UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2013
or
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
For the transition period from __________to________
Commission File Number 1-2256
EXXON MOBIL CORPORATION
(Exact name of registrant as specified in its charter)
NEW JERSEY 13-5409005
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5959 LAS COLINAS BOULEVARD, IRVING, TEXAS 75039-2298
(Address of principal executive offices)(Zip Code)
(972) 444-1000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
x
Accelerated filer
¨
Non-accelerated filer
Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Class Outstanding as of March 31, 2013
Common stock, without par value 4,446,375,887
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2013
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statement of Income
Three months ended March 31, 2013 and 2012
3
Condensed Consolidated Statement of Comprehensive Income
4
Condensed Consolidated Balance Sheet
As of March 31, 2013 and December 31, 2012
5
Condensed Consolidated Statement of Cash Flows
6
Condensed Consolidated Statement of Changes in Equity
7
Notes to Condensed Consolidated Financial Statements
8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
14
Item 3. Quantitative and Qualitative Disclosures About Market Risk
18
Item 4. Controls and Procedures
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
19
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
20
Item 6. Exhibits
Signature
21
Index to Exhibits
22
-2-
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(millions of dollars)
Three Months Ended
March 31,
2013
2012
Revenues and other income
Sales and other operating revenue (1)
103,828
119,189
Income from equity affiliates
4,418
4,210
Other income
561
654
Total revenues and other income
108,807
124,053
Costs and other deductions
Crude oil and product purchases
59,899
69,825
Production and manufacturing expenses
9,736
9,850
Selling, general and administrative expenses
3,118
3,601
Depreciation and depletion
4,110
3,842
Exploration expenses, including dry holes
445
522
Interest expense
24
107
Sales-based taxes (1)
7,492
8,493
Other taxes and duties
7,945
10,298
Total costs and other deductions
92,769
106,538
Income before income taxes
16,038
17,515
Income taxes
6,277
7,716
Net income including noncontrolling interests
9,761
9,799
Net income attributable to noncontrolling interests
261
349
Net income attributable to ExxonMobil
9,500
9,450
Earnings per common share (dollars)
2.12
2.00
Earnings per common share - assuming dilution (dollars)
Dividends per common share (dollars)
0.57
0.47
(1) Sales-based taxes included in sales and other operating revenue
The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.
-3-
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Other comprehensive income (net of income taxes)
Foreign exchange translation adjustment
(1,209)
1,045
Adjustment for foreign exchange translation (gain)/loss included in net income
-
67
Postretirement benefits reserves adjustment (excluding amortization)
65
(404)
Amortization and settlement of postretirement benefits reserves adjustment
included in net periodic benefit costs
444
393
Total other comprehensive income
(700)
1,101
Comprehensive income including noncontrolling interests
9,061
10,900
Comprehensive income attributable to noncontrolling interests
144
325
Comprehensive income attributable to ExxonMobil
8,917
10,575
-4-
CONDENSED CONSOLIDATED BALANCE SHEET
Mar. 31,
Dec. 31,
Assets
Current assets
Cash and cash equivalents
6,214
9,582
Cash and cash equivalents – restricted
376
341
Notes and accounts receivable – net
34,291
34,987
Inventories
Crude oil, products and merchandise
12,446
10,836
Materials and supplies
3,785
3,706
Other current assets
5,482
5,008
Total current assets
62,594
64,460
Investments, advances and long-term receivables
35,641
34,718
Property, plant and equipment – net
233,728
226,949
Other assets, including intangibles – net
7,676
7,668
Total assets
339,639
333,795
Liabilities
Current liabilities
Notes and loans payable
5,937
3,653
Accounts payable and accrued liabilities
53,978
50,728
Income taxes payable
10,169
9,758
Total current liabilities
70,084
64,139
Long-term debt
7,475
7,928
Postretirement benefits reserves
25,286
25,267
Deferred income tax liabilities
38,712
37,570
Long-term obligations to equity companies
3,748
3,555
Other long-term obligations
21,257
23,676
Total liabilities
166,562
162,135
Commitments and contingencies (Note 2)
Equity
Common stock without par value
(9,000 million shares authorized, 8,019 million shares issued)
9,665
9,653
Earnings reinvested
372,666
365,727
Accumulated other comprehensive income
(12,767)
(12,184)
Common stock held in treasury
(3,573 million shares at Mar. 31, 2013 and
3,517 million shares at Dec. 31, 2012)
(202,563)
(197,333)
ExxonMobil share of equity
167,001
165,863
Noncontrolling interests
6,076
5,797
Total equity
173,077
171,660
Total liabilities and equity
-5-
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Cash flows from operating activities
Changes in operational working capital, excluding cash and debt
2,321
5,792
All other items – net
(2,600)
(146)
Net cash provided by operating activities
13,592
19,287
Cash flows from investing activities
Additions to property, plant and equipment
(7,494)
(7,843)
Proceeds associated with sales of subsidiaries, property, plant and
equipment, and sales and returns of investments
360
2,513
Additional investments and advances
(3,032)
(111)
Other investing activities – net
112
90
Net cash used in investing activities
(10,054)
(5,351)
Cash flows from financing activities
Additions to long-term debt
129
Reductions in long-term debt
(5)
Additions/(reductions) in short-term debt – net
1,587
(527)
Cash dividends to ExxonMobil shareholders
(2,561)
(2,221)
Cash dividends to noncontrolling interests
(105)
(96)
Changes in noncontrolling interests
(1)
212
Common stock acquired
(5,621)
(5,704)
Common stock sold
2
82
Net cash used in financing activities
(6,694)
(8,130)
Effects of exchange rate changes on cash
(212)
200
Increase/(decrease) in cash and cash equivalents
(3,368)
6,006
Cash and cash equivalents at beginning of period
12,664
Cash and cash equivalents at end of period
18,670
Supplemental Disclosures
Income taxes paid
7,220
5,416
Cash interest paid
105
99
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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
ExxonMobil Share of Equity
Accumulated
Other
Common
Compre-
Stock
ExxonMobil
Non-
Earnings
hensive
Held in
Share of
controlling
Total
Reinvested
Income
Treasury
Interests
Balance as of December 31, 2011
9,512
330,939
(9,123)
(176,932)
154,396
6,348
160,744
Amortization of stock-based awards
226
Tax benefits related to stock-based
awards
(753)
544
(209)
Net income for the period
Dividends – common shares
(2,317)
Other comprehensive income
1,125
(24)
Acquisitions, at cost
(16)
(5,720)
Dispositions
471
Balance as of March 31, 2012
9,007
338,168
(7,998)
(182,165)
157,012
7,105
164,117
Balance as of December 31, 2012
188
(388)
241
(147)
(2,666)
(583)
(117)
(5,622)
391
Balance as of March 31, 2013
Three Months Ended March 31, 2013
Three Months Ended March 31, 2012
Common Stock Share Activity
Issued
Outstanding
(millions of shares)
Balance as of December 31
8,019
(3,517)
4,502
(3,285)
4,734
Acquisitions
(63)
(66)
Balance as of March 31
(3,573)
4,446
(3,343)
4,676
-7-
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Financial Statement Preparation
These unaudited condensed consolidated financial statements should be read in the context of the consolidated financial statements and notes thereto filed with the Securities and Exchange Commission in the Corporation's 2012 Annual Report on Form 10-K. In the opinion of the Corporation, the information furnished herein reflects all known accruals and adjustments necessary for a fair statement of the results for the periods reported herein. All such adjustments are of a normal recurring nature. Prior year’s data has been reclassified in certain cases to conform to the 2013 presentation basis.
The Corporation's exploration and production activities are accounted for under the "successful efforts" method.
2. Litigation and Other Contingencies
Litigation
A variety of claims have been made against ExxonMobil and certain of its consolidated subsidiaries in a number of pending lawsuits. Management has regular litigation reviews, including updates from corporate and outside counsel, to assess the need for accounting recognition or disclosure of these contingencies. The Corporation accrues an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. The Corporation does not record liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote. For contingencies where an unfavorable outcome is reasonably possible and which are significant, the Corporation discloses the nature of the contingency and, where feasible, an estimate of the possible loss. For purposes of our contingency disclosures, “significant” includes material matters as well as other matters which management believes should be disclosed. ExxonMobil will continue to defend itself vigorously in these matters. Based on a consideration of all relevant facts and circumstances, the Corporation does not believe the ultimate outcome of any currently pending lawsuit against ExxonMobil will have a material adverse effect upon the Corporation's operations, financial condition, or financial statements taken as a whole.
Other Contingencies
The Corporation and certain of its consolidated subsidiaries were contingently liable at March 31, 2013, for guarantees relating to notes, loans and performance under contracts. Where guarantees for environmental remediation and other similar matters do not include a stated cap, the amounts reflect management’s estimate of the maximum potential exposure. These guarantees are not reasonably likely to have a material effect on the Corporation’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
As of March 31, 2013
Company
Third Party
Obligations(1)
Obligations
Guarantees
Debt-related
2,583
51
2,634
4,654
4,678
9,332
7,237
4,729
11,966
(1) ExxonMobil share
-8-
Additionally, the Corporation and its affiliates have numerous long-term sales and purchase commitments in their various business activities, all of which are expected to be fulfilled with no adverse consequences material to the Corporation’s operations or financial condition. The Corporation's outstanding unconditional purchase obligations at March 31, 2013, were similar to those at the prior year-end period. Unconditional purchase obligations as defined by accounting standards are those long-term commitments that are noncancelable or cancelable only under certain conditions, and that third parties have used to secure financing for the facilities that will provide the contracted goods or services.
The operations and earnings of the Corporation and its affiliates throughout the world have been, and may in the future be, affected from time to time in varying degree by political developments and laws and regulations, such as forced divestiture of assets; restrictions on production, imports and exports; price controls; tax increases and retroactive tax claims; expropriation of property; cancellation of contract rights and environmental regulations. Both the likelihood of such occurrences and their overall effect upon the Corporation vary greatly from country to country and are not predictable.
In accordance with a nationalization decree issued by Venezuela’s president in February 2007, by May 1, 2007 a subsidiary of the Venezuelan National Oil Company (PdVSA) assumed the operatorship of the Cerro Negro Heavy Oil Project. This Project had been operated and owned by ExxonMobil affiliates holding a 41.67 percent ownership interest in the Project. The decree also required conversion of the Cerro Negro Project into a “mixed enterprise” and an increase in PdVSA’s or one of its affiliate’s ownership interest in the Project, with the stipulation that if ExxonMobil refused to accept the terms for the formation of the mixed enterprise within a specified period of time, the government would “directly assume the activities” carried out by the joint venture. ExxonMobil refused to accede to the terms proffered by the government, and on June 27, 2007, the government expropriated ExxonMobil’s 41.67 percent interest in the Cerro Negro Project. ExxonMobil’s remaining net book investment in Cerro Negro producing assets is about $750 million.
On September 6, 2007, affiliates of ExxonMobil filed a Request for Arbitration with the International Centre for Settlement of Investment Disputes (ICSID) invoking ICSID jurisdiction under Venezuela’s Investment Law and the Netherlands-Venezuela Bilateral Investment Treaty. The ICSID Tribunal issued a decision on June 10, 2010, finding that it had jurisdiction to proceed on the basis of the Netherlands-Venezuela Bilateral Investment Treaty. The ICSID arbitration proceeding is continuing and a hearing on the merits was held in February 2012. At this time, the net impact of these matters on the Corporation’s consolidated financial results cannot be reasonably estimated. Regardless, the Corporation does not expect the resolution to have a material effect upon the Corporation’s operations or financial condition.
An affiliate of ExxonMobil is one of the Contractors under a Production Sharing Contract (PSC) with the Nigerian National Petroleum Corporation (NNPC) covering the Erha block located in the offshore waters of Nigeria. ExxonMobil's affiliate is the operator of the block and owns a 56.25 percent interest under the PSC. The Contractors are in dispute with NNPC regarding NNPC's lifting of crude oil in excess of its entitlement under the terms of the PSC. In accordance with the terms of the PSC, the Contractors initiated arbitration in Abuja, Nigeria, under the Nigerian Arbitration and Conciliation Act. On October 24, 2011, a three-member arbitral Tribunal issued an award upholding the Contractors' position in all material respects and awarding damages to the Contractors jointly in an amount of approximately $1.8 billion plus $234 million in accrued interest. The Contractors petitioned a Nigerian federal court for enforcement of the award, and NNPC petitioned the same court to have the award set aside. On May 22, 2012, the court set aside the award. The Contractors have appealed that judgment. At this time, the net impact of this matter on the Corporation's consolidated financial results cannot be reasonably estimated. However, regardless of the outcome of enforcement proceedings, the Corporation does not expect the proceedings to have a material effect upon the Corporation's operations or financial condition.
-9-
3. Other Comprehensive Income Information
Cumulative
Post-
Foreign
retirement
Exchange
Benefits
ExxonMobil Share of Accumulated Other
Translation
Reserves
Comprehensive Income
Adjustment
4,168
(13,291)
Current period change excluding amounts reclassified
from accumulated other comprehensive income
1,065
(366)
699
Amounts reclassified from accumulated other
comprehensive income
52
374
426
Total change in accumulated other comprehensive income
1,117
5,285
(13,283)
2,410
(14,594)
(1,088)
78
(1,010)
427
505
1,322
(14,089)
Amounts Reclassified Out of Accumulated Other
Comprehensive Income - Before-tax Income/(Expense)
Foreign exchange translation gain/(loss) included in net income
(Statement of Income line: Other income)
(67)
Amortization and settlement of postretirement benefits reserves
adjustment included in net periodic benefit costs (1)
(644)
(582)
(1) These accumulated other comprehensive income components are included in the computation of net periodic pension cost. (See Note 5 – Pension and Other Postretirement Benefits for additional details.)
Income Tax (Expense)/Credit For
Components of Other Comprehensive Income
37
(60)
Postretirement benefits reserves adjustment
(19)
161
adjustment included in net periodic benefit costs
(200)
(189)
(182)
(88)
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4. Earnings Per Share
Earnings per common share
Net income attributable to ExxonMobil (millions of dollars)
Weighted average number of common shares outstanding(millions of shares)
4,485
4,715
Earnings per common share - assuming dilution
Weighted average number of common shares outstanding (millions of shares)
Effect of employee stock-based awards
1
Weighted average number of common shares outstanding - assuming dilution
4,716
-11-
5. Pension and Other Postretirement Benefits
Pension Benefits - U.S.
Components of net benefit cost
Service cost
187
156
Interest cost
205
Expected return on plan assets
(190)
Amortization of actuarial loss/(gain) and prior service cost
164
146
Net pension enhancement and curtailment/settlement cost
167
123
Net benefit cost
496
440
Pension Benefits - Non-U.S.
178
168
277
298
(292)
(289)
250
254
413
437
Other Postretirement Benefits
36
33
91
103
(10)
(11)
63
53
180
6. Financial Instruments
The fair value of financial instruments is determined by reference to observable market data and other valuation techniques as appropriate. The only category of financial instruments where the difference between fair value and recorded book value is notable is long-term debt. The estimated fair value of total long-term debt, excluding capitalized lease obligations, was $7,523 million at March 31, 2013, and $8,027 million at December 31, 2012, as compared to recorded book values of $7,061 million at March 31, 2013, and $7,497 million at December 31, 2012.
The fair value of long-term debt by hierarchy level at March 31, 2013, is: Level 1 $6,154 million; Level 2 $1,303 million; and Level 3 $66 million. Level 1 represents quoted prices in active markets. Level 2 includes debt whose fair value is based upon a publicly available index. Level 3 involves using internal data augmented by relevant market indicators if available.
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7. Disclosures about Segments and Related Information
EARNINGS AFTER INCOME TAX
Upstream
United States
859
1,010
Non-U.S.
6,178
6,792
Downstream
1,039
603
506
983
Chemical
752
433
385
268
All other
(219)
(639)
Corporate total
SALES AND OTHER OPERATING REVENUE (1)
3,080
2,967
6,402
7,896
30,998
30,909
53,407
67,018
3,883
3,927
6,050
6,468
(1) Includes sales-based taxes
INTERSEGMENT REVENUE
2,275
2,492
11,387
12,170
5,170
5,510
13,517
17,169
3,227
3,128
2,062
2,693
70
-13-
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
FUNCTIONAL EARNINGS SUMMARY
First Three Months
Earnings (U.S. GAAP)
Corporate and financing
Net Income attributable to ExxonMobil
References in this discussion to corporate earnings mean net income attributable to ExxonMobil (U.S. GAAP) from the consolidated income statement. Unless otherwise indicated, references to earnings, Upstream, Downstream, Chemical and Corporate and Financing segment earnings, and earnings per share are ExxonMobil's share after excluding amounts attributable to noncontrolling interests.
REVIEW OF FIRST QUARTER 2013 RESULTS
ExxonMobil achieved strong results during the first quarter of 2013, while investing significantly to develop new energy supplies. ExxonMobil’s financial performance enables continued investment to deliver the energy needed to help meet growing demand, support economic growth, and raise living standards around the world.
First quarter 2013 earnings were $9.5 billion, up 1 percent from the first quarter of 2012.
Capital and exploration expenditures for the first quarter were $11.8 billion, including $3.1 billion for the acquisition of Celtic Exploration Ltd.
The Corporation distributed $7.6 billion to shareholders in the first quarter through dividends and share purchases to reduce shares outstanding.
Upstream earnings
7,037
7,802
Upstream earnings for the first three months were $7,037 million, down $765 million from the first quarter of 2012. Lower liquids realizations, partially offset by improved natural gas realizations, decreased earnings by $230 million. Production volume and mix effects reduced earnings by $280 million. All other items, including higher operating expenses, decreased earnings by $250 million.
-14-
On an oil-equivalent basis, production decreased 3.5 percent from the first quarter of 2012. Excluding the impacts of entitlement volumes, OPEC quota effects and divestments, production decreased 1.2 percent.
Liquids production totaled 2,193 kbd (thousands of barrels per day), down 21 kbd from the first quarter of 2012 as field decline was partially offset by project ramp-up in West Africa. The net impact of entitlement volumes, OPEC quota effects, and divestments was negligible.
First quarter natural gas production was 13,213 mcfd (millions of cubic feet per day), down 823 mcfd from 2012. Excluding the impacts of entitlement volumes and divestments, natural gas production was down 1.5 percent, as field decline was partially offset by lower downtime and higher demand.
Earnings from U.S. Upstream operations were $859 million, $151 million lower than the first quarter of 2012. Non-U.S. Upstream earnings were $6,178 million, down $614 million from the prior year.
Downstream earnings
1,545
1,586
For the first three months, Downstream earnings were $1,545 million, down $41 million from the first quarter of 2012. Stronger margins, mainly in refining, increased earnings by $780 million. Volume and mix effects decreased earnings by $290 million. All other items, including lower gains on asset sales, higher expenses, and foreign exchange effects, decreased earnings by $530 million. Petroleum product sales of 5,755 kbd were 561 kbd lower than last year's first quarter reflecting the Japan restructuring and other divestment related impacts.
Earnings from the U.S. Downstream were $1,039 million, up $436 million from the first quarter of 2012. Non-U.S. Downstream earnings of $506 million were $477 million lower than last year.
Chemical earnings
1,137
701
Chemical earnings of $1,137 million for the first three months were $436 million higher than the first quarter of 2012. Higher margins, mainly commodities, increased earnings by $320 million. All other items, including gains on asset sales, increased earnings by $120 million. First quarter prime product sales of 5,910 kt (thousands of metric tons) were 427 kt lower than last year's first quarter due mainly to the Japan restructuring.
Corporate and financing earnings
Corporate and financing expenses were $219 million for the first quarter of 2013, down $420 million from the first quarter of 2012, reflecting favorable tax impacts.
-15-
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by/(used in)
Operating activities
Investing activities
Financing activities
Effect of exchange rate changes
Cash and cash equivalents (at end of period)
Cash and cash equivalents – restricted (at end of period)
477
Total cash and cash equivalents (at end of period)
6,590
19,147
Cash flow from operations and asset sales
Net cash provided by operating activities (U.S. GAAP)
Proceeds associated with sales of subsidiaries, property, plant & equipment,
and sales and returns of investments
13,952
21,800
Because of the ongoing nature of our asset management and divestment program, we believe it is useful for investors to consider asset sales proceeds together with cash provided by operating activities when evaluating cash available for investment in the business and financing activities.
Total cash and cash equivalents of $6.6 billion at the end of the first quarter of 2013 compared to $19.1 billion at the end of the first quarter of 2012.
Cash provided by operating activities totaled $13.6 billion for the first three months of 2013, $5.7 billion lower than 2012. The major source of funds was net income including noncontrolling interests of $9.8 billion which was flat with the prior year period. The adjustment for the noncash provision of $4.1 billion for depreciation and depletion increased by $0.3 billion. Changes in operational working capital added to cash flows in both periods. All other items net in 2013 decreased cash by $2.6 billion. For additional details, see the Condensed Consolidated Statement of Cash Flows on page 6.
Investing activities for the first three months of 2013 used net cash of $10.1 billion, an increase of $4.7 billion compared to the prior year. Spending for additions to property, plant and equipment decreased $0.3 billion to $7.5 billion. Proceeds from asset sales of $0.4 billion, decreased $2.2 billion. Additional investment and advances increased $2.9 billion to $3.0 billion reflecting the impact of the acquisition of Celtic Exploration Ltd.
Cash flow from operations and asset sales in the first quarter of 2013 of $14.0 billion, including asset sales of $0.4 billion, decreased $7.8 billion from the comparable 2012 period.
Net cash used in financing activities of $6.7 billion in the first three months of 2013 was $1.4 lower than 2012, reflecting short-term debt issuance in 2013.
During the first quarter of 2013, Exxon Mobil Corporation purchased 63 million shares of its common stock for the treasury at a gross cost of $5.6 billion. These purchases included $5 billion to reduce the number of shares outstanding with the balance used to acquire shares in conjunction with the company’s benefit plans and programs. Shares outstanding decreased from 4,502 million at year-end 2012 to 4,446 million at the end of the first quarter 2013. Purchases may be made in both the open market and through negotiated transactions, and may be increased, decreased or discontinued at any time without prior notice.
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The Corporation distributed to shareholders a total of $7.6 billion in the first quarter of 2013 through dividends and share purchases to reduce shares outstanding.
Total debt of $13.4 billion compared to $11.6 billion at year-end 2012. The Corporation's debt to total capital ratio was 7.2 percent at the end of the first quarter of 2013 compared to 6.3 percent at year-end 2012.
Although the Corporation issues long-term debt from time to time and maintains a revolving commercial paper program, internally generated funds are expected to cover the majority of its net near-term financial requirements.
The Corporation, as part of its ongoing asset management program, continues to evaluate its mix of assets for potential upgrade. Because of the ongoing nature of this program, dispositions will continue to be made from time to time which will result in either gains or losses. Additionally, the Corporation continues to evaluate opportunities to enhance its business portfolio through acquisitions of assets or companies, and enters into such transactions from time to time. Key criteria for evaluating acquisitions include potential for future growth and attractive current valuations. Acquisitions may be made with cash, shares of the Corporation’s common stock, or both.
Litigation and other contingencies are discussed in Note 2 to the unaudited condensed consolidated financial statements.
TAXES
Effective income tax rate
46
%
49
Sales-based taxes
All other taxes and duties
8,781
11,203
22,550
27,412
Income, sales-based and all other taxes and duties totaled $22.6 billion for the first quarter of 2013, a decrease of $4.9 billion from 2012. Income tax expense decreased by $1.4 billion to $6.3 billion reflecting lower pre-tax income and a lower effective tax rate. The effective income tax rate was 46 percent compared to 49 percent in the prior year period. Sales-based taxes and all other taxes and duties decreased by $3.4 billion to $16.3 billion reflecting the Japan restructuring.
CAPITAL AND EXPLORATION EXPENDITURES
Upstream (including exploration expenses)
10,847
8,079
609
439
316
313
11,775
8,834
Capital and exploration expenditures in the first quarter of 2013 were $11.8 billion, up 33 percent from the first quarter of 2012, and included $3.1 billion for the acquisition of Celtic Exploration Ltd. The Corporation anticipates an investment profile of about $38 billion per year for the next several years. Actual spending could vary depending on the progress of individual projects and property acquisitions.
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FORWARD-LOOKING STATEMENTS
Statements relating to future plans, projections, events or conditions are forward-looking statements. Actual results, including project plans, costs, timing, and capacities; capital and exploration expenditures; resource recoveries; and share purchase levels, could differ materially due to factors including: changes in oil or gas prices or other market or economic conditions affecting the oil and gas industry, including the scope and duration of economic recessions; the outcome of exploration and development efforts; changes in law or government regulation, including tax and environmental requirements; the outcome of commercial negotiations; changes in technical or operating conditions; and other factors discussed under the heading "Factors Affecting Future Results" in the “Investors” section of our website and in Item 1A of ExxonMobil's 2012 Form 10-K. We assume no duty to update these statements as of any future date.
The term “project” as used in this report does not necessarily have the same meaning as under SEC Rule 13q-1 relating to government payment reporting. For example, a single project for purposes of the rule may encompass numerous properties, agreements, investments, developments, phases, work efforts, activities, and components, each of which we may also informally describe as a “project”.
Information about market risks for the three months ended March 31, 2013, does not differ materially from that discussed under Item 7A of the registrant's Annual Report on Form 10-K for 2012.
As indicated in the certifications in Exhibit 31 of this report, the Corporation’s Chief Executive Officer, Principal Financial Officer and Principal Accounting Officer have evaluated the Corporation’s disclosure controls and procedures as of March 31, 2013. Based on that evaluation, these officers have concluded that the Corporation’s disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Corporation in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to them in a manner that allows for timely decisions regarding required disclosures and are effective in ensuring that such information is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. There were no changes during the Corporation’s last fiscal quarter that materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.
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With regard to a matter previously reported in the Corporation’s Form 10-Q for the third quarter of 2011, in April 2013, the Corporation, without admitting liability, signed an Agreed Final Judgment with Harris County, Texas, which, upon entry by the court, and without constituting an adjudication of a violation by ExxonMobil, will resolve alleged violations of the Clean Air Act at the Corporation’s Baytown Olefins Plant and Baytown Refinery in Texas in 2011. Under the Agreed Judgment, the Corporation would pay a penalty of $277,500 and $150,000 in reimbursement of attorney fees incurred by Harris County and the State of Texas.
On March 25, 2013, ExxonMobil Pipeline Company (EMPCo) received from the U. S. Department of Transportation Pipeline & Hazardous Materials Safety Administration (PHMSA), a Notice of Probable Violation, Proposed Civil Penalty and Proposed Compliance Order alleging violations of the federal Pipeline Safety Regulations in connection with the July 1, 2011, discharge of crude oil into the Yellowstone River from EMPCo’s Silvertip Pipeline near Laurel, Montana. PHMSA is proposing to assess a $1.7 million civil penalty in connection with this matter and to require additional training of certain EMPCo personnel. EMPCo is contesting the allegations and the proposed penalty and compliance order and has requested a hearing on this matter.
On January 24, 2013, the California Air Resources Board (CARB) announced that it was seeking civil penalties in excess of $100,000 against ExxonMobil Oil Corporation (EMOC) to resolve alleged reporting violations in connection with EMOC’s Torrance Refinery’s receipt of an “adverse verification” on its 2011 California Greenhouse Gas Mandatory Report. EMOC has agreed to settlement terms with CARB which, upon the execution of a final agreement, would require EMOC to pay a penalty of $120,000 and submit to CARB an updated Greenhouse Gas Monitoring Plan complying with California law. Execution of a final agreement is currently anticipated by May 2013.
On January 30, 2013, the Texas Commission on Environmental Quality (TCEQ) issued a Notice of Enforcement and Proposed Agreed Order alleging that during three emission events in May and June 2012, ExxonMobil Oil Corporation’s (EMOC) Beaumont Refinery violated provisions of the Texas Health and Safety Code and the Texas Water Code. TCEQ has proposed a penalty of $188,125. EMOC is in discussions with TCEQ in an attempt to resolve the matter.
In March 2013, the North Dakota Department of Health (NDDOH) contacted XTO Energy Inc. (XTO) concerning alleged violations of the North Dakota Air Pollution Control Act and implementing regulations in connection with air permitting and emissions controls for XTO’s oil and gas facilities and flares located in the Bakken Pool in North Dakota. NDDOH is seeking a civil penalty in excess of $100,000 along with various corrective actions. XTO is negotiating with NDDOH to resolve the open issues.
On March 29, 2013, a breach in the Pegasus Pipeline, owned and operated by affiliates of the Corporation, resulted in a release of oil in Mayflower, Arkansas. The Arkansas Attorney General has initiated an investigation. ExxonMobil Pipeline Company is cooperating fully with all federal, state and local authorities and continues active response operations.
Refer to the relevant portions of Note 2 of this Quarterly Report on Form 10-Q for further information on legal proceedings.
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Issuer Purchase of Equity Securities for Quarter Ended March 31, 2013
Total Number of
Maximum Number
Shares Purchased
Of Shares that May
Total Number
Average
as Part of Publicly
Yet Be Purchased
Of Shares
Price Paid
Announced Plans
Under the Plans or
Period
Purchased
per Share
or Programs
Programs
January 2013
21,955,537
$89.73
February 2013
19,997,133
$88.93
March 2013
20,971,787
$89.31
62,924,457
$89.33
(See Note 1)
Note 1 - On August 1, 2000, the Corporation announced its intention to resume purchases of shares of its common stock for the treasury both to offset shares issued in conjunction with company benefit plans and programs and to gradually reduce the number of shares outstanding. The announcement did not specify an amount or expiration date. The Corporation has continued to purchase shares since this announcement and to report purchased volumes in its quarterly earnings releases. In its most recent earnings release dated April 25, 2013, the Corporation stated that second quarter 2013 share purchases to reduce shares outstanding are anticipated to equal $4 billion. Purchases may be made in both the open market and through negotiated transactions, and purchases may be increased, decreased or discontinued at any time without prior notice.
Exhibit
Description
31.1
Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by Chief Executive Officer.
31.2
Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by Principal Financial Officer.
31.3
Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by Principal Accounting Officer.
32.1
Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Chief Executive Officer.
32.2
Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal Financial Officer.
32.3
Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal Accounting Officer.
101
Interactive Data Files.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 2, 2013
By:
/s/ PATRICK T. MULVA
Patrick T. Mulva
Vice President, Controller and
Principal Accounting Officer
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INDEX TO EXHIBITS
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