Exxon Mobil Corp 10-Q

Item 1. Financial Statements EXXON MOBIL CORPORATION CONDENSED CONSOLIDATED STATEMENT OF INCOME (millions of dollars) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Revenues and other income Sales and other operating revenue 71,892 45,425 195,387 132,836 Income from equity affiliates 1,670 517 4,579 1,395 Other income 224 257 709 731 Total revenues and other income 73,786 46,199 200,675 134,962 Costs and other deductions Crude oil and product purchases 39,745 23,950 109,675 70,102 Production and manufacturing expenses 8,719 7,103 25,252 22,295 Selling, general and administrative expenses 2,287 2,444 7,060 7,432 Depreciation and depletion 4,990 4,983 14,946 15,718 Exploration expenses, including dry holes 190 188 530 690 Non-service pension and postretirement benefit expense 146 272 686 812 Interest expense 214 279 726 845 Other taxes and duties 7,889 7,352 22,295 19,338 Total costs and other deductions 64,180 46,571 181,170 137,232 Income (loss) before income taxes 9,606 ( 372 ) 19,505 ( 2,270 ) Income taxes 2,664 337 4,986 378 Net income (loss) including noncontrolling interests 6,942 ( 709 ) 14,519 ( 2,648 ) Net income (loss) attributable to noncontrolling interests 192 ( 29 ) 349 ( 278 ) Net income (loss) attributable to ExxonMobil 6,750 ( 680 ) 14,170 ( 2,370 ) Earnings (loss) per common share (dollars) 1.57 ( 0.15 ) 3.31 ( 0.55 ) Earnings (loss) per common share - assuming dilution (dollars) 1.57 ( 0.15 ) 3.31 ( 0.55 ) The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements. 3 EXXON MOBIL CORPORATION CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (millions of dollars) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net income (loss) including noncontrolling interests 6,942 ( 709 ) 14,519 ( 2,648 ) Other comprehensive income (loss) (net of income taxes) Foreign exchange translation adjustment ( 1,625 ) 1,469 ( 1,053 ) ( 1,305 ) Adjustment for foreign exchange translation (gain)/loss included in net income — 14 — 14 Postretirement benefits reserves adjustment (excluding amortization) 184 ( 140 ) 305 ( 189 ) Amortization and settlement of postretirement benefits reserves adjustment included in net periodic benefit costs 196 206 789 613 Total other comprehensive income (loss) ( 1,245 ) 1,549 41 ( 867 ) Comprehensive income (loss) including noncontrolling interests 5,697 840 14,560 ( 3,515 ) Comprehensive income (loss) attributable to noncontrolling interests 57 92 381 ( 449 ) Comprehensive income (loss) attributable to ExxonMobil 5,640 748 14,179 ( 3,066 ) The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements. 4 EXXON MOBIL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET (millions of dollars) September 30, 2021 December 31, 2020 Assets Current assets Cash and cash equivalents 4,768 4,364 Notes and accounts receivable – net 29,516 20,581 Inventories Crude oil, products and merchandise 15,087 14,169 Materials and supplies 4,520 4,681 Other current assets 1,664 1,098 Total current assets 55,555 44,893 Investments, advances and long-term receivables 45,641 43,515 Property, plant and equipment – net 218,795 227,553 Other assets, including intangibles – net 16,697 16,789 Total assets 336,688 332,750 Liabilities Current liabilities Notes and loans payable 12,966 20,458 Accounts payable and accrued liabilities 47,257 35,221 Income taxes payable 1,633 684 Total current liabilities 61,856 56,363 Long-term debt 43,639 47,182 Postretirement benefits reserves 21,060 22,415 Deferred income tax liabilities 19,008 18,165 Long-term obligations to equity companies 3,060 3,253 Other long-term obligations 20,559 21,242 Total liabilities 169,182 168,620 Commitments and contingencies (Note 3) Equity Common stock without par value ( 9,000 million shares authorized, 8,019 million shares issued) 16,104 15,688 Earnings reinvested 386,952 383,943 Accumulated other comprehensive income ( 16,696 ) ( 16,705 ) Common stock held in treasury ( 3,785 million shares at September 30, 2021 and 3,786 million shares at December 31, 2020) ( 225,771 ) ( 225,776 ) ExxonMobil share of equity 160,589 157,150 Noncontrolling interests 6,917 6,980 Total equity 167,506 164,130 Total liabilities and equity 336,688 332,750 The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements. 5 EXXON MOBIL CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (millions of dollars) Nine Months Ended September 30, 2021 2020 Cash flows from operating activities Net income (loss) including noncontrolling interests 14,519 ( 2,648 ) Depreciation and depletion 14,946 15,718 Changes in operational working capital, excluding cash and debt 2,232 ( 1,539 ) All other items – net ( 692 ) ( 868 ) Net cash provided by operating activities 31,005 10,663 Cash flows from investing activities Additions to property, plant and equipment ( 7,987 ) ( 13,653 ) Proceeds from asset sales and returns of investments 575 229 Additional investments and advances ( 1,055 ) ( 3,443 ) Other investing activities including collection of advances 342 1,710 Net cash used in investing activities ( 8,125 ) ( 15,157 ) Cash flows from financing activities Additions to long-term debt 46 23,186 Reductions in long-term debt ( 4 ) ( 4 ) Additions to short-term debt (1) 12,197 28,839 Reductions in short-term debt (1) ( 24,066 ) ( 24,090 ) Additions/(reductions) in debt with three months or less maturity 997 ( 6,261 ) Contingent consideration payments ( 28 ) ( 21 ) Cash dividends to ExxonMobil shareholders ( 11,161 ) ( 11,150 ) Cash dividends to noncontrolling interests ( 166 ) ( 137 ) Changes in noncontrolling interests ( 278 ) 511 Common stock acquired ( 1 ) ( 305 ) Net cash used in financing activities ( 22,464 ) 10,568 Effects of exchange rate changes on cash ( 12 ) ( 331 ) Increase/(decrease) in cash and cash equivalents 404 5,743 Cash and cash equivalents at beginning of period 4,364 3,089 Cash and cash equivalents at end of period 4,768 8,832 Supplemental Disclosures Income taxes paid 3,516 2,341 Cash interest paid Included in cash flows from operating activities 818 726 Capitalized, included in cash flows from investing activities 478 516 Total cash interest paid 1,296 1,242 Noncash right of use assets recorded in exchange for lease liabilities Operating leases 804 45 Finance leases 168 29 (1) Includes commercial paper with a maturity greater than three months. The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements. 6 EXXON MOBIL CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (millions of dollars) ExxonMobil Share of Equity Common Stock Earnings Reinvested Accumulated Other Comprehensive Income Common Stock Held in Treasury ExxonMobil Share of Equity Non-controlling Interests Total Equity Balance as of June 30, 2020 15,812 412,124 ( 21,617 ) ( 226,136 ) 180,183 6,970 187,153 Amortization of stock-based awards 187 — — — 187 — 187 Other ( 2 ) — — — ( 2 ) 194 192 Net income (loss) for the period — ( 680 ) — — ( 680 ) ( 29 ) ( 709 ) Dividends - common shares — ( 3,716 ) — — ( 3,716 ) ( 44 ) ( 3,760 ) Other comprehensive income (loss) — — 1,428 — 1,428 121 1,549 Balance as of September 30, 2020 15,997 407,728 ( 20,189 ) ( 226,136 ) 177,400 7,212 184,612 Balance as of June 30, 2021 16,006 383,922 ( 15,586 ) ( 225,771 ) 158,571 6,985 165,556 Amortization of stock-based awards 99 — — — 99 — 99 Other ( 1 ) — — — ( 1 ) 4 3 Net income (loss) for the period — 6,750 — — 6,750 192 6,942 Dividends - common shares — ( 3,720 ) — — ( 3,720 ) ( 54 ) ( 3,774 ) Other comprehensive income (loss) — — ( 1,110 ) — ( 1,110 ) ( 135 ) ( 1,245 ) Acquisitions, at cost — — — — — ( 75 ) ( 75 ) Balance as of September 30, 2021 16,104 386,952 ( 16,696 ) ( 225,771 ) 160,589 6,917 167,506 Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 Common Stock Share Activity Issued Held in Treasury Outstanding Issued Held in Treasury Outstanding (millions of shares) (millions of shares) Balance as of June 30 8,019 ( 3,785 ) 4,234 8,019 ( 3,791 ) 4,228 Acquisitions — — — — — — Dispositions — — — — — — Balance as of September 30 8,019 ( 3,785 ) 4,234 8,019 ( 3,791 ) 4,228 The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements. 7 EXXON MOBIL CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (millions of dollars) ExxonMobil Share of Equity Common Stock Earnings Reinvested Accumulated Other Comprehensive Income Common Stock Held in Treasury ExxonMobil Share of Equity Non-controlling Interests Total Equity Balance as of December 31, 2019 15,637 421,341 ( 19,493 ) ( 225,835 ) 191,650 7,288 198,938 Amortization of stock-based awards 545 — — — 545 — 545 Other ( 185 ) — — — ( 185 ) 574 389 Net income (loss) for the period — ( 2,370 ) — — ( 2,370 ) ( 278 ) ( 2,648 ) Dividends - common shares — ( 11,150 ) — — ( 11,150 ) ( 137 ) ( 11,287 ) Cumulative effect of accounting change — ( 93 ) — — ( 93 ) ( 1 ) ( 94 ) Other comprehensive income (loss) — — ( 696 ) — ( 696 ) ( 171 ) ( 867 ) Acquisitions, at cost — — — ( 305 ) ( 305 ) ( 63 ) ( 368 ) Dispositions — — — 4 4 — 4 Balance as of September 30, 2020 15,997 407,728 ( 20,189 ) ( 226,136 ) 177,400 7,212 184,612 Balance as of December 31, 2020 15,688 383,943 ( 16,705 ) ( 225,776 ) 157,150 6,980 164,130 Amortization of stock-based awards 427 — — — 427 — 427 Other ( 11 ) — — — ( 11 ) 90 79 Net income (loss) for the period — 14,170 — — 14,170 349 14,519 Dividends - common shares — ( 11,161 ) — — ( 11,161 ) ( 166 ) ( 11,327 ) Other comprehensive income (loss) — — 9 — 9 32 41 Acquisitions, at cost — — — ( 1 ) ( 1 ) ( 368 ) ( 369 ) Dispositions — — — 6 6 — 6 Balance as of September 30, 2021 16,104 386,952 ( 16,696 ) ( 225,771 ) 160,589 6,917 167,506 Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020 Common Stock Share Activity Issued Held in Treasury Outstanding Issued Held in Treasury Outstanding (millions of shares) (millions of shares) Balance as of December 31 8,019 ( 3,786 ) 4,233 8,019 ( 3,785 ) 4,234 Acquisitions — — — — ( 6 ) ( 6 ) Dispositions — 1 1 — — — Balance as of September 30 8,019 ( 3,785 ) 4,234 8,019 ( 3,791 ) 4,228 The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements. 8 EXXON MOBIL CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Financial Statement Preparation These unaudited condensed consolidated financial statements should be read in the context of the consolidated financial statements and notes thereto filed with the Securities and Exchange Commission in the Corporation's 2020 Annual Report on Form 10-K. In the opinion of the Corporation, the information furnished herein reflects all known accruals and adjustments necessary for a fair statement of the results for the periods reported herein. All such adjustments are of a normal recurring nature. Prior data has been reclassified in certain cases to conform to the current presentation basis. The Corporation's exploration and production activities are accounted for under the "successful efforts" method. 2. Miscellaneous Financial Information Crude oil, products and merchandise inventories are carried at the lower of current market value or cost, generally determined under the last-in first-out method (LIFO). The Corporation's results for the third quarter of 2020 included a before-tax credit of $ 153 million, as rising prices reduced the charge against the book value of inventories. This adjustment, which is included in "Crude oil and product purchases", together with a market adjustment to inventory for equity companies included in "Income from equity affiliates", resulted in a $ 113 million after-tax credit to earnings (excluding noncontrolling interests) in the third quarter of 2020. The Corporation recognized impairment charges of $ 262 million and $ 1,036 million in the nine months ended, September 30, 2021 and 2020, respectively. The 2021 impairments included $ 20 million for exploratory well costs that had been suspended more than one year. The 2020 impairments included goodwill impairments of $ 611 million and other impairments of $ 425 million, mainly as a result of declines in prices for crude oil, natural gas and petroleum products and a significant decline in the Corporation's market capitalization at the end of the first quarter. Impairment charges generally are included in “Depreciation and depletion” or "Other income". 9 3. Litigation and Other Contingencies Litigation. A variety of claims have been made against ExxonMobil and certain of its consolidated subsidiaries in a number of pending lawsuits. Management has regular litigation reviews, including updates from corporate and outside counsel, to assess the need for accounting recognition or disclosure of these contingencies. The Corporation accrues an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. The Corporation does not record liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote. For contingencies where an unfavorable outcome is reasonably possible and which are significant, the Corporation discloses the nature of the contingency and, where feasible, an estimate of the possible loss. For purposes of our contingency disclosures, “significant” includes material matters, as well as other matters which management believes should be disclosed. ExxonMobil will continue to defend itself vigorously in these matters. Based on a consideration of all relevant facts and circumstances, the Corporation does not believe the ultimate outcome of any currently pending lawsuit against ExxonMobil will have a material adverse effect upon the Corporation's operations, financial condition, or financial statements taken as a whole. Other Contingencies. The Corporation and certain of its consolidated subsidiaries were contingently liable at September 30, 2021, 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 September 30, 2021 Equity Company Obligations (1) Other Third-Party Obligations Total (millions of dollars) Guarantees Debt-related 1,100 137 1,237 Other 1,002 4,795 5,797 Total 2,102 4,932 7,034 (1) ExxonMobil share Additionally, the Corporation and its affiliates have numerous long-term sales and purchase commitments in their various business activities, all of which are expected to be fulfilled with no adverse consequences material to the Corporation’s operations or financial condition. 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 Venezuelan nationalization decree issued in February 2007, a subsidiary of the Venezuelan National Oil Company (PdVSA) assumed the operatorship of the Cerro Negro Heavy Oil 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. 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 collected awards of $ 908 million in an arbitration against PdVSA under the rules of the International Chamber of Commerce in respect of an indemnity related to the Cerro Negro Project and $ 260 million in an arbitration for compensation due for the La Ceiba Project and for export curtailments at the Cerro Negro Project under rules of International Centre for Settlement of Investment Disputes (ICSID). An ICSID arbitration award relating to the Cerro Negro Project’s expropriation ($ 1.4 billion) was annulled based on a determination that a prior Tribunal failed to adequately explain why the cap on damages in the indemnity owed by PdVSA did not affect or limit the amount owed for the expropriation of the Cerro Negro Project. ExxonMobil filed a new claim seeking to restore the original award of damages for the Cerro Negro Project with ICSID on September 26, 2018. The net impact of this matter 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. 10 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 appealed that judgment to the Court of Appeal, Abuja Judicial Division. On July 22, 2016, the Court of Appeal upheld the decision of the lower court setting aside the award. On October 21, 2016, the Contractors appealed the decision to the Supreme Court of Nigeria. In June 2013, the Contractors filed a lawsuit against NNPC in the Nigerian federal high court in order to preserve their ability to seek enforcement of the PSC in the courts if necessary. Following dismissal by this court, the Contractors appealed to the Nigerian Court of Appeal in June 2016. In October 2014, the Contractors filed suit in the United States District Court for the Southern District of New York (SDNY) to enforce, if necessary, the arbitration award against NNPC assets residing within that jurisdiction. NNPC moved to dismiss the lawsuit. On September 4, 2019, the SDNY dismissed the Contractors’ petition to recognize and enforce the Erha arbitration award. The Contractors filed a notice of appeal in the Second Circuit on October 2, 2019. 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. 11 4. Other Comprehensive Income Information ExxonMobil Share of Accumulated Other Comprehensive Income Cumulative Foreign Exchange Translation Adjustment Postretirement Benefits Reserves Adjustment Total (millions of dollars) Balance as of December 31, 2019 ( 12,446 ) ( 7,047 ) ( 19,493 ) Current period change excluding amounts reclassified from accumulated other comprehensive income (1) ( 1,125 ) ( 172 ) ( 1,297 ) Amounts reclassified from accumulated other comprehensive income 14 587 601 Total change in accumulated other comprehensive income ( 1,111 ) 415 ( 696 ) Balance as of September 30, 2020 ( 13,557 ) ( 6,632 ) ( 20,189 ) Balance as of December 31, 2020 ( 10,614 ) ( 6,091 ) ( 16,705 ) Current period change excluding amounts reclassified from accumulated other comprehensive income (1) ( 1,041 ) 289 ( 752 ) Amounts reclassified from accumulated other comprehensive income — 761 761 Total change in accumulated other comprehensive income ( 1,041 ) 1,050 9 Balance as of September 30, 2021 ( 11,655 ) ( 5,041 ) ( 16,696 ) (1) Cumulative Foreign Exchange Translation Adjustment includes net investment hedge gain/(loss) net of taxes of $ 240 million and $( 159 ) million in 2021 and 2020, respectively. Amounts Reclassified Out of Accumulated Other Comprehensive Income - Before-tax Income/(Expense) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 (millions of dollars) (millions of dollars) Foreign exchange translation gain/(loss) included in net income (Statement of Income line: Other income) — ( 14 ) — ( 14 ) Amortization and settlement of postretirement benefits reserves adjustment included in net periodic benefit costs (Statement of Income line: Non-service pension and postretirement benefit expense) ( 256 ) ( 268 ) ( 1,020 ) ( 790 ) Income Tax (Expense)/Credit For Components of Other Comprehensive Income Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 (millions of dollars) (millions of dollars) Foreign exchange translation adjustment ( 26 ) 57 ( 60 ) 72 Postretirement benefits reserves adjustment (excluding amortization) ( 76 ) 74 ( 109 ) 64 Amortization and settlement of postretirement benefits reserves adjustment included in net periodic benefit costs ( 60 ) ( 62 ) ( 231 ) ( 177 ) Total ( 162 ) 69 ( 400 ) ( 41 ) 12 5. Earnings Per Share Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Earnings per common share Net income (loss) attributable to ExxonMobil (millions of dollars) 6,750 ( 680 ) 14,170 ( 2,370 ) Weighted average number of common shares outstanding (millions of shares) 4,276 4,271 4,275 4,270 Earnings (loss) per common share (dollars) (1) 1.57 ( 0.15 ) 3.31 ( 0.55 ) Dividends paid per common share (dollars) 0.87 0.87 2.61 2.61 (1) The calculation of earnings (loss) per common share and earnings (loss) per common share – assuming dilution are the same in each period shown. 6. Pension and Other Postretirement Benefits Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 (millions of dollars) (millions of dollars) Components of net benefit cost Pension Benefits - U.S. Service cost 228 245 661 712 Interest cost 139 177 418 531 Expected return on plan assets ( 181 ) ( 178 ) ( 542 ) ( 528 ) Amortization of actuarial loss/(gain) and prior service cost 57 79 167 237 Net pension enhancement and curtailment/settlement cost 75 52 468 156 Net benefit cost 318 375 1,172 1,108 Pension Benefits - Non-U.S. Service cost 194 178 587 524 Interest cost 131 165 396 488 Expected return on plan assets ( 256 ) ( 226 ) ( 777 ) ( 664 ) Amortization of actuarial loss/(gain) and prior service cost 118 124 362 358 Net pension enhancement and curtailment/settlement cost 4 — 16 — Net benefit cost 191 241 584 706 Other Postretirement Benefits Service cost 44 45 139 134 Interest cost 55 70 166 208 Expected return on plan assets ( 5 ) ( 4 ) ( 14 ) ( 13 ) Amortization of actuarial loss/(gain) and prior service cost 9 13 26 39 Net benefit cost 103 124 317 368 13 7. Financial Instruments and Derivatives Financial Instruments. The estimated fair value of financial instruments at September 30, 2021, and December 31, 2020, and the related hierarchy level for the fair value measurement was as follows: At September 30, 2021 (millions of dollars) Fair Value Level 1 Level 2 Level 3 Total Gross Assets & Liabilities Effect of Counterparty Netting Effect of Collateral Netting Difference in Carrying Value and Fair Value Net Carrying Value Assets Derivative assets (1) 2,251 986 — 3,237 ( 2,537 ) — — 700 Advances to/receivables from equity companies (2)(6) — 3,127 5,825 8,952 — — ( 229 ) 8,723 Other long-term financial assets (3) 1,118 — 1,336 2,454 — — 184 2,638 Liabilities Derivative liabilities (4) 3,489 1,671 — 5,160 ( 2,537 ) ( 1,238 ) — 1,385 Long-term debt (5) 44,934 111 4 45,049 — — ( 3,166 ) 41,883 Long-term obligations to equity companies (6) — — 3,334 3,334 — — ( 274 ) 3,060 Other long-term financial liabilities (7) — — 922 922 — — 60 982 At December 31, 2020 (millions of dollars) Fair Value Level 1 Level 2 Level 3 Total Gross Assets & Liabilities Effect of Counterparty Netting Effect of Collateral Netting Difference in Carrying Value and Fair Value Net Carrying Value Assets Derivative assets (1) 1,247 194 — 1,441 ( 1,282 ) ( 6 ) — 153 Advances to/receivables from equity companies (2)(6) — 3,275 5,904 9,179 — — ( 367 ) 8,812 Other long-term financial assets (3) 1,235 — 944 2,179 — — 125 2,304 Liabilities Derivative liabilities (4) 1,443 254 — 1,697 ( 1,282 ) ( 202 ) — 213 Long-term debt (5) 50,263 125 4 50,392 — — ( 4,890 ) 45,502 Long-term obligations to equity companies (6) — — 3,530 3,530 — — ( 277 ) 3,253 Other long-term financial liabilities (7) — — 964 964 — — 44 1,008 (1) Included in the Balance Sheet lines: Notes and accounts receivable - net and Other assets, including intangibles - net (2) Included in the Balance Sheet line: Investments, advances and long-term receivables (3) Included in the Balance Sheet lines: Investments, advances and long-term receivables and Other assets, including intangibles - net (4) Included in the Balance Sheet lines: Accounts payable and accrued liabilities and Other long-term obligations (5) Excluding finance lease obligations (6) Advances to/receivables from equity companies and long-term obligations to equity companies are mainly designated as hierarchy level 3 inputs. The fair value is calculated by discounting the remaining obligations by a rate consistent with the credit quality and industry of the company. (7) Included in the Balance Sheet line: Other long-term obligations. Includes contingent consideration related to a prior year acquisition where fair value is based on expected drilling activities and discount rates. At September 30, 2021, and December 31, 2020, respectively, the Corporation had $ 511 million and $ 504 million of collateral under master netting arrangements not offset against the derivatives on the Consolidated Balance Sheet, primarily related to initial margin requirements. 14 The Corporation may use non-derivative financial instruments, such as its foreign currency-denominated debt, as hedges of its net investments in certain foreign subsidiaries. Under this method, the change in the carrying value of the financial instruments due to foreign exchange fluctuations is reported in accumulated other comprehensive income. As of September 30, 2021, the Corporation has designated $ 5.2 billion of its Euro-denominated long-term debt and related accrued interest as a net investment hedge of its European business. The net investment hedge is deemed to be perfectly effective. The Corporation had undrawn short-term committed lines of credit of $ 10.6 billion and undrawn long-term committed lines of credit of $ 0.6 billion as of third quarter 2021. Derivative Instruments. The Corporation’s size, strong capital structure, geographic diversity and the complementary nature of the Upstream, Downstream and Chemical businesses reduce the Corporation’s enterprise-wide risk from changes in commodity prices, currency rates and interest rates. In addition, the Corporation uses commodity-based contracts, including derivatives, to manage commodity price risk and for trading purposes. Commodity contracts held for trading purposes are presented in the Consolidated Statement of Income on a net basis in the line “Sales and other operating revenue.” The Corporation’s commodity derivatives are not accounted for under hedge accounting. At times, the Corporation also enters into currency and interest rate derivatives, none of which are material to the Corporation’s financial position as of September 30, 2021, and December 31, 2020, or results of operations for the periods ended September 30, 2021, and 2020. Credit risk associated with the Corporation’s derivative position is mitigated by several factors, including the use of derivative clearing exchanges and the quality of and financial limits placed on derivative counterparties. The Corporation maintains a system of controls that includes the authorization, reporting and monitoring of derivative activity. The net notional long/(short) position of derivative instruments at September 30, 2021, and December 31, 2020, was as follows: September 30, December 31, 2021 2020 (millions) Crude oil (barrels) 37 40 Petroleum products (barrels) ( 60 ) ( 46 ) Natural gas (MMBTUs) ( 371 ) ( 500 ) Realized and unrealized gains/(losses) on derivative instruments that were recognized in the Consolidated Statement of Income are included in the following lines on a before-tax basis: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 (millions of dollars) (millions of dollars) Sales and other operating revenue ( 1,596 ) ( 297 ) ( 3,196 ) 688 Crude oil and product purchases ( 34 ) 134 ( 53 ) ( 396 ) Total ( 1,630 ) ( 163 ) ( 3,249 ) 292 15 8. Disclosures about Segments and Related Information Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Earnings (Loss) After Income Tax (millions of dollars) (millions of dollars) Upstream United States 869 ( 681 ) 1,895 ( 2,582 ) Non-U.S. 3,082 298 7,795 1,084 Downstream United States 663 ( 136 ) 401 ( 338 ) Non-U.S. 592 ( 95 ) 237 472 Chemical United States 1,183 357 3,180 816 Non-U.S. 957 304 2,695 456 Corporate and financing ( 596 ) ( 727 ) ( 2,033 ) ( 2,278 ) Corporate total 6,750 ( 680 ) 14,170 ( 2,370 ) Sales and Other Operating Revenue Upstream United States 2,072 1,422 5,683 4,280 Non-U.S. 2,295 2,015 9,181 6,604 Downstream United States 21,326 12,267 56,444 35,854 Non-U.S. 36,356 23,862 96,868 69,468 Chemical United States 4,363 2,162 11,461 6,028 Non-U.S. 5,473 3,684 15,834 10,574 Corporate and financing 7 13 ( 84 ) 28 Corporate total 71,892 45,425 195,387 132,836 Intersegment Revenue Upstream United States 4,374 2,348 11,524 5,999 Non-U.S. 9,371 5,132 23,935 14,371 Downstream United States 5,548 2,812 14,939 8,820 Non-U.S. 7,176 3,334 18,062 11,210 Chemical United States 2,466 1,480 6,904 4,466 Non-U.S. 1,635 895 4,208 2,866 Corporate and financing 57 55 166 166 16 Geographic Three Months Ended September 30, Nine Months Ended September 30, Sales and Other Operating Revenue 2021 2020 2021 2020 (millions of dollars) (millions of dollars) United States 27,761 15,851 73,588 46,162 Non-U.S. 44,131 29,574 121,799 86,674 Total 71,892 45,425 195,387 132,836 Significant Non-U.S. revenue sources include: (1) Canada 5,837 3,566 15,378 9,537 Singapore 3,678 2,400 10,628 6,883 France 3,513 2,273 9,541 6,446 United Kingdom 3,379 2,827 10,137 8,424 Italy 2,808 2,055 7,139 5,241 Belgium 2,409 1,504 6,590 4,639 Australia 1,751 1,354 5,499 4,380 (1) Revenue is determined by primary country of operations. Excludes certain sales and other operating revenues in Non-U.S. operations where attribution to a specific country is not practicable. 17 9. Divestment Activities ExxonMobil signed an agreement in the first quarter of 2021 with HitecVision, through its wholly-owned portfolio company NEO Energy, for the sale of most of its non-operated upstream assets in the United Kingdom central and northern North Sea for more than $ 1 billion. The transaction is expected to close by year-end 2021, subject to standard conditions precedent, including regulatory and third-party approvals. The agreed sales price is subject to interim period adjustments from the effective date of January 1, 2021, to the closing date, and has an additional upside potential of approximately $ 0.3 billion in contingent payments, based on production levels and commodity prices. Estimated total cash flow from the divestment will range from $ 0.7 billion to $ 1.2 billion, of which $ 0.7 billion to $ 0.8 billion is expected in 2021 and the remainder in future years. In the second quarter of 2021, ExxonMobil signed an agreement with Celanese for the sale of its global Santoprene business for $ 1.15 billion, subject to working capital and other adjustments. The sale includes two thermoplastic elastomers manufacturing sites in Pensacola, Florida and Newport, Wales along with associated assets. The transaction is expected to close in the fourth quarter of 2021, subject to standard conditions precedent including regulatory approvals. Estimated total cash flow from the divestment is approximately $ 0.9 billion. The Corporation expects to recognize a gain at closing for each of these transactions. Estimated gain and net cash flow could change due to market factors, working capital adjustments, tax impacts, and closing dates. Following the end of the third quarter, the Corporation executed an agreement to divest certain assets in the U.S. Unconventional portfolio. The book value of the assets subject to disposal is approximately $ 0.5 billion and closing is expected by year-end 2021, with proceeds in the range of $ 0.2 billion. 10. Restructuring Activities During 2020, ExxonMobil conducted an extensive global review of staffing levels and subsequently commenced targeted workforce reductions within a number of countries to improve efficiency and reduce costs. The programs, which are expected to be substantially completed by the end of 2021, include both voluntary and involuntary employee separations and reductions in contractors. During the third quarter of 2021, the Corporation recorded before-tax charges of $ 4 million, consisting primarily of employee separation costs, from workforce reductions in Europe associated with the global review of staffing levels. These costs are captured in “Selling, general and administrative expenses” on the Statement of Income. For the first nine months of the year, the recorded before-tax charges associated with the global review of staffing levels were $ 53 million. The Corporation does not expect any further significant charges related to the previously disclosed workforce reduction programs. Th is does not include charges related to employee reductions associated with any portfolio changes or other projects. The following tables summarize the reserves and charges related to the workforce reduction programs associated with the global review of staffing levels, which are recorded in “Accounts payable and accrued liabilities.” Three Months Ended September 30, Nine Months Ended September 30, 2021 2021 (millions of dollars) (millions of dollars) Beginning Balance 228 403 Additions/adjustments 4 53 Payments made ( 97 ) ( 321 ) Ending Balance 135 135 18 EXXON MOBIL CORPORATION