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Item 2. Management’s Discussion and Analysis

2022-05-04 compared with 2021-11-03 · 195 added, 189 removed, 105 unchanged (79% of the section changed)

Management's Discussion and Analysis of Financial Condition and Results of Operations

In early 2020, the balance of supply and demand for petroleum and petrochemical products experienced two significant disruptive effects.

On the demand side, the COVID-19 pandemic spread rapidly through most areas of the world resulting in substantial reductions in consumer and business activity and significantly reduced demand for crude oil, natural gas, and petroleum products.

This reduction in demand coincided with announcements of increased production in certain key oil-producing countries which led to increases in inventory levels and sharp declines in prices for crude oil, natural gas, and petroleum products.

Demand for petroleum and petrochemical products has continued to recover through 2021 with each of the Corporation's sequential quarterly financial results benefiting from stronger prices and margins versus the previous quarter.

The rate and pace of recovery, however, has varied across geographies and business lines, with Downstream margins remaining low compared to historical levels over the last decade.

The Corporation continues to closely monitor industry and economic conditions amid the uneven global recovery from the COVID-19 pandemic.

Looking beyond the volatility marking recent economic conditions, the Corporation’s annual planning process provides an opportunity to re-affirm the fundamentals of supply and demand that underpin our businesses.

Consideration is given to a diverse set of risks and other factors that may influence future energy supply and demand trends, including technological advancements, regulation and government policies, climate change, greenhouse gas restrictions, and other general economic conditions.

The Corporation views climate change risks as a global issue that requires collaboration among governments, private companies, consumers and other stakeholders to create meaningful solutions.

These should meet the world’s increasing demand for affordable and reliable energy while creating opportunities to transition to a lower-carbon emissions future.

The variety of potential transition pathways for society to a lower-carbon emissions future, influenced by assumptions regarding economic growth, technology and governmental policy, indicates a wide range of uncertainty for the types and demand levels of energy.

The Board of Directors evaluates climate change risk in the context of overall enterprise risk, including other operational, strategic, and financial risks.

The Corporation considers the interactions among these factors as it pursues a strategy that is resilient to a wide range of potential pathways for society’s energy transition while continuing to grow shareholder value.

It takes into account emerging industry and economic conditions and market and government policy uncertainties in developing its strategic plans and longer-term price views as part of its annual business planning process.

The Corporation continues to make progress on its greenhouse gas emission reduction plans and efforts to position the company for success in a lower-carbon emissions future.

It expects to play an important role in providing petroleum and petrochemical products that are critical to economic growth while minimizing environmental impacts and delivering solutions to achieve a lower-carbon emissions future.

The company continues to analyze internal and external scenarios of future energy markets to create a deeper understanding of what resiliency requires and which opportunities could emerge, but the assumptions and outcome of any given scenario or set of scenarios come with a high degree of uncertainty.

The Corporation tests assets or groups of assets for recoverability on an ongoing basis whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable.

To the extent the annual planning process described above, including review by the Board of Directors in the fourth quarter, results in any significant changes to the Corporation’s current development plans for its portfolio, certain assets could be at risk for impairment.

The Corporation will complete any required asset recoverability assessments in connection with the preparation and review of the Corporation’s year-end financial statements for inclusion in its 2021 Form 10-K.

Until these activities are complete, it is not practicable to reasonably estimate the existence or range of potential future impairments.

During the COVID-19 pandemic, industry investment to maintain and increase production capacity was restrained to preserve capital, resulting in underinvestment and supply tightness as demand for petroleum and petrochemical products recovered.

Across late 2021 and early 2022, this dynamic, along with supply chain constraints, and a continuation of demand recovery led to a steady increase in oil and natural gas prices.

In the first quarter of 2022, tightness in the oil and natural gas markets was further exacerbated by Russia’s invasion of Ukraine and subsequent sanctions imposed upon business and other activities in Russia.

The price of Brent crude oil and certain regional natural gas indicators increased to levels not seen for several years.

Additionally, by the end of the first quarter, refining margins improved to levels above the 10-year range, and the tight supply and demand balance is expected to persist.

In early March, in response to Russia’s military action in Ukraine, the Corporation announced that it plans to discontinue operations on the Sakhalin-1 project (“Sakhalin”) and develop steps to exit the venture.

The Corporation remains focused on protecting the safety of employees, operations, and the environment.

The Corporation is complying with all applicable laws and sanctions and is currently engaged in transitioning Sakhalin-1 operating activities to another party.

The Corporation’s first quarter results include after-tax charges of $3.4 billion largely representing the impairment of its operations related to Sakhalin (see Note 2 to Condensed Consolidated Financial Statements).

Efforts to transition operatorship to a third party and exit the venture is expected to result in limited hydrocarbon sales and cash flows for the Corporation’s account during the second quarter of 2022, and none following that period.

For reference, excluding the impact of impairments and other charges, after-tax earnings related to the Corporation’s interest in Sakhalin in the first quarter were approximately $0.2 billion, and combined oil and gas production was approximately 65 thousand oil-equivalent barrels per day.

The Corporation's exit from the project would result in quantities estimated at 150 million oil-equivalent barrels no longer qualifying as proved reserves, which represented less than one percent of the Corporation's 18.5 billion oil-equivalent barrels of proved reserves at year-end 2021.

FUNCTIONAL EARNINGS SUMMARY

Third Quarter

First Nine Months

Earnings (loss) excluding Identified Items, are earnings (loss) excluding individually significant non-operational events with an absolute corporate total earnings impact of at least $250 million in a given quarter.

The earnings (loss) impact of an Identified Item for an individual segment in a given quarter may be less than $250 million when the item impacts several segments or several periods.

Management uses these figures to improve comparability of the underlying business across multiple periods by isolating and removing significant non-operational events from business results.

The Corporation believes this view provides investors increased transparency into business results and trends, and provides investors with a view of the business as seen through the eyes of management.

Earnings (loss) excluding Identified Items is not meant to be viewed in isolation or as a substitute for net income (loss) attributable to ExxonMobil as prepared in accordance with U.S.

Three Months Ended

March 31, 2022 Upstream Downstream Chemical Corporate and Financing Total

(millions of dollars)

Earnings (loss) (U.S.

GAAP) 2,376 2,112 685 (353) 819 535 (694) 5,480

(millions of dollars) (millions of dollars)

United States 869 (681) 1,895 (2,582)

3,082 298 7,795 1,084

United States 663 (136) 401 (338)

592 (95) 237 472

United States 1,183 357 3,180 816

957 304 2,695 456

Corporate and financing (596) (727) (2,033) (2,278)

Net income (loss) attributable to ExxonMobil (U.S.

Identified Items

Impairments — (2,877) — — — — (98) (2,975)

Other - Russia impacts — (378) — — — — — (378)

Earnings (loss) excluding Identified Items 2,376 5,367 685 (353) 819 535 (596) 8,833

Three Months Ended

March 31, 2021 Upstream Downstream Chemical Corporate and Financing Total

(millions of dollars)

Earnings (loss) (U.S.

GAAP) 363 2,191 (113) (277) 715 700 (849) 2,730

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)

Identified Items

Severance charges — — — — — — (31) (31)

Earnings (loss) excluding Identified Items 363 2,191 (113) (277) 715 700 (818) 2,761

References in this discussion to Corporate earnings (loss) mean net income (loss) attributable to ExxonMobil (U.S.

GAAP) from the consolidated income statement.

Unless otherwise indicated, references to earnings (loss), Upstream, Downstream, Chemical and Corporate and financing segment earnings (loss), and earnings (loss) per share are ExxonMobil's share after excluding amounts attributable to noncontrolling interests.

REVIEW OF THIRD QUARTER 2021 RESULTS

ExxonMobil’s third quarter 2021 earnings were $6.8 billion, or $1.57 per diluted share, compared with a loss of $0.7 billion a year earlier.

The increase in earnings was driven by higher Upstream realizations and volumes;

higher Chemical and Downstream margins;

and lower expenses.

Earnings for the first nine months of 2021 were $14.2 billion, or $3.31 per diluted share, compared with a loss of $2.4 billion a year earlier.

Capital and exploration expenditures were $10.8 billion, down $5.8 billion from 2020.

GAAP) from the Consolidated Statement of Income.

Unless otherwise indicated, references to earnings (loss), Upstream, Downstream,

Chemical and Corporate and Financing segment earnings (loss), and earnings (loss) per share are ExxonMobil's share after excluding amounts attributable to noncontrolling interests.

REVIEW OF FIRST QUARTER 2022 RESULTS

ExxonMobil’s first quarter 2022 earnings were $5.5 billion, or $1.28 per diluted share, compared with earnings of $2.7 billion a year earlier.

The increase in earnings was driven by higher Upstream realizations and Downstream margins partly offset by charges related to the company's Russia Sakhalin-1 operation.

Oil-equivalent production was 3.7 million barrels per day, down 3 percent from the prior year.

Excluding entitlement effects, divestments, and government mandates, oil-equivalent production was up 2 percent from the prior year.

The Corporation distributed $11.2 billion in dividends to shareholders.

Third Quarter

First Nine Months

2021 2020 2021 2020

(millions of dollars) (millions of dollars)

Upstream results

Excluding entitlement effects, divestments, and government mandates, oil-equivalent production was down 2 percent from the prior year.

The Corporation distributed $3.8 billion in dividends to shareholders and bought back $2.1 billion of common stock.

Upstream Financial Results

Three Months Ended

Earnings (loss) (U.S.

GAAP) (millions of dollars)

United States 2,376 363

3,082 298 7,795 1,084

Total 4,488 2,554

Upstream earnings were $3,951 million in the third quarter of 2021, compared with a loss of $383 million in the third quarter of 2020.

• Realizations increased earnings by $3,720 million, driven by higher liquids realizations of $3,120 million and higher gas realizations of $600 million.

• Volume and mix effects increased earnings by $140 million due to higher liquids sales of $100 million and favorable gas sales mix of $40 million.

• All other items increased earnings by $470 million, driven by lower expenses of $280 million, favorable other earnings impacts of $180 million, and the absence of prior year quarter unfavorable non-operational impacts of $10 million.

Upstream earnings were $869 million, up $1,550 million from the prior year quarter.

Upstream earnings were $3,082 million, up $2,784 million from the prior year quarter.

• On an oil-equivalent basis, production was essentially flat from the third quarter of 2020.

• Liquids production totaled 2.3 million barrels per day, up 27,000 barrels per day, reflecting the impacts of less downtime, growth and higher demand, partly offset by lower entitlements.

• Natural gas production was 8.1 billion cubic feet per day, down 206 million cubic feet per day, as less downtime and growth were more than offset by lower entitlements, the Groningen production limit, and divestments.

Upstream earnings were $9,690 million in the first nine months of 2021, compared with a loss of $1,498 million in the first nine months of 2020.

• Realizations increased earnings by $9,350 million, with higher liquids realizations of $8,580 million and higher gas realizations of $770 million.

• Volume and mix effects reduced earnings by $210 million, reflecting lower liquids sales volumes of $290 million partly offset by favorable gas sales mix of $80 million.

• All other items increased earnings by $2,050 million, driven by lower expenses of $1,270 million, the absence of prior year unfavorable non-operational impacts of $420 million, and other favorable earnings impacts of $360 million.

Upstream earnings were $1,895 million, compared with a loss of $2,582 million in the prior year.

Upstream earnings were $7,795 million, up $6,711 million from the prior year.

• On an oil-equivalent basis, production decreased 3 percent from the first nine months of 2020.

• Liquids production totaled 2.3 million barrels per day, down 100,000 barrels per day, with higher demand and project growth more than offset by impacts from lower entitlements, increased government mandates, decline and divestments.

• Natural gas production was 8.5 billion cubic feet per day, down 44 million cubic feet per day, as higher demand was offset by lower entitlements, the Groningen production limit, and divestments.

Third Quarter

First Nine Months

Upstream additional information (thousands of barrels daily) (thousands of barrels daily)

Identified Items (1)

United States — —

Total (3,255) —

Earnings (loss) excluding Identified Items (1)

United States 2,376 363

Total 7,743 2,554

Upstream Earnings Factor Analysis

(millions of dollars)

Price – Higher realizations increased earnings by $5,930 million as average realizations for crude oil increased 68%, while natural gas realizations increased 137%.

Volume – Unfavorable volume and mix effects decreased earnings by $810 million reflecting impacts from the reduced Groningen production limit, higher downtime including the effects of weather, and lower entitlements due to prices, partly offset by growth in the Permian Basin and Guyana.

Other – All other items increased earnings by $70 million.

Identified Items (1) – 1Q 2022 $(3,255) million loss as a result of the company's decision to discontinue operations at the Russia Sakhalin-1 project.

(1) Refer to Functional Earnings Summary for definition of Identified Items and earnings (loss) excluding Identified Items.

Upstream Operational Results

Three Months Ended

Production of crude oil, natural gas liquids, bitumen and synthetic oil

Net production (thousands of barrels daily)

United States 753 665

Canada/Other Americas 474 575

Africa 257 253

Australia/Oceania 40 39

Worldwide 2,266 2,258

Natural gas production available for sale

Net production (millions of cubic feet daily)

United States 2,777 2,767

Canada/Other Americas 182 216

Europe 770 1,403

Asia 3,340 3,599

Australia/Oceania 1,325 1,164

Worldwide 8,452 9,173

(thousands of oil-equivalent barrels daily)

Oil-equivalent production (1)

(1) Natural gas is converted to an oil-equivalent basis at six million cubic feet per one thousand barrels.

1Q 2022 versus 1Q 2021

Liquids production – 2.3 million barrels per day increased 8 thousand barrels per day from 2021, reflecting easing government mandated curtailments, growth in the Permian Basin and Guyana, partly offset by higher downtime including the effects of weather, lower entitlements due to higher prices, and divestment impacts.

Natural gas production available for sale – 8.5 billion cubic feet per day decreased 721 million cubic feet per day from 2021, reflecting impacts from the reduced Groningen production limit, divestments, and entitlements.

Upstream Additional Information

Three Months Ended

(thousands of barrels daily)

Volumes reconciliation (Oil-equivalent production) (1)

2020 3,672 3,785

Entitlements - Net Interest (30)

2 unchanged sentences

Divestments (62)

Growth / Other 165 71

2021 3,665 3,677

(1) Natural gas is converted to an oil-equivalent basis at six million cubic feet per one thousand barrels.

11 unchanged sentences

Divestments are reductions in ExxonMobil’s production arising from commercial arrangements to fully or partially reduce equity in a field or asset in exchange for financial or other economic consideration.

Growth and Other factors comprise all other operational and non-operational factors not covered by the above definitions that may affect volumes attributable to ExxonMobil.

Other comprise all other operational and non-operational factors not covered by the above definitions that may affect volumes attributable to ExxonMobil.

Such factors include, but are not limited to, production enhancements from project and work program activities, acquisitions including additions from asset exchanges, downtime, market demand, natural field decline, and any fiscal or commercial terms that do not affect entitlements.

Third Quarter

First Nine Months

2021 2020 2021 2020

(millions of dollars) (millions of dollars)

Downstream results

Downstream Financial Results

Three Months Ended

Earnings (loss) (U.S.

GAAP) (millions of dollars)

United States 685 (113)

592 (95) 237 472

Total 332 (390)

Downstream earnings were $1,255 million in the third quarter of 2021, up $1,486 million from the third quarter of 2020.

• Margins increased earnings by $1,250 million, reflecting stronger industry refining conditions.

• Volume and mix effects decreased earnings by $10 million.

• All other items increased earnings by $250 million, reflecting other favorable earnings impacts of $190 million and lower expenses of $70 million, partly offset by the absence of prior year quarter favorable non-operational impacts of $10 million.

Downstream earnings were $663 million, compared with a loss of $136 million in the prior year quarter.

Downstream earnings were $592 million, up $687 million from the prior year quarter.

• Petroleum product sales of 5.3 million barrels per day were 304,000 barrels per day higher than the prior year quarter.

Downstream earnings were $638 million in the first nine months of 2021, up $504 million from the first nine months of 2020.

• Margins decreased earnings by $50 million, driven by lower realized fuels margins.

• Volume and mix effects decreased earnings by $30 million.

• All other items increased earnings by $580 million, as lower expenses of $430 million and the absence of prior year unfavorable non-operational impacts of $340 million were partly offset by unfavorable other earnings impacts of $190 million.

Downstream earnings were $401 million, compared with a loss of $338 million in the prior year.

Downstream results were $237 million, down $235 million from the prior year.

• Petroleum product sales of 5.1 million barrels per day were 168,000 barrels per day higher than the prior year.

Third Quarter

First Nine Months

2021 2020 2021 2020

(millions of dollars) (millions of dollars)

Chemical results

Earnings (loss) excluding Identified Items (1)

United States 685 (113)

957 304 2,695 456

Total 332 (390)

Chemical earnings were $2,140 million in the third quarter of 2021, up $1,479 million from the third quarter of 2020.

• Higher margins increased earnings by $1,640 million.

• All other items decreased earnings by $160 million, mainly due to the absence of prior year favorable non-operational impacts of $120 million and increased expenses of $50 million.

Chemical earnings were $1,183 million, up $826 million from the prior year quarter.

Chemical earnings were $957 million, up $653 million from the prior year quarter.

• Third quarter prime product sales of 6.7 million metric tons were 48,000 metric tons higher than the prior year quarter.

Chemical earnings were $5,875 million in the first nine months of 2021, up $4,603 million from the first nine months of 2020.

• Higher margins increased earnings by $3,890 million.

• Volume and mix effects increased earnings by $260 million.

• All other items increased earnings by $450 million, driven by lower expenses of $190 million, the absence of prior year unfavorable non-operational impacts of $90 million and other favorable earnings impacts of $170 million.

Chemical earnings were $3,180 million, up $2,364 million from the prior year.

Chemical earnings were $2,695 million, up $2,239 million from the prior year.

• First nine months prime product sales of 19.6 million metric tons were 825,000 metric tons higher than the prior year.

Third Quarter

First Nine Months

2021 2020 2021 2020

(millions of dollars) (millions of dollars)

Corporate and financing results (596) (727) (2,033) (2,278)

Corporate and financing expenses were $596 million for the third quarter of 2021, down $131 million from the third quarter of 2020, reflecting lower corporate costs, partly offset by net unfavorable tax impacts.

Corporate and financing expenses were $2,033 million for the first nine months of 2021, down $245 million from 2020, reflecting lower financing costs.

(1) Refer to Functional Earnings Summary for definition of Identified Items and earnings (loss) excluding Identified Items.

Downstream Earnings Factor Analysis

(millions of dollars)

Margins – Higher margins increased earnings by $310 million.

Improved refining margins were partially offset by unfavorable unsettled derivative impacts.

Volume – Favorable volume and mix effects increased earnings by $180 million, primarily due to the absence of prior year reliability impacts from winter storm Uri.

Other – All other items increased earnings by $230 million, driven by the absence of terminal conversion impacts in the prior year quarter.

Downstream Operational Results

Three Months Ended

Refinery throughput (thousands of barrels daily)

United States 1,685 1,532

Canada 399 364

Europe 1,193 1,153

Asia Pacific 537 545

Other 169 157

Worldwide 3,983 3,751

Petroleum product sales (1)

United States 2,256 2,077

Canada 442 409

Europe 1,345 1,272

Asia Pacific 644 665

Other 471 458

Worldwide 5,158 4,881

Gasoline, naphthas 2,114 1,996

Heating oils, kerosene, diesel oils 1,722 1,692

Aviation fuels 289 183

Heavy fuels 249 257

Specialty petroleum products 784 753

Worldwide 5,158 4,881

(1) Data reported net of purchases/sales contracts with the same counterparty.

Chemical Financial Results

Three Months Ended

Earnings (loss) (U.S.

GAAP) (millions of dollars)

United States 819 715

Total 1,354 1,415

Earnings (loss) excluding Identified Items (2)

United States 819 715

Total 1,354 1,415

(2) Refer to Functional Earnings Summary for definition of Identified Items and earnings (loss) excluding Identified Items.

Chemical Earnings Factor Analysis

(millions of dollars)

Margins – Lower margins decreased earnings by $20 million.

Volume – Favorable volume and mix effects increased earnings by $70 million, primarily due to higher U.S.

Other – All other items decreased earnings by $110 million, primarily driven by increased project and planned maintenance spend.

Chemical Operational Results

Three Months Ended

Chemical prime product sales (1)

(thousands of metric tons)

United States 2,704 2,190

Worldwide 6,737 6,446

(1) Data reported net of purchases/sales contracts with the same counterparty.

CORPORATE AND FINANCING

Corporate and Financing Financial Results

Three Months Ended

(millions of dollars)

Earnings (loss) (U.S.

GAAP) (694) (849)

Identified Items (1)

Earnings (loss) excluding Identified Items (1)

Corporate and Financing expenses were $694 million for the first quarter of 2022, down $155 million from the first quarter of 2021, reflecting lower pension-related corporate costs and the absence of prior year severance charges, partly offset by Russia Sakhalin impacts.

(1) Refer to Functional Earnings Summary for definition of Identified Items and earnings (loss) excluding Identified Items.

LIQUIDITY AND CAPITAL RESOURCES

Third Quarter

First Nine Months

2021 2020 2021 2020

(millions of dollars) (millions of dollars)

Three Months Ended

(millions of dollars)

Net cash provided by/(used in)

9 unchanged sentences

Proceeds associated with sales of subsidiaries, property, plant & equipment, and sales and returns of investments

18 100 575 229

Cash flow from operations and asset sales 15,081 9,571

Because of the ongoing nature of our asset management and divestment program, 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.

Cash flow from operations and asset sales in the third quarter of 2021 was $12.1 billion, an increase of $7.6 billion from the comparable 2020 period primarily reflecting higher earnings.

Cash provided by operating activities totaled $31.0 billion for the first nine months of 2021, $20.3 billion higher than 2020.

Cash flow from operations and asset sales in the first quarter of 2022 was $15.1 billion, an increase of $5.5 billion from the comparable 2021 period primarily reflecting higher earnings.

Cash provided by operating activities totaled $14.8 billion for the first three months of 2022, $5.5 billion higher than 2021.

Net income including noncontrolling interests was $5.8 billion, an increase of $3.0 billion from the prior year period.

The adjustments for the noncash provision of $14.9 billion for depreciation and depletion was down $0.8 billion from 2020.

Changes in operational working capital were a contribution of $2.2 billion, compared to a reduction of $1.5 billion in the prior year period.

The adjustment for the noncash provision of $8.9 billion for depreciation and depletion was up $3.9 billion from 2021.

Changes in operational working capital were a contribution of $1.1 billion, compared to a contribution of $2.0 billion in the prior year period.

All other items net decreased cash flows by $0.9 billion in 2022 versus a reduction of $0.5 billion in 2021.

See the Condensed Consolidated Statement of Cash Flows for additional details.

Investing activities for the first nine months of 2021 used net cash of $8.1 billion, a decrease of $7.0 billion compared to the prior year.

Spending for additions to property, plant and equipment of $8.0 billion was $5.7 billion lower than 2020.

Proceeds from asset sales of $0.6 billion were $0.3 billion higher than the prior year.

Net investments and advances decreased $1.0 billion to $0.7 billion.

Net cash used by financing activities was $22.5 billion in the first nine months of 2021, including $10.8 billion of debt repayments.

This compares to net cash provided by financing activities of $10.6 billion in the prior year, reflecting long-term debt issuances in the first nine months of 2020.

Total debt at the end of the third quarter of 2021 was $56.6 billion compared to $67.6 billion at year-end 2020.

The Corporation's debt to total capital ratio was 25.3 percent at the end of the third quarter of 2021 compared to 29.2 percent at year-end 2020.

Investing activities for the first three months of 2022 used net cash of $3.9 billion, an increase of $1.6 billion compared to the prior year.

Spending for additions to property, plant and equipment of $3.9 billion was $1.5 billion higher than 2021.

Proceeds from asset sales of $0.3 billion were essentially flat with the prior year.

Net investments and advances increased $0.1 billion to $0.3 billion.

Net cash used in financing activities was $6.7 billion in the first three months of 2022, including $2.1 billion for the purchase of 26.2 million shares of ExxonMobil stock, as the Corporation initiated its previously announced buyback program in the quarter.

This compares to net cash used in financing activities of $7.8 billion in the prior year, reflecting long-term debt repayments of $4.1 billion during the first three months of 2021.

On April 29, 2022, the company announced that it is increasing its share repurchase program from up to $10 billion to a total of up to $30 billion through 2023.

The stock repurchase program does not obligate the company to acquire any particular amount of common stock, and it may be discontinued or resumed at any time.

The timing and amount of shares actually repurchased in the future will depend on market, business, and other factors.

Total debt at the end of the first quarter of 2022 was $47.5 billion compared to $47.7 billion at year-end 2021.

The Corporation's debt to total capital ratio was 21.2 percent at the end of the first quarter of 2022 compared to 21.4 percent at year-end 2021.

The net debt to capital ratio was 17.1 percent at the end of the first quarter, a decrease of 1.8 percentage points from year-end 2021.

The Corporation's capital allocation priorities continue to be investing in advantaged projects, strengthening the balance sheet and paying a reliable dividend.

The Corporation has access to significant capacity of long-term and short-term liquidity.

Commercial paper continues to provide short-term liquidity, and is reflected in "Notes and loans payable" on the Consolidated Balance Sheet.

Cash and cash equivalents was $4.8 billion at the end of the third quarter of 2021.

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.

The Corporation distributed a total of $11.2 billion to shareholders in the first nine months of 2021 through dividends.

In addition to cash balances, commercial paper continues to provide short-term liquidity, and is reflected in "Notes and loans payable" on the Consolidated Balance Sheet.

Cash and cash equivalents was $11.1 billion at the end of the first quarter of 2022.

The Corporation had undrawn short-term committed lines of credit of $10.7 billion and undrawn long-term committed lines of credit of $0.6 billion as of first quarter 2022.

The Corporation distributed a total of $3.8 billion to shareholders in the first three months of 2022 through dividends.

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.

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.

1 unchanged sentence

Acquisitions may be made with cash, shares of the Corporation’s common stock, or both.

The termination of certain transportation service agreements in the first quarter reduced commitments previously reported at year-end in Form 10-K under “Take-or-pay and unconditional purchase obligations” by approximately $2.3 billion.

The majority of those commitments related to the years 2026 and beyond.

Litigation and other contingencies are discussed in Note 3 to the unaudited condensed consolidated financial statements.

Third Quarter

First Nine Months

2021 2020 2021 2020

(millions of dollars) (millions of dollars)

Three Months Ended

(millions of dollars)

Income taxes 2,806 796

1 unchanged sentence

Total other taxes and duties (1)

8,572 7,901 24,296 21,081

Total 11,255 8,079

(1) Includes “Other taxes and duties” plus taxes that are included in “Production and manufacturing expenses” and “Selli ng, general and administrative expenses”.

Total taxes were $11.2 billion for the third quarter of 2021, an increase of $3.0 billion from 2020.

Total taxes were $11.3 billion for the first quarter of 2022, an increase of $3.2 billion from 2021.

Income tax expense was $2.8 billion compared to $0.8 billion in the prior year reflecting higher commodity prices.

1 unchanged sentence

Total other taxes and duties increased by $1.2 billion to $8.4 billion.

Total taxes were $29.3 billion for the first nine months of 2021, an increase of $7.8 billion from 2020.

Income tax expense increased by $4.6 billion to $5.0 billion reflecting higher commodity prices.

The effective income tax rate of 32 percent compared to -56 percent in the prior year period primarily due to a change in mix of results in jurisdictions with varying tax rates.

Total other taxes and duties increased by $3.2 billion to $24.3 billion.

In the United States, the Corporation has various ongoing U.S.

6 unchanged sentences

On January 13, 2021, the District Court ruled that no penalties apply to the Corporation's positions in this suit.

The Corporation filed a notice of appeal regarding the substantive issues to the Fifth Circuit Court of Appeals on April 9, 2021.

The government filed a notice of appeal regarding the penalty issue to the same court on April 19, 2021.

The Corporation filed its opening brief regarding the substantive issues on July 21, 2021.

Proceedings in the Fifth Circuit Court of Appeals are continuing.

The Corporation and the government have appealed the District Court's rulings to the U.S.

Court of Appeals for the Fifth Circuit (Fifth Circuit).

Proceedings in the Fifth Circuit are continuing.

On March 4, 2022, the Corporation also filed a refund suit for tax years 2010-2011 in District Court with respect to the positions at issue for those years.

The Corporation has not recognized asserted penalties for 2010-2011 as an expense because the Corporation does not expect the penalties to be sustained under applicable law.

Unfavorable resolution of all positions at issue with the IRS would not have a material adverse effect on the Corporation’s operations or financial condition.

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 complete by the end of 2021, include both voluntary and involuntary employee separations and reductions in contractors.

In the nine months of 2021, the Corporation recorded after-tax charges of $48 million, consisting primarily of employee separation costs, from workforce reduction programs in Europe and Singapore associated with the global review of staffing levels.

The cash outflows in the nine months of 2021 associated with these activities were $321 million.

The Corporation does not expect any further significant charges related to the previously disclosed workforce reduction programs.

Total charges for 2021 will be approximately $50 million with cash outflows ranging between $350 million and $450 million.

This does not include charges related to employee reductions associated with any portfolio changes or other projects.

Before-tax workforce reduction savings, including employees and contractors, are estimated to range between $1 billion and $2 billion per year after program completion when compared to 2019 levels.

CAPITAL AND EXPLORATION EXPENDITURES

Third Quarter

First Nine Months

2021 2020 2021 2020

(millions of dollars) (millions of dollars)

Three Months Ended

(millions of dollars)

Upstream (including exploration expenses) 3,879 2,357

1 unchanged sentence

Chemical 448 306

Other 1 3 2 6

Total 4,904 3,133

Capital and exploration expenditures in the third quarter of 2021 were $3.9 billion, down 7 percent from the third quarter of 2020.

Capita l a nd exploration expenditures in the first nine months of 2021 were $10.8 billion, down 35 percent from the first nine months of 2020.

The Corporation expects 2021 capital spending to be near the low end of the guidance range of $16 billion to $19 billion.

Capital and exploration expenditures in the first quarter of 2022 were $4.9 billion, up 57 percent from the first quarter of 2021.

The Corporation plans to invest in the range of $21 billion to $24 billion in 2022.

Actual spending could vary depending on the progress of individual projects and property acquisitions.

FORWARD-LOOKING STATEMENTS

Statements related to outlooks, projections, goals, targets, descriptions of strategic, operating, and financial plans and objectives, and other statements of future events or conditions are forward-looking statements.

Statements related to outlooks;

descriptions of strategic, operating, and financial plans and objectives;

statements of future ambitions and plans;

and other statements of future events or conditions, are forward-looking statements.

Actual future results, including financial and operating performance;

1 unchanged sentence

cost reductions and efficiency gains, including the ability to meet or exceed announced cost and expense reduction objectives;

plans to reduce future emissions and emissions intensity;

timing and outcome of projects to capture and store CO2;

timing and outcome of biofuel and plastic waste recycling projects;

cash flow, dividends and shareholder returns, including the timing and amounts of share repurchases;

3 unchanged sentences

These include global or regional changes in the supply and demand for oil, natural gas, petrochemicals, and feedstocks and other market conditions that impact prices and differentials for our products;

variable impacts of trading activities on our margins and results each quarter;

actions of competitors and commercial counterparties;

the outcome of commercial negotiations, including final agreed terms and conditions;

the ability to access short- and long-term debt markets on a timely and affordable basis;

the ability to access debt markets;

the ultimate impacts of COVID-19, including the extent and nature of further outbreaks and the effects of government responses on people and economies;

reservoir performance;

reservoir performance, including variability and timing factors applicable to unconventional resources;

the outcome of exploration projects;

1 unchanged sentence

final management approval of future projects and any changes in the scope, terms, or costs of such projects as approved;

final approval of company plans and strategies, including capital allocation, and changes in such plans and strategies as approved;

changes in law, taxes, or regulation including environmental regulations, trade sanctions, and timely granting of governmental permits and certifications;

6 unchanged sentences

the results of research programs and the ability to bring new technologies to commercial scale on a cost-competitive basis;

and other factors discussed in this report and under Item 1A.

and other factors discussed under Item 1A.

Risk Factors of ExxonMobil’s 2021 Form 10-K.

We assume no duty to update these statements as of any future date.

The term “project” as used in this report can refer to a variety of different activities and does not necessarily have the same meaning as in any government payment transparency reports.

Quantitative and Qualitative Disclosures About Market Risk

Information about market risks for the nine months ended September 30, 2021, does not differ materially from that discussed under Item 7A of the registrant's Annual Report on Form 10-K for 2020.

Information about market risks for the three months ended March 31, 2022, does not differ materially from that discussed under Item 7A of the registrant's Annual Report on Form 10-K for 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis