blvd. Irving, Texas 75039-2298 exxonmobil.com Printed in U.S.A. X 2 0 1 8 E X X O N M O B I L C O R P O R A T I O N • S U M M A R Y A N N U A L R E P O R T 2018 SUMMARY ANNUAL REPORT Integration 2 To our shareholders 4 2018 results and highlights 5 Competitive advantages 6 Technology 10 Scale 14 18 Functional excellence 22 People 26 Global operations 28 Upstream highlights 30 Downstream highlights 32 Chemical highlights 34 Corporate sustainability 35 Financial information 40 Frequently used terms 42 Board of Directors, Officers, and Affiliated Companies 44 Investor information 45 General information exxonmobil.com/annualreport Statements of future events or conditions in this report, including projections, targets, expectations, asset profitability, 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 40 and 41. 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. 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 2018. Prior years’ data have been reclassified in certain cases to conform to the 2018 presentation basis. Unless otherwise stated, production rates, project capacities, and acreage values are gross.  Energy enables modern life. Energy improves standards of living. Energy drives economic growth. Energy brings mobility. Energy promotes health and education. ExxonMobil provides the energy and products that raise living standards. It’s a role we take seriously. We recognize the critical importance of meeting the growing demand for affordable and reliable energy, while at the same time reducing environmental impacts – including the risks of climate change. It’s a dual challenge the industry must help solve, and ExxonMobil remains committed to doing our part to provide sustainable solutions. 1 E X X O N M O B I L 2 0 1 8 S U M M A R Y A N N U A L R E P O R T TO OUR SHAREHOLDERS As we mark the 20th anniversary of the merger that brought together Exxon and Mobil, we do so with our strongest portfolio of investments in two decades. It positions us to deliver attractive returns for you, our shareholders, far into the future. In 2018, we laid out a growth strategy Our growth strategy takes advantage of our scale designed to take advantage of the unique strengths and expertise across each of our business lines. that have made ExxonMobil an industry leader. These include a sharp focus on fundamentals; dedication to innovative technology; deep integration across our businesses; disciplined investment in advantaged In the Upstream, we achieved many important milestones including advancements in five key world- class projects that will add significant new production. projects; and industry-leading execution from our highly In Guyana, multiple discoveries have raised our estimate skilled workforce. Our goal is to significantly increase of recoverable resources to more than 5 billion barrels the earnings and cash flow generation capacity of our business. In last year’s volatile margin and price environment, we generated earnings of $21 billion and cash flow from operations and asset sales of $40 billion – the highest of oil equivalent. We are fast-tracking development and expect oil production to start in 2020. In another deepwater development area, we increased our holdings to approximately 2.3 million net acres in Brazil’s pre-salt basins, where we plan to start drilling in 2019. since 2014. This strong performance enabled us to Onshore, we accelerated operations in the Permian fund attractive investments, reduce debt, and increase Basin in Texas and New Mexico, building on our 2017 the dividend by 6 percent – the 36th consecutive annual increase. acquisition of high-quality, contiguous acreage that will enable significant low-cost production growth. 2 Our investments in this prolific region remain profitable In our Chemical business, we moved forward on from our operations and making products that help our at $35 per barrel. Integration through transportation 13 new facilities to meet growing demand. Seven of customers limit theirs. We are also leading the way in investments linking this production to our refining and these came online by the end of last year. The remaining developing low-carbon technologies like carbon capture chemical assets allows us to capture additional value – six are on schedule. These investments, enhanced by and storage and advanced biofuels. from the wellhead to the consumer. our technologies and global supply chain, are expected And we are working to add additional low-cost to support 30-percent sales growth by 2025. ExxonMobil’s story spans more than 135 years. From supplying the fuel and lubricants for the first airplane production in Papua New Guinea and Mozambique, Across all of our operations, we are committed to in the early 20th century, to providing cleaner-burning where we are progressing new liquefied natural gas maintaining a safe work environment enriched by natural gas to power entire cities today, it has been a (LNG) projects. diversity and characterized by open communications history of meeting our customers’ changing needs and Our successes in Upstream development were recognized in 2018 by the World Oil and Gas Council, and trust. We strive to continuously improve and achieve expectations. It has been one of continual improvement the highest standards of excellence in all that we do. and innovation. And it has been a record of creating when they honored ExxonMobil as “Explorer of the This includes upholding the highest standards of significant value for our shareholders and for society. Year” – for the second consecutive year. corporate citizenship. We maintain high ethical Building on this history, I believe the chapter we are In our Downstream business, we progressed six major refining investments, all of which are advantaged standards, obey all applicable laws, rules, and writing today will be the most rewarding yet. regulations, and respect local and national cultures. versus industry. Three started up last year, including We are also dedicated to reducing environmental the Beaumont hydrofiner, the Antwerp delayed coker, impacts and managing the risks of climate change. and the Rotterdam advanced hydrocracker. These Society faces a dual challenge: meeting growing energy Downstream investments deliver higher-value products needs while protecting the environment. ExxonMobil is and are expected to generate 20-percent returns. playing our part by reducing greenhouse gas emissions Darren Woods Chairman and CEO 3 E X X O N M O B I L 2 0 1 8 S U M M A R Y A N N U A L R E P O R T 2018 RESULTS AND HIGHLIGHTS $21 BILLION EARNINGS IN 2018 FINANCIAL HIGHLIGHTS (millions of dollars, unless noted) Earnings after income taxes Average capital employed(1) Return on average capital employed (%)(1) Capital and exploration expenditures(1) CASH FLOW FROM OPERATING ACTIVITIES OF $36 BILLION, HIGHEST SINCE 2014 FIVE ADDITIONAL DISCOVERIES OFFSHORE GUYANA IN 2018, INCREASING RESOURCE ESTIMATE TO MORE THAN 5 BILLION BARRELS CAPTURED BENEFITS FROM NORTH AMERICAN CRUDE DIFFERENTIALS WITH INTEGRATED LOGISTICS AND MANUFACTURING CHEMICAL SALES GROWTH RESULTED IN HIGHEST ANNUAL VOLUMES IN MORE THAN 10 YEARS Upstream Downstream Chemical Corporate and Financing Total 14,079 6,010 3,351 (2,600) 20,840 177,874 25,740 30,420 (1,660) 232,374 7.9 23.3 11.0 N.A. 9.2 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) 20,194 3,429 2,235 65 25,923 2,266 9,405 3,833 4,272 5,512 26,869 RETURN ON AVERAGE CAPITAL EMPLOYED (1)(4) FUNCTIONAL EARNINGS AND NET INCOME 36 YEARS OF DIVIDEND GROWTH (6) (1) See Frequently used terms on pages (percent) Corporate and Financing Net income(5) (billions of dollars) 5-year average 10-year average Upstream Downstream Chemical ExxonMobil S&P 500 Consumer Price Index (7) (dollars per share) 40 and 41. (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. (4) Competitor data estimated on a consistent basis with ExxonMobil and based on public information. (5) Net income attributable to ExxonMobil. (6) S&P 500 and CPI indexed to 1982 Exxon dividend. (7) CPI based on historical yearly average from U.S. Bureau of Labor Statistics. 4 EXXONMOBIL CHEVRON SHELL TOTAL BP 40 30 20 10 0 –4 0 2 4 6 8 10 12 14 16 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0 1982 1990 2000 2010 2018 2014 2015 2016 2017 2018 COMPETITIVE ADVANTAGES TECHNOLOGY A steadfast commitment to investments in technology has led to a history of innovation and the development of industry-advantaged assets, processes, products, and applications. Technology has allowed us to effectively respond to a dynamic and challenging landscape with changes in sources of supply, consumer demand, and regulatory requirements. We invest in fundamental science and research, leading to advances in existing processes and products, as well as new discoveries. This allows us to meet the evolving needs of society, lower operating and project costs, and develop higher-value products and applications. SCALE The size and breadth of our business provide a critical foundation for long-term success. It enables investments in the development of advanced technologies by leveraging benefits across a large base of operations. Facilities and businesses operated consistently around the globe accelerate experience and learning – replicating innovations, improving effectiveness, and driving down cost. Our size allows us to pursue a wide range of value-accretive investments across the commodity price cycle – specifically taking advantage of counter-cyclical opportunities. INTEGRATION Our business spans various hydrocarbon value chains from end-to-end, involving production of raw materials into high- value fuels, lubricants, chemical products, and unique customer applications. We maximize value across the entire chain, ensuring the whole is greater than the sum of the parts. As markets evolve and value shifts up or down the chain, we are positioned to capture it. The different sectors we serve and products we make provide further diversification, helping to mitigate the impact of commodity price cycles. Our integrated business provides additional scale, allows us to share support organizations and facility infrastructure, and capture synergies in organizational capabilities and competencies. FUNCTIONAL EXCELLENCE An extensive history of running a complex global business with a focus on the long term has led to a strong culture of consistently doing the right things, the right way, at a high standard. How we achieve results is as important as the results themselves. Living this philosophy and learning from our collective experiences has resulted in deep knowledge in critical disciplines and industry-leading execution capabilities. These strengths manifest themselves in all facets and functions of our business through a disciplined and consistently executed approach. PEOPLE The above advantages and the synergies that exist between them have taken generations to establish and serve as the foundation for our strategies. The benefits, though, are only realized through the commitment and hard work of our people – our most important advantage. We strive to hire the best and develop world-class capabilities through challenging, cross-functional assignments and global experiences. Strong retention and career-long tenures result in unmatched capabilities and knowledge, anchored in a culture of excellence. 5 E X X O N M O B I L 2 0 1 8 S U M M A R Y A N N U A L R E P O R T $1 BILLION INVESTED EACH YEAR IN RESEARCH AND DEVELOPMENT >10,000 PATENTS GRANTED GLOBALLY SINCE 2009 >1,000 SCIENTIFIC PAPERS PUBLISHED IN THE PAST 10 YEARS PHOTO: An ExxonMobil scientist leverages an advanced measurement apparatus to study the physical properties of hydrocarbon fluids under a range of pressures and temperatures. 6 TECHNOLOGY 7 E X X O N M O B I L 2 0 1 8 S U M M A R Y A N N U A L R E P O R T TECHNOLOGY RESULTS IN ADVANTAGED ASSETS, PROCESSES, AND PRODUCTS Technology has led to the development of industry- advantaged assets, processes, products, and applications. We invest in fundamental science and research, leading to advances in existing processes and products, as well as new discoveries. This allows us to meet the evolving needs of society, lower operating and project costs, and develop higher-value processes and products. MANAGING SUBSURFACE UNCERTAINTY Capabilities in subsurface definition and development in the Upstream enable us to find more oil and natural gas and maximize recovery from existing reservoirs. Interpreting subsurface data and integrating multiple geologic features is highly complex and begins with fully leveraging the value of seismic data. Full Wavefield Inversion technology harnesses complex algorithms and exploits the power of high-performance computing. As a result, we are better able to understand the rock properties of each geologic layer. An ExxonMobil scientist works on a recombination cell used to combine gases with liquid oil at high pressure to produce a live oil mixture of fluid at in-situ reservoir conditions in support of calibrating advanced reservoir models. The result of these subsurface technologies is an ability developing catalyst and process technology result in Additionally, a suite of proprietary, automated pattern- to identify potential oil and natural gas deposits below projects like the Rotterdam advanced hydrocracker, recognition algorithms provides us with the ability the surface and optimize investments in key growth which started up at the end of 2018. This advantaged to rapidly scan large 3D seismic surveys and identify areas like Guyana, the Permian, and Brazil. project deploys advanced catalysts within unique direct hydrocarbon indicators. The application of process configurations to produce Group II lube this technology, combined with the use of integrated UPGRADING PRODUCT PORTFOLIO basestocks and ultra-low-sulfur fuels at a lower cost. reservoir modeling and simulation technologies, Technology enables us to upgrade and expand The Rotterdam site profitability is expected to double leads to a rich picture of the subsurface. This enables product offerings in our Downstream and Chemical as a result of the investment. geoscientists and engineers to make informed businesses, with the objective of making more of the investment decisions by efficiently predicting reservoir higher-performing, higher-value products the market performance throughout the life of an asset. and consumers demand. Decades of experience in We will apply similar technology at our Singapore petrochemical facility, with a planned future project to 8 DOWNSTREAM PROJECT RETURNS AVERAGE 20%, SUPPORTED BY OUR ADVANTAGED TECHNOLOGY INVESTING TO CAPTURE GROWTH IN sugars from wood, grass, and agricultural waste into DEMAND OF LOWER-CARBON SOLUTIONS biodiesel. We also continued efforts to develop scalable We are investing in research to develop scalable and and economically viable carbon capture and storage. affordable technologies to meet the growing demand Research and development in this area focused on our for lower-emission fuels, identify economic carbon partnership with FuelCell Energy, Inc. and the potential capture, utilization, and storage (CCUS) solutions, and to capture carbon dioxide (CO2) while also generating upgrade high-sulfur residual streams into Group II lube reduce the intensity of existing manufacturing processes. power using a fuel cell. We also progressed efforts basestocks and low-sulfur fuels. The company made significant progress in 2018 on In addition, we are deploying new products, including an algae biofuels program with partner Synthetic to identify new materials for CO2 capture and assess multiple new CO2 utilization and storage options. premium transportation fuels and lubricants that Genomics, Inc., and on cellulosic biofuels with partner Another area of ongoing research involves developing provide higher levels of efficiency and new performance Renewable Energy Group. Successes included initiation low-energy membrane and adsorption technologies chemical products that enable low-cost, lighter-weight of outdoor algae pond experimentation and a substantial that could replace the energy-intensive separation automotive parts. improvement in the bioconversion of cellulose-derived processes that exist today. TECHNOLOGY: EXXONMOBIL CONTINUES A LEGACY OF TECHNOLOGY BREAKTHROUGHS ExxonMobil has a proven track record of discovering, developing, and commercializing advantaged technology at scale. The company’s history of innovations includes more-durable tires, 3D seismic imaging, and extended-mileage lubricants. With consistent and ongoing investments in technology, we seek to improve efficiency, promote enhanced resource recovery and product margins, and identify next-generation opportunities. Synthetic rubber tires 1940s Synthetic catalysts 1950s 3D seismic imaging 1960s Synthetic motor oil 1970s Lithium batteries 1980s Ultra-deepwater drilling Large LNG ships Extended-life lubes 1990s 2000s 2010s 9 E X X O N M O B I L 2 0 1 8 S U M M A R Y A N N U A L R E P O R T SCALE 10 APPROXIMATELY 2.5 BILLION BARRELS OF CRUDE HANDLED ANNUALLY ACROSS OUR BUSINESSES APPROACHING 2 BILLION SENSOR READINGS PER DAY IN OUR MANUFACTURING FACILITIES MANAGING NEARLY 100,000 SUPPLIERS GLOBALLY PHOTO: With the start-up of the 1.5-million-tonnes-per-year ethane cracker, the ExxonMobil Baytown, Texas, complex is one of the largest integrated refining and petrochemical complexes in the world. 11 E X X O N M O B I L 2 0 1 8 S U M M A R Y A N N U A L R E P O R T SCALE BRINGS UNIQUE SET OF ADVANTAGES The size and breadth of our business provide a critical foundation for long-term success. It enables investments in the development of advanced technologies by leveraging benefits across a large base of operations. Facilities and businesses operated consistently around the globe accelerate experience and learning – replicating innovations, improving effectiveness, and driving down cost. Our size allows us to pursue a wide range of value-accretive investments across the commodity price cycle – specifically taking advantage of counter-cyclical opportunities. INDUSTRY-LEADING INVESTMENT PORTFOLIO We have a high-quality portfolio of investment opportunities across our businesses, involving a broad range of resource types and high-value products. The Upstream portfolio includes five key developments: under construction and expected to be operational in early 2020. the Permian in the United States; Guyana; Brazil; Successful exploration offshore Guyana continued with five additional discoveries in 2018. The first FPSO vessel is Mozambique; and Papua New Guinea (PNG). We are and offloading (FPSO) vessels and related infrastructure In the Downstream, we are investing to increase the the most active operator in the Permian Basin, where an to support the production of at least 750,000 barrels production of higher-value products. This includes innovative development approach will provide decades of oil per day by 2025. In Brazil, we captured more upgrading nearly 200,000 barrels per day of fuel oil into of low-cost, highly profitable production, and serve acreage than any other major international oil company higher-quality Group II lube basestocks, chemicals, and as an attractive feedstock for U.S. Gulf Coast over the past year, further expanding our attractive lower-sulfur distillates by 2025. We completed three manufacturing plants. deepwater portfolio. In Guyana, we have discovered more than 5 billion We are also developing low-cost LNG supplies in oil-equivalent barrels from 10 exploration discoveries the United States, PNG, and Mozambique. These through 2018. Our extensive global experience developments will leverage our extensive technical, developing deepwater resources will facilitate efficient operational, and project experience in large-scale, frontier deployment of at least five floating production, storage, LNG developments. of these projects in 2018. In Beaumont, we started up a hydrofiner to produce cleaner, lower-sulfur gasoline. We also commenced a delayed coker in Antwerp, Belgium, to upgrade heavy residual products and started up the Rotterdam, Netherlands, advanced hydrocracker to produce Group II basestocks. 12 FINANCIAL STRENGTH MAXIMIZES INVESTMENT FLEXIBILITY LEARNING AND OPTIMIZATION sites will connect to the data lake by 2020. By applying We leverage our global footprint to optimize strategies advanced analytics to this abundance of data, we can for operating and maintaining essential equipment like identify new approaches to run sites more efficiently and heat exchangers, compressors, and pumps. For example, potentially with fewer emissions. we manage more than 30,000 pieces of heat transfer Additionally, we progressed key projects in Singapore, equipment and nearly 500 critical compressor units Fawley, and Beaumont, where we will expand refining across our manufacturing facilities. This scale allows us capacity to process light Permian crudes. to identify and deploy equipment strategies efficiently, In the Chemical business, we have started up seven new facilities since 2017 and are planning the completion resulting in a significant reduction in risk and increased reliability across our global equipment fleet. of another six projects by 2025, supported by growing In addition, centralizing analysis of real-time data across demand for high-performance chemical products. The our manufacturing sites accelerates learning and allows Singapore butyl plant, the Newport elastomer plant us to optimize operations. For example, we are leveraging expansion, and the Baytown ethane cracker all started up a globally scaled data lake platform that will further in 2018. We are also progressing additional investments in enable us to collect operating data from our refineries the United States and Singapore. These new facilities will and chemical plants. We expect to capture more than result in a 40-percent increase in manufacturing capacity 2 billion sensor readings per day into this high-performing in North America and Asia. computing environment. All of our global manufacturing SCALE: FINANCIAL STRENGTH Our industry-leading financial strength provides us with the capacity to invest throughout commodity price cycles, taking particular advantage of counter- cyclical opportunities. As a result, we are positioned to deliver projects with lower costs and higher returns versus industry. It also allows us to pursue a broad portfolio of investment opportunities, while also meeting our commitment to pay a reliable and growing dividend. LEVERAGE, YEAR-END 2018 (1) Total capitalization (billions of dollars) 400 300 200 100 0 0 EXXONMOBIL AA+/Aaa SHELL AA-/Aa2 CHEVRON AA/Aa2 BP A-/A1 TOTAL A+/Aa3 5 10 15 20 Leverage (percent) 25 30 (1) Total capitalization defined as “net debt + market capitalization”; leverage defined as “net debt/total capitalization.” We also have the largest inventory of operated horizontal wells in the United States at more than 6,600, providing our engineering and subsurface experts with one of the most extensive databases in the industry with which to learn and optimize development and operating plans. To fully leverage the tremendous amount of data we have and the scale advantage it provides, we deploy a network of technology centers around the world, staffed with scientists and engineers who collaborate globally with manufacturing sites, production units, projects, and ventures across the Upstream, Downstream, and Chemical business lines. Enabled by access to global data, these engineers drive manufacturing excellence by monitoring, analyzing, and optimizing process units and equipment fleets around the world. Our technology centers are seamless extensions of our production and manufacturing sites, providing valuable technical solutions that we replicate across our global network. Best practices across similar assets are quickly and broadly applied, which leads to effective prioritization and efficient execution of high-value optimization opportunities. Equipment monitoring and process analysis enable global manufacturing circuit optimization efforts and are anticipated to generate more than $500 million in cumulative earnings contribution in our Downstream business between 2017 and 2020. 13 E X X O N M O B I L 2 0 1 8 S U M M A R Y A N N U A L R E P O R T $1 BILLION IN VALUE CAPTURE FROM NORTH AMERICA INTEGRATION TAKEAWAY CAPACITY FOR >100 PERCENT OF OUR PERMIAN CRUDE PRODUCTION 12 INTEGRATED SITES IN NINE COUNTRIES PHOTO: We continue to progress the integration of the Singapore Banyan facility, acquired in 2017, with our nearby integrated refining and petrochemical complex, realizing product and logistical synergies. 14 INTEGRATION 15 E X X O N M O B I L 2 0 1 8 S U M M A R Y A N N U A L R E P O R T INTEGRATION MAXIMIZES VALUE ACROSS THE ENTIRE VALUE CHAIN We maximize value across the entire value chain, ensuring the whole is greater than the sum of the parts. The different sectors we serve and products we make provide further diversification, helping to mitigate the impact of commodity price cycles. Our integrated business provides additional scale, allows us to share support organizations and facility infrastructure, and capture synergies in organizational capabilities and competencies. NORTH AMERICA INTEGRATION An excellent example of the value of integration involves our North American operations, where our Upstream business produces oil and natural gas in the Permian and other basins. Permian crude volumes are transported via integrated midstream assets to refineries and Leaders from the Upstream, Downstream, and Chemical organizations working together at the Houston campus to chemical complexes along the U.S. Gulf Coast and in the Midwest, where they are upgraded to higher-value capture opportunities along the integrated Permian value chain. fuels and products for global markets. We also create our production in Western Canada and is well positioned SYNERGIES ACROSS ALL BUSINESS LINES value by processing high-quality Permian crudes at to respond to market dynamics, enabling maximum value Nearly 80 percent of our refining capacity is integrated manufacturing locations in Europe and Asia, including capture. In the Permian, we leveraged excess pipeline with chemical or lubricant manufacturing plants. At our Singapore steam cracker. takeaway capacity and terminal assets to transport these integrated sites, we realize significant savings by By maximizing integration across the entire value chain, we capture incremental value at transfer points or when short-term market disconnects occur. For example, when crude prices declined in the Permian and Western Canada in 2018, mainly driven by industry pipeline constraints, we leveraged our logistics capacity to move the lower-cost feedstocks into our refinery network. The Edmonton Rail Terminal provides logistics capacity for crude efficiently – including both equity- and third-party sharing resources, using interconnected facilities, and crude – to the U.S. Gulf Coast. Capturing these market coordinating operating practices. Integration increases opportunities across the value chain resulted in an margins by lowering the cost of feedstocks while estimated $1 billion benefit in 2018. As Permian crude enabling the production of the highest-value products. production grows, we continue to expand our logistics footprint beyond the level of equity production to retain this advantage and create feed flexibility for our global refining and chemical assets. An example of this integration is found at our Singapore manufacturing complex, where we are investing in an integrated project that will use proprietary catalyst and process technology to upgrade refinery residual products 16 NEARLY 80% OF OUR REFINING AND CHEMICAL FACILITIES ARE INTEGRATED INTEGRATION: PERMIAN BASIN DEVELOPED AS AN INTEGRATED ASSET Integration in the Permian Basin allows us to connect high-value light Permian crude to demand centers on the U.S. Gulf Coast (USGC), including facilities in Baytown and Beaumont. Further development of the logistics network will provide flexibility to move cost-advantaged feedstocks to our refineries and chemical plants in the Americas, Asia Pacific, and Europe. and chemical steam-cracked tar into higher-value fuels, chemicals, and lubricants. In addition, we continue to integrate the Singapore Banyan aromatics facility, one of the world’s largest aromatics plants, with our existing refining and chemical complex. Following acquisition of the facility in 2017, we are progressing the integration of the site with our adjacent petrochemical facility through pipelines, enabling further optimization of site profitability through improved feed and energy costs, enhanced molecule management, and increased utilization of existing logistics capabilities. We expect completion of these activities in 2019, ahead of schedule, resulting in accelerated value capture. These applications of technology, coupled with scale and integration, will position our Singapore refinery in the top quartile of global refinery competitiveness and will further increase the site’s competitive advantage gained from cracking crude into chemical products. We also applied extensive Downstream experience to implement a multivariable control system at the Shute Creek treating facility at the LaBarge natural gas field, increasing production and improving product purity. Multivariable control allows the plant to run closer to capacity and specification limits by optimizing operational parameters simultaneously. N E W M E X I C O T E X A S UPSTREAM Permian Basin Midland Wink CHEMICAL Baytown Mont Belvieu Beaumont Baton Rouge LOUISIANA Existing Under development Downstream refining Chemical manufacturing LOGISTICS Webster Beaumont Baytown Baton Rouge REFINING UPSTREAM DOWNSTREAM CHEMICAL Equity Permian production USGC logistics capacity USGC refining capacity Flexible feed options 2018 0.2 Moebd 2022 0.8 Moebd 0.3 Mbd 1 Mbd 0.4 Mbd Light crude 1.7 Mbd Total crude 0.8 Mbd Light crude 2.1 Mbd Total crude Singapore steam cracker Singapore steam cracker Singapore Banyan facility Asia liquids cracker 17 E X X O N M O B I L 2 0 1 8 S U M M A R Y A N N U A L R E P O R T FUNCTIONAL EXCELLENCE 18 AN INDUSTRY LEADER IN SAFETY PERFORMANCE >25 GLOBAL MANUFACTURING NETWORKS 30% MORE EFFICIENT EXECUTION OF COMPLEX UPSTREAM PROJECTS VERSUS COMPETITION(1) PHOTO: Thoughtful, proactive risk management actions and safeguards are some of the most important things we do. (1) Source: ExxonMobil and Wood Mackenzie 19 E X X O N M O B I L 2 0 1 8 S U M M A R Y A N N U A L R E P O R T FUNCTIONAL EXCELLENCE MAXIMIZES VALUE OF EXISTING OPERATIONS AND NEW PROJECTS An extensive history of running a complex global business with a focus on the long term has led to a strong culture of consistently doing the right things, the right way, at a high standard. Living this philosophy and learning from our collective experiences has resulted in a deep knowledge in critical disciplines and industry-leading execution capabilities. These strengths manifest themselves in all facets and functions of our business through a disciplined and consistently executed approach. OPERATIONAL EXCELLENCE We rigorously apply management systems worldwide to ensure consistent application of the highest operational standards. Our Operations Integrity Management System (OIMS) provides a systematic, structured, and disciplined approach to manage risk and drive accountability for safety, security, health, and environmental performance across business lines, facilities, and projects. Employees effectively manage the complexity of our manufacturing facilities around the world. To meet the expectations established by OIMS, we simulators, virtual reality, and experiential training allow training to develop and maintain core competencies. leverage global best practices across all of our businesses employees to experience real-life situations in a controlled In addition to the competency of individuals, we also to standardize work processes that eliminate or mitigate environment, reinforcing their understanding of risks and evaluate the overall capability of our teams. At our significant safety, health, or environmental risks. Examples safeguards. Training equips our employees with the skills manufacturing sites, when assessing the competency of these best practices include the application of electrical and knowledge to respond appropriately to circumstances level of functional teams, we evaluate succession plans isolation, confined space entry, and crane and lifting that could lead to serious events. for anchor positions, which are staffed by highly skilled operations. A process console operator, for example, will undergo up In addition, our competency assurance systems provide to three weeks of training on a simulator as part of his or structured processes to ensure personnel have the her learning curriculum to ensure the appropriate level knowledge and skills to operate and maintain facilities in of competency. Across our Upstream, we have identified a safe and effective manner. To support this objective, more than 6,000 critical positions that require rigorous individuals who provide organizational memory and serve as coaches, mentors, and problem solvers. These anchor positions account for approximately 15 percent of our manufacturing workforce. 20 FUNCTIONAL EXCELLENCE: PROJECT MANAGEMENT – U.S. GULF COAST GROWTH VENTURE (GCGV) Experts from procurement, research and development, and Chemical organizations worked together to develop a rail and pipeline terminal solution for a new petrochemical project on the U.S. Gulf Coast. The cross-functional team executed a complex commercial strategy to reduce cycle times, meet an aggressive project schedule, and reduce costs. A flexible contracting strategy and unique synchronization of construction, combined with a long-term operational contract, allowed third-party logistics experts to capitalize on their deep technical expertise to shape the design. This integrated approach resulted in a unique design, captured efficiencies in design and operations, and will deliver state-of-the-art terminals. OVER $1 BILLION OF PROJECT SAVINGS IN MANUFACTURING We apply project learnings and experience in the Upstream to the Downstream and Chemical business lines as well. For example, Upstream project development expertise is facilitating modular development of a future petrochemical complex in San Patricio, Texas, in the United States. BEST PRACTICE DEVELOPMENT Modular development – a common practice in Upstream A series of global networks provide the platform to develop projects – involves constructing equipment off-site at a best practices and drive performance improvement. lower cost, and then transporting it to the site fully built. These networks leverage the deep knowledge base and We also successfully utilized this practice in the construction scale of ExxonMobil and create a collaborative problem- of the Antwerp delayed coker and the Rotterdam advanced solving approach. Our global manufacturing network, hydrocracker. This process of modular development for example, involves leaders and technical experts from improves project execution efficiency and lowers costs by across our businesses and covers such dimensions as safe sourcing construction globally. operations, operational excellence, operator training, and environmental performance. We aggressively identify efficiencies and cost reductions during project design and development, such as the We also look externally to identify and implement best implementation of facility-related optimizations that practices. We are implementing enhancements identified reduce plant complexity. In Downstream and Chemical from a recent comprehensive, multiyear review of our projects, these efforts delivered significant value in process safety practices compared to those employed by 2018, with more than $1 billion in savings via design companies in the oil and gas, specialty chemicals, nuclear and execution optimization. For example, an integrated power generation, and aviation industries. team with personnel from our Chemical, research and development, and procurement organizations partnered to SUPERIOR PROJECT EXECUTION design a control center for a grassroots plant in Baytown. A rigorous approach to project development, supported Visibility into strategic supplier offerings allowed the cross- by decades of large-scale project experience across functional team to identify an alternative approach by multiple geographies and resource types, is enabling key using a modular designed control center, which resulted in developments like Guyana, where the pace of project a cost-competitive alternative to the traditional stick-built execution is outperforming industry averages. design, with savings of 50 percent. This concept establishes a benchmark going forward, resulting in a step-change in new control center construction design. 21 E X X O N M O B I L 2 0 1 8 S U M M A R Y A N N U A L R E P O R T 160 NATIONALITIES REPRESENTED IN OUR WORKFORCE 30 YEARS AVERAGE SERVICE OF CAREER EMPLOYEES >2,200 PhD’s EMPLOYED AT EXXONMOBIL PHOTO: Employees from Guyana participate in the training and development of our local workforce. 22 PEOPLE 23 E X X O N M O B I L 2 0 1 8 S U M M A R Y A N N U A L R E P O R T PEOPLE ARE OUR MOST IMPORTANT COMPETITIVE ADVANTAGE The benefits of our competitive advantages are only realized through the commitment and hard work of our people. Our long-term development approach is built on challenging, cross-functional assignments and global experiences. The result is a workforce with world-class capabilities and knowledge, anchored in a culture of excellence. PEOPLE DEVELOPMENT PHILOSOPHY We place a priority on maximizing the development of each one of our employees. It begins with recruiting exceptional talent and continues with individually planned assignments and experiences that lead to broad skill development and a deep understanding of our businesses. This career-oriented, personalized approach results in a retention rate of 96 percent and an average length of service of 30 years for our career employees. It also facilitates development of the next generation of leaders from within the company. We develop future leaders from within the company, drawing upon our diverse employee population. Employees are developed for professional and leadership roles, both in their home countries and globally. CROSS-FUNCTIONAL DEVELOPMENT This approach maximizes the contribution of each Our unique scale and integrated business model enable employee and results in better, more-informed decisions broad development across functions, business lines, at all levels of the organization. It also facilitates an We set high performance expectations, foster a and geographies. In fact, one-third of our managerial integrated approach to how we operate facilities, execute work environment in which every employee has the and professional workforce have had one or more projects, and invest in assets. Our employees possess opportunity to excel, and reward employees based on assignments outside of their primary function, and diverse experiences and knowledge that allow us to their performance and contributions. one-fifth of our employees have worked outside identify and capture benefits across the value chain. Through a combination of work assignments, on-the-job experiences, and focused training and education, employees acquire the necessary skills and competencies to take on increasing levels of responsibility and job complexity. their home country. The result is a high level of integrated knowledge, skills, and experiences. Cross- functional assignments across business lines, support organizations, and geographies provide employees with a greater understanding of the end-to-end business and promote diversity of thought and perspective. An example of this is in the Permian, where an integrated team is contributing to an innovative approach to the development of this important asset from wellhead to manufacturing. Each employee on the team has had at least one cross-functional assignment in his or her career, which provides a unique perspective on how we create integrated value. 24 WE VALUE A DIVERSE WORKFORCE THAT IS REPRESENTATIVE OF WHERE WE DO BUSINESS The Rotterdam advanced hydrocracker project is another example of how we leveraged a diverse set of skills and knowledge to deliver value. Integrated teams worked together to identify proprietary technologies, form a business case, construct associated facilities, and PEOPLE AND TECHNOLOGY such as proprietary algorithms to support seismic data We are a science and technology company, and processing, new catalysts, high-strength steel, and technical expertise and leadership are fundamental advanced statistical methods. to our long-term success. Ensuring focused career development in the areas of research and technology enables employees to deliver innovative solutions. Additionally, the World Oil and Gas Council named ExxonMobil “Large Cap Company of the Year” and “Explorer of the Year” in 2018. These awards and many We employ more than 16,000 engineers and 2,200 others are a reflection of the world-class capabilities PhD’s across multiple disciplines, including petroleum and knowledge of our employees and their commitment engineering, manufacturing technology, behavioral to excellence. science, mathematics, and biology. market high-value products. Experts from the lubricants Such a diverse, technical workforce brings broad value chain proved critical to the success of the project perspectives that drive innovation and the development by establishing a customer base and supply chain of proprietary technologies. Over the past decade, our and supporting knowledge transfer to the Rotterdam employees have registered an average of more than refinery, which had not previously manufactured 1,000 new patents each year, with a record high of 1,700 lubricants products. in 2018. These patents cover a wide range of technology, LONG-TERM COMMITMENT ExxonMobil invests in our people for a long-term career. We spend an average of $100 million per year on training and in 2018 had more than 25,000 job rotations in support of development plans. PEOPLE: COMPETENCY DEVELOPMENT WITHIN RESEARCH AND DEVELOPMENT ExxonMobil research engineers, scientists, and laboratory staff work around the world in Upstream, Downstream, and Chemical research and development organizations. A standard competency model is applied to all research and technology positions. The competency model sets expectations for technical skill proficiency and behavioral effectiveness. Specific skill expectations for R&D leadership allow us to identify and develop future technical leaders. Establishing proficiency standards and defining key experiences and career journeys provide the context for ongoing individual-supervisor coaching that addresses the needs of the business while also developing individuals. Human resources and research organization leadership have collaborated to form a research and technology talent strategy that is linked to business strategy. This approach systematically sharpens the focus of recruiting and informs employee development plans. A strategic approach to talent management enables forward- looking skill development and allows us to mobilize talent across the company to the area of most importance. We aim to place the right people on the right projects, at the right time, across our global businesses. 25 E X X O N M O B I L 2 0 1 8 S U M M A R Y A N N U A L R E P O R T 3.8 MILLION OIL-EQUIVALENT BARRELS OF NET OIL AND GAS PRODUCTION PER DAY(1) 26 5.5 MILLION BARRELS OF PETROLEUM PRODUCT SALES PER DAY(2) 26.9 MILLION TONNES OF CHEMICAL PRIME PRODUCT SALES(2) Countries with ExxonMobil operations Upstream Downstream Chemical GLOBAL OPERATIONS EARNINGS BY BUSINESS SEGMENT (5-year average) As the world’s largest publicly held international oil and gas company, ExxonMobil has a diverse portfolio of high-quality assets and projects across our Upstream, Downstream, and Chemical businesses. DOWNSTREAM UPSTREAM CHEMICAL UPSTREAM: ONE OF THE LARGEST AND MOST DIVERSE UPSTREAM COMPANIES, WITH ACTIVE PRESENCE IN 41 COUNTRIES With a diverse portfolio, we are active in all aspects of the Upstream, from exploring, developing, and producing, to marketing hydrocarbon resources around the world. RETURN ON AVERAGE CAPITAL EMPLOYED (3) (percent) 2018 10-year average UPSTREAM DOWNSTREAM CHEMICAL 0 5 10 15 20 25 DOWNSTREAM: ONE OF THE WORLD’S LARGEST INTEGRATED REFINERS AND MARKETERS OF FUELS AND LUBRICANTS Our portfolio includes refining and lubricant blending facilities in 25 countries. We are one of the largest integrated refiners and marketers of fuels and lube basestocks, as well as a leading manufacturer of petroleum products and finished lubricants. (1) Natural gas converted to oil-equivalent at 6 million cubic feet per 1,000 barrels. (2) Sales data reported net of purchases/sales contracts with the same counterparty. (3) See Frequently used terms on pages 40 and 41. CHEMICAL: ONE OF THE MOST PROFITABLE CHEMICAL COMPANIES, WITH OPERATIONS IN 16 COUNTRIES A unique portfolio of world-class manufacturing facilities, advantaged technology, and high-performance products delivers strong shareholder value. 27 E X X O N M O B I L 2 0 1 8 S U M M A R Y A N N U A L R E P O R T EXXONMOBIL’S UPSTREAM IS A GLOBAL LEADER IN THE EXPLORATION, DEVELOPMENT, AND PRODUCTION OF OIL AND NATURAL GAS RESOURCES RESULTS AND HIGHLIGHTS Strong financial and operational performance Liquids growth of more than 3 percent, excluding impact of entitlements and divestments Most active operator in the Permian, with 44 rigs at the end of 2018 Five additional discoveries in Guyana, bringing total discovered resources to more than 5 billion barrels gross Brazil deepwater acreage position increased to 2.3 million net acres Proved oil and natural gas reserves additions of 4.5 billion oil-equivalent barrels Exploration discoveries totaling more than 700 million oil-equivalent barrels, driven by Guyana and Brazil UPSTREAM STATISTICAL RECAP 2018 2017 2016 2015 2014 Earnings (millions of dollars) Liquids production (net, thousands of barrels per day) 14,079 13,355 2,266 2,283 196 2,365 7,101 2,345 27,548 2,111 Natural gas production available for sale (net, millions of cubic feet per day) 9,405 10,211 10,127 10,515 11,145 Oil-equivalent production(1) (net, thousands of barrels per day) Proved reserves replacement ratio(2)(3) (percent) Resource additions(3) (millions of oil-equivalent barrels) 3,833 318 1,297 3,985 189 9,763 4,053 – 2,453 4,097 69 1,378 3,969 111 3,206 Average capital employed(3) (millions of dollars) 177,874 174,674 170,055 169,954 164,965 Return on average capital employed(3) (percent) 7.9 7.6 0.1 4.2 16.7 Capital and exploration expenditures(3) (millions of dollars) 20,194 16,695 14,542 25,407 32,727 PHOTO: As the most active operator in the Permian at year-end 2018, we are focused on safe, reliable operations to support growth. (1) Natural gas converted to oil-equivalent at 6 million cubic feet per 1,000 barrels. (2) Proved reserves exclude asset sales. (3) See Frequently used terms on pages 40 and 41. Note: Unless otherwise stated, production rates, project capacities, and acreage values are gross. 28 BUSINESS FUNDAMENTALS Demand for oil is expected to increase approximately 20 percent from 2016 to 2040 and will remain the primary source of energy for commercial transportation and continue to serve as a critical feedstock for chemical products. Natural gas demand is expected to grow nearly 40 percent over the same period, largely from expanding industrial activity and increasing use in power generation as utilities look to switch to lower-emission fuels. To meet this demand and offset natural decline rates of approximately 5 to 7 percent per year, increased supplies, requiring significant investment, for both oil and natural gas are needed. We also expect global liquefied natural gas (LNG) volumes to more than double by 2040, primarily to supply Asian and European markets. COMPETITIVE ADVANTAGES Proprietary exploration technologies were key to the discovery of more than 5 billion barrels of resource in Guyana across 10 discoveries through 2018. Guyana is one of the most significant play openings across the industry in recent years. These discoveries are enabling us to rapidly build a portfolio of deepwater projects that will leverage our leading project-development expertise. We leveraged scale and financial capacity to aggressively bid for attractive acreage in Brazil, acquiring more acreage than any other major international oil company in recent years. We now possess a high-quality portfolio of deepwater development and exploration opportunities in Brazil with multibillion-barrel potential. The combined fundamentals of low-cost development, an integrated business model, and a continued focus on technology are allowing us to maximize value from the Permian. We are positioned to deliver decades of low-cost, highly profitable production that will move through an efficient logistics network and serve as advantaged feedstock for U.S. Gulf Coast refineries and chemical plants. We demonstrate functional excellence with leading technical and commercial capabilities that are critical to developing some of industry’s lowest-cost LNG supplies in the frontier countries of Papua New Guinea and Mozambique. These developments will strengthen our global LNG portfolio and will leverage our technical, operational, and project experience in frontier areas. In 2018, the World Oil and Gas Council recognized ExxonMobil as the “Explorer of the Year” for the second year in a row. The award is a recognition of the talented people working in our Upstream and the success they have achieved in discovering world-class resources. GROWING EARNINGS, CASH FLOW, AND ROCE BY… PROFITABLY GROWING PERMIAN PRODUCTION TO MORE THAN 1 MILLION OIL-EQUIVALENT BARRELS PER DAY NET BY 2024 RAPIDLY PROGRESSING DEEPWATER EXPLORATION AND DEVELOPMENT IN GUYANA AND BRAZIL TO DELIVER >900 KBD PRODUCTION BY 2025 STARTING UP NEW LNG PROJECTS IN MOZAMBIQUE AND PAPUA NEW GUINEA, WITH POTENTIAL TO ADD MORE THAN 25 MTA OF CAPACITY BY 2025 HIGHGRADING EXISTING PORTFOLIO THROUGH IMPROVEMENTS IN BASE OPERATIONS, ACQUISITIONS, AND DIVESTMENTS 29 E X X O N M O B I L 2 0 1 8 S U M M A R Y A N N U A L R E P O R T EXXONMOBIL’S DOWNSTREAM IS ONE OF THE WORLD’S LARGEST MANUFACTURERS AND MARKETERS OF FUELS AND LUBRICANTS RESULTS AND HIGHLIGHTS Achieved strong safety performance Completed three major refinery investments in Beaumont, Antwerp, and Rotterdam, increasing production of higher-value fuels and lubricant products Expanded branded retail presence with introduction of the Mobil brand in Canada, growth in Europe and Mexico, and expansion of Synergy fuels Increased lubricants and fuels sales volume in growing markets Acquired PT Federal Karyatama’s lubricant business, strengthening ExxonMobil’s position in Indonesia and building on the Mobil lubricant brand in a key growth market Highgraded portfolio, with divestment of Germany retail assets and Augusta refinery in Italy DOWNSTREAM STATISTICAL RECAP 2018 2017 2016 2015 2014 Earnings (millions of dollars) Refinery throughput (thousands of barrels per day) Petroleum product sales(1) (thousands of barrels per day) 6,010 4,272 5,512 5,597 4,291 5,530 4,201 4,269 5,482 6,557 4,432 5,754 3,045 4,476 5,875 Average capital employed(2) (millions of dollars) 25,740 22,514 21,804 23,253 23,977 Return on average capital employed(2) (percent) Capital expenditures(2) (millions of dollars) 23.3 3,429 24.9 2,524 19.3 2,462 28.2 2,613 12.7 3,034 (1) Petroleum product sales data reported net of purchases/sales contracts with the same counterparty. (2) See Frequently used terms on pages 40 and 41. PHOTO: At our Antwerp, Belgium, refinery, we started operations of a new 50,000-barrel-per-day delayed coker in 2018 to upgrade heavy residual products into higher-value fuels. 30 BUSINESS FUNDAMENTALS Global demand for fuels and lubricant products is directly linked to economic activity. Fuel demand for commercial transportation is expected to increase over the next two decades, driven by diesel and jet fuel, while worldwide gasoline demand will likely peak and then begin declining with increasing fuel efficiency and electric vehicle penetration. Finished lubricant demand is expected to grow, with high-value synthetic lubricants significantly outpacing industry growth. Demand for higher-value grades of lube basestocks will grow by approximately 30 percent by 2025, as consumer preferences for higher-performing finished lubricants products increase. COMPETITIVE ADVANTAGES A long-standing history of catalyst and process technology leadership underpins project returns of more than 20 percent on average and the development of high-quality products like Mobil 1, Synergy, and Diesel Efficient. Through application of technology, we have a strong portfolio of advantaged manufacturing sites in key demand centers globally, supported by a rich product and marketing offer, with market leadership in synthetic lubricants. We operate some of the largest manufacturing facilities in the industry, with a total processing capacity of 4.7 million barrels per day. Leveraging our global scale and technology investments, we are now the largest Group I and Group II basestocks producer globally, which helps ensure product integrity and reliable global supply of consistent and innovative lube basestocks. Integration across Upstream, Downstream, and Chemical business lines enables us to lower production costs and ensures molecules are upgraded to their highest possible value. Leveraging our Upstream position in the Permian, we are capturing value along the value chain through investments in light-crude capacity processing at our U.S. Gulf Coast manufacturing facilities, and in logistics to efficiently move crude domestically and internationally. Combining functional excellence with scale and integration, our worldwide refining cash operating costs are 15 percent lower than the industry average. In addition, our project development and execution capabilities enable us to invest in existing refineries at less-than-grassroots project costs and integrate new technologies into existing plants, such as the addition of new light-crude capacity at the Beaumont refinery and the introduction of the advanced hydrocracker in Rotterdam. Critical anchor positions in the Downstream business are filled by highly skilled people with in-depth technical knowledge, demonstrated leadership, and significant institutional knowledge. These 2,800 employees are coaches and mentors to their functional teams and serve important roles in supporting safe and reliable operations at our facilities. GROWING EARNINGS, CASH FLOW, AND ROCE BY… CAPTURING FULL VALUE-CHAIN BENEFITS, INCLUDING PERMIAN LOGISTICS INTEGRATION WITH U.S. GULF COAST MANUFACTURING FACILITIES PROGRESSING SIX KEY REFINERY PROJECTS TO PRODUCE MORE HIGHER-VALUE DISTILLATES, LUBES, AND CHEMICALS BY 2025 GROWING INDUSTRY-LEADING LUBE BASESTOCK AND SYNTHETIC LUBRICANTS BUSINESSES EXPANDING FUELS AND LUBRICANTS BRAND PRESENCE IN GROWING MARKETS SUCH AS INDONESIA AND MEXICO 31 E X X O N M O B I L 2 0 1 8 S U M M A R Y A N N U A L R E P O R T EXXONMOBIL CHEMICAL IS ONE OF THE WORLD’S MOST PROFITABLE CHEMICAL COMPANIES RESULTS AND HIGHLIGHTS Achieved strong safety performance Started up a new 1.5-million-tonnes-per-year ethane cracker in Baytown to supply low-cost feedstock to our U.S. Gulf Coast derivative facilities Completed several key projects in Singapore, with the integration of the Banyan aromatics facility and our existing Singapore chemical complex, and the completion of the butyl rubber and adhesion resin projects Progressed development of the Gulf Coast Growth Venture in San Patricio County, Texas, with partner SABIC Signed cooperation framework agreement with Guangdong Provincial People’s Government for a new chemical complex in China Launched new Achieve Advanced Polypropylene using proprietary product technology to expand performance-product offer CHEMICAL STATISTICAL RECAP 2018 2017 2016 2015 2014 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) 3,351 26,869 30,420 11.0 2,235 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 (1) Prime product sales data reported net of purchases/sales contracts with the same counterparty. (2) See Frequently used terms on pages 40 and 41. PHOTO: To meet growing demand for high-performance plastics, we are installing a new production unit at the Beaumont polyethylene plant. 32 BUSINESS FUNDAMENTALS Chemical industry growth is forecast to outpace growth in global GDP and energy demand for the next two decades. Most of that growth will come from Asia and other developing markets. GROWING EARNINGS, CASH FLOW, AND ROCE BY… The driving factors are increasing global population and improving standards of living. Global population is forecast to grow from about 7.4 billion people in 2016 to about 9.2 billion people by 2040. According to research by the Brookings Institution, the global middle class is expected to grow by about 80 percent from 2015 to 2030. As incomes in the developing world increase, more people will have access to consumer goods, automobiles, and appliances, which require many chemical products. ExxonMobil estimates that global demand for chemicals will rise by approximately 45 percent over the next decade. COMPETITIVE ADVANTAGES Catalyst and process technology leadership, including metallocene catalyst development and commercialization, underpins our strong market position in high-performance products. We also invest in new process technology innovations, as demonstrated by the world’s first and only crude cracker in Singapore, which lowers cost and enhances feed flexibility. Building on our global scale and market presence, we have established several technology centers around the world, enabling us to interact directly with customers, develop timely new product solutions, and nurture long-term relationships. Leveraging our global manufacturing footprint, we are able to process the most advantaged feedstocks and move products efficiently through a unique global supply chain. We leveraged the acquisition of the Banyan aromatics facility to strengthen our integrated business in Singapore across Downstream and Chemical operations by interconnecting pipelines and optimizing logistics. We are also jointly developing the Singapore residual upgrade project between Downstream and Chemical to upgrade residual, low-value streams from both chemical and downstream operations into Group II lube basestocks, further improving the competitiveness of the site. Leading project management capabilities and deep technical and commercial functional excellence have contributed to recent sales growth. With a proven track record of delivering several major chemical projects successfully in the past two years, we remain a partner of choice, as demonstrated by the world-scale petrochemical complex on the U.S. Gulf Coast with partner SABIC and the agreement of cooperation signed with the government of Guangdong Province, China, for a potential petrochemical facility. Critical positions in the Chemical business are filled by employees we have developed through training, challenging assignments, and broad experiences. Approximately 1,500 people fill these roles and are essential to meeting resource demand for major growth projects. PROGRESSING 13 NEW FACILITIES UTILIZING GLOBAL FEEDSTOCK FLEXIBILITY AND SUPPLY SCALE INVESTING IN THREE MAJOR STEAM CRACKERS, INCLUDING ONE LIQUID CRACKER IN ASIA AND SEVERAL DERIVATIVE PROJECTS – POLYETHYLENE, POLYPROPYLENE, ETHYLENE GLYCOL, VISTAMAXX, AND LINEAR ALPHA OLEFINS GROWING SALES OF HIGH-VALUE PERFORMANCE PRODUCTS BY 50% BY 2025 EXPANDING TECHNOLOGY PORTFOLIO WITH A FOCUS ON SUSTAINABLE SOLUTIONS 33 CORPORATE SUSTAINABILITY ExxonMobil’s primary responsibility is to produce and technology to lower the energy intensity of industrial And in a more recently sanctioned project in Guyana, the energy and products that are essential to processes. Since 2000, we have invested more than we have already worked with more than 500 Guyanese- modern life and economic development. What we $9 billion in lower-emission energy solutions. owned companies to support capacity-building in the do is critically important. And it is equally important that we operate in a way that protects people, the environment, and the well-being of communities where we live and work. On the policy front, ExxonMobil supports the Paris Agreement and market-based approaches to reduce greenhouse gas emissions, such as a revenue-neutral carbon tax. Our annual Sustainability Report delivers a Our 2019 Energy & Carbon Summary provides a comprehensive analysis of the critical dimensions detailed overview of how the company manages risks country ahead of first oil production in 2020. As part of our long-term commitment to support local development priorities, we invested $10 million in a collaboration with Conservation International and the University of Guyana to train Guyanese for sustainable job opportunities and to expand community-supported conservation. of sustainability, including environmental, social, related to climate change, including a view of potential and governance (ESG) performance. The following scenarios toward a 2-degree Celsius (2°C) pathway as GOVERNANCE is a summary of our approach. envisioned by the Paris Agreement. ENVIRONMENT AND CLIMATE CHANGE Management of environmental performance is guided by a fundamental scientific understanding of the impacts of energy and petrochemical production and a commitment to develop, maintain, and operate facilities using appropriate environmental standards. SOCIAL We work to ensure sustainable economic benefits for communities where we operate. We focus on three key areas: employing and training a local workforce; supporting diverse, local suppliers; and improving people’s livelihoods through direct community One area of critical importance is climate change. investments. We manage the risks by reducing our emissions, helping consumers reduce theirs, participating in policy discussions, and advancing research to find new low-emissions technologies. For example, in 2018, we outlined measures to reduce methane emissions by 15 percent and flaring by 25 percent by 2020. We also continued to advance our research into next-generation, breakthrough energy solutions, including biofuels, carbon capture and storage, For example, around the world, our affiliates are locally staffed, including in Nigeria, Chad, and Indonesia, where we have 95 percent local hires, including 90 percent of supervisors and managers. In Papua New Guinea, where it has been nearly a decade since construction started on our liquefied natural gas project, investment in local businesses continues to grow. In fact, we have spent about $4 billion on local goods and services. Our corporate governance systems and practices are core strengths of ExxonMobil. We apply a rigorous approach to corporate governance in all aspects of the way we do business, everywhere we operate, and we observe the highest standards of integrity and ethics. ExxonMobil requires that employees, officers, directors, and those working on our behalf comply with all applicable laws, including U.S. anti-corruption, anti-trust, anti- boycott, trade sanctions, and export controls laws, as well as laws in other countries applicable to our business. Good corporate governance creates a business environment that supports long-term growth. ExxonMobil’s Board of Directors – comprised of the CEO and nine independent directors – provides a key oversight role, including review of risk management efforts and strategic plans. Ensuring that we have diversity of backgrounds, experiences, and thought represented on the board remains critical to our success. 34 EXXONMOBIL 2018 SUMMARY ANNUAL REPORT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 (the “Corporation”) as of December 31, 2018 and 2017, 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, 2018 (not presented herein) appearing in the ExxonMobil 2018 Financial Statements and Supplemental Information booklet enclosed with the proxy materials for the 2019 annual meeting of shareholders of the Corporation and have issued our report thereon dated February 27, 2019, which included an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated financial statements (pages 37–39) is fairly stated, in all material respects, in relation to the consolidated financial statements from which it has been derived. Dallas, Texas February 27, 2019 SUMMARY OF ACCOUNTING POLICIES AND PRACTICES The Corporation’s accounting and financial reporting fairly reflect its integrated business model involving exploration for, and production of, crude oil and natural gas and manufacture, trade, transport and sale of crude oil, natural gas, petroleum products, petrochemicals and a wide variety of specialty 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. Revenue is recognized at the amount the Corporation expects to receive when the customer has taken control, which is typically when title transfers and the customer has assumed the risks and rewards of ownership. 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 2018 Financial Statements and Supplemental Information booklet. The Corporation awards stock-based compensation to employees in the form of 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 2018 Financial Statements and Supplemental Information booklet (Critical Accounting Estimates and Note 1 to the Consolidated Financial Statements). 35 E X X O N M O B I L 2 0 1 8 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) 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 40 and 41. (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. 36 2018 2017 2016 20,840 40,137 25,923 1,116 37,796 232,374 288,892 71.0 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 2018 9.2 11.0 16.0 14.9 0.84 2018 3.23 5.6 4,270 4,270 4,237 (15.1) 626 89.30 64.65 79.96 68.19 2017 9.0 11.1 17.9 16.8 0.82 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 2016 2.98 3.5 4,177 4,177 4,148 19.8 977 95.55 71.55 86.22 90.26 SUMMARY STATEMENT OF INCOME (millions of dollars) Revenues and other income Sales and other operating revenue 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 Non-service pension and postretirement benefit expense 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) 2018 2017 2016 279,332 7,355 3,525 290,212 156,172 36,682 11,480 18,745 1,466 1,285 766 32,663 259,259 30,953 9,532 21,421 581 20,840 4.88 4.88 237,162 5,380 1,821 244,363 128,217 32,690 10,649 19,893 1,790 1,745 601 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 30,448 10,443 22,308 1,467 1,835 453 29,020 200,145 7,969 (406) 8,375 535 7,840 1.88 1.88 The information in the Summary statement of income (for 2016 to 2018), the Summary balance sheet (for 2017 and 2018), and the Summary statement of cash flows (for 2016 to 2018), shown on pages 37 through 39, corresponds to the information in the Consolidated statement of income, the Consolidated balance sheet, and the Consolidated statement of cash flows in ExxonMobil’s 2018 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 2018 Financial Statements and Supplemental Information booklet. 37 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 2018 2017 3,042 24,701 14,803 4,155 1,272 47,973 40,790 247,101 10,332 346,196 17,258 37,268 2,612 57,138 20,538 20,272 27,244 4,382 18,094 147,668 15,258 421,653 (19,564) (225,553) 191,794 6,734 198,528 346,196 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 (1) For more information, please refer to Note 16 in ExxonMobil’s 2018 Financial Statements and Supplemental Information booklet. The information in the Summary statement of income (for 2016 to 2018), the Summary balance sheet (for 2017 and 2018), and the Summary statement of cash flows (for 2016 to 2018), shown on pages 37 through 39, corresponds to the information in the Consolidated statement of income, the Consolidated balance sheet, and the Consolidated statement of cash flows in ExxonMobil’s 2018 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 2018 Financial Statements and Supplemental Information booklet. 38 EXXONMOBIL 2018 SUMMARY ANNUAL REPORT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 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 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 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 2018 2017 2016 21,421 18,745 (60) 1,070 (68) (1,684) (545) (3,107) (25) 2,321 (1,993) (61) 36,014 (19,574) 4,123 (1,981) 986 (16,446) 46 – (4,752) (219) (13,798) (243) 146 (626) – (19,446) (257) (135) 3,177 3,042 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 The information in the Summary statement of income (for 2016 to 2018), the Summary balance sheet (for 2017 and 2018), and the Summary statement of cash flows (for 2016 to 2018), shown on pages 37 through 39, corresponds to the information in the Consolidated statement of income, the Consolidated balance sheet, and the Consolidated statement of cash flows in ExxonMobil’s 2018 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 2018 Financial Statements and Supplemental Information booklet. 39 E X X O N M O B I L 2 0 1 8 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. Returns, investment returns, project returns • Unless referring specifically to ROCE, references to returns, investment returns, project returns and similar terms mean discounted cash flow returns based on current company estimates. Future investment returns exclude prior exploration and acquisition costs. Proved reserves • Proved reserve figures in this publication are determined in accordance with SEC definitions in effect at the end of each applicable year. 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 classified as proved reserves, as well as, quantities that are not yet classified as proved reserves, but that are expected to be ultimately recoverable. 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. 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 2018 20,840 (912) (192) 498 (606) 21,446 232,374 9.2% 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% 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. 40 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 2018 2017 2016 2015 2014 346,196 348,691 330,314 336,758 349,493 (39,880) (69,992) (7,958) 3,914 232,280 17,258 20,538 191,794 (1,224) 3,914 232,280 (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 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 2018 36,014 4,123 40,137 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 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 2018 2017 2016 2015 2014 36,014 (19,574) 4,123 (1,981) 986 19,568 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 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 2018 13,798 – 13,798 626 2017 13,001 – 13,001 747 2016 12,453 – 12,453 977 2015 12,090 3,000 15,090 1,039 The Corporation distributes cash to shareholders in the form of both dividends and share purchases. Shares are acquired to reduce shares outstanding and 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. 2014 11,568 12,000 23,568 1,183 41 BOARD OF DIRECTORS, OFFICERS, AND AFFILIATED COMPANIES (left to right) 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 S Reinemund Presiding Director; Former Chairman of the Board and Chief Executive Officer, PepsiCo (consumer food products) Steven A. Kandarian Chairman of the Board, President, and Chief Executive Officer, MetLife Inc. (insurance) Darren W. Woods Chairman of the Board and Chief Executive Officer Douglas R. Oberhelman Former Chairman of the Board and Chief Executive Officer, Caterpillar Inc. (heavy equipment) Samuel J. Palmisano Former Chairman of the Board, President, and Chief Executive Officer, International Business Machines Corporation (computer hardware, software, business consulting, and IT services) William C. Weldon Former Chairman of the Board and Chief Executive Officer, Johnson & Johnson (pharmaceuticals) Susan K. Avery President Emerita, Woods Hole Oceanographic Institution (nonprofit ocean research, exploration, and education) Ursula M. Burns Chairman of the Board and Chief Executive Officer, VEON, Ltd. (telecommunication services) 42 EXXONMOBIL 2018 SUMMARY ANNUAL REPORTSTANDING COMMITTEES OF THE BOARD 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) 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 A.F. Braly (Chair) S.K. Avery S.A. Kandarian S.S Reinemund Executive Committee D.W. Woods (Chair) U.M. Burns K.C. Frazier S.J. Palmisano S.S Reinemund OFFICERS D.W. Woods Chairman of the Board (1) N.A. Chapman Senior Vice President (1) A.P. Swiger Senior Vice President (1) J.P. Williams, Jr. Senior Vice President (1) P.P. Clarke 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) S.M. Greenlee Vice President (1) T.C. Gunnlaugsson Vice President – Human Resources N.A. Hansen Vice President – Investor Relations and Secretary (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) FUNCTIONAL AND SERVICE ORGANIZATIONS Upstream P.P. Clarke N.W. Duffin President, ExxonMobil Gas & Power Marketing Company (1) President, ExxonMobil Production 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.H. March B.W. Milton Chemical J.R. Verity Other L.D. DuCharme President, ExxonMobil Research and Engineering Company President, ExxonMobil Fuels & Lubricants Company (1) 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. As of December 31, 2018 43 E X X O N M O B I L 2 0 1 8 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 a.m. to 8 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 • Sustainability 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 2018 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, EHC, Santoprene, Synergy, Vistamaxx, and Achieve. 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). 44 ANNUAL SHAREHOLDER MEETING The 2019 Annual Meeting of Shareholders will be held at 9:30 a.m. Central Time on Wednesday, May 29, 2019, at: Renaissance Dallas Hotel Conference Center 2222 North Stemmons Freeway Dallas, TX 75207 An audio webcast 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 Important shareholder information is available at exxonmobil.com: • Publications • Stock Quote • Dividend Information • Contact Information • Speeches • News Releases • Investor Presentations • Corporate Governance 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 ADDRESS 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 is traded. STOCK SYMBOL: XOM exxonmobil.com/annualreport . 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 9 1 0 2 © N G I S E D E N O T S T E H W 002CSN9B53 Exxon Mobil Corporation Corporate Headquarters 5959 Las Colinas Blvd. Irving, Texas 75039-2298 exxonmobil.com Printed in U.S.A. 

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