What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-03 compared with 2022-05-04 · 216 added, 102 removed, 198 unchanged (62% of the section changed)

1 unchanged sentence

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.

In addition, industry rationalization of refining capacity resulted in more than 3 million barrels per day of capacity being taken offline.

Across late 2021 and the first half of 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 and refining margins.

In the first half 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, and both natural gas realizations and industry refining margins improved to levels well above the 10-year range.

By the end of the second quarter, high prices had led to a tempering of demand for some products.

Commodity and product prices are expected to remain volatile given the current global economic uncertainty and geopolitical events affecting supply and demand.

In response to Russia’s military action in Ukraine, the Corporation announced in early 2022 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 first quarter results included 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 are expected to result in minimal hydrocarbon sales and cash flows for the Corporation’s account in future periods.

For reference, excluding the impact of impairments and other charges, after-tax earnings related to the Corporation’s interest in Sakhalin during the first half of 2022 were approximately $0.3 billion, and combined oil and gas production was approximately 45 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.

The Corporation holds a 25% interest in Tengizchevroil, LLP (TCO), which operates the Tengiz and Korolev oil fields in Kazakhstan, and holds a 16.8% working interest in the Kashagan field in Kazakhstan.

Oil production from those operations is exported through the Caspian Pipeline Consortium (CPC) pipeline, in which the Corporation holds a 7.5% interest.

CPC traverses parts of Kazakhstan and Russia to tanker-loading facilities on the Russian coast of the Black Sea.

In the event that existing sanctions related to Russia’s military actions in Ukraine expand, new sanctions are imposed, countermeasures are employed by the Russian Federation, or other direct or indirect impacts arise, it is possible that the transportation of Kazakhstan oil through the CPC pipeline could be disrupted, curtailed, temporarily suspended, or otherwise restricted.

In such a case, the Corporation could experience a loss of cash flows of uncertain duration.

For reference, after-tax earnings related to the Corporation’s interests in Kazakhstan for the first half of 2022 were $1.5 billion, and its share of combined oil and gas production was approximately 250 thousand oil-equivalent barrels per day.

Effective April 1, 2022, the Corporation streamlined its business structure by combining the Chemical and Downstream businesses into a single business, Product Solutions.

The new business is focused on growing high-value products, improving competitiveness and leading in sustainability.

Product Solutions consists of three operating segments:

• Energy Products:

Fuels, aromatics, and catalysts and licensing

• Chemical Products:

Olefins, polyethylene, polypropylene, and intermediates

• Specialty Products:

Finished lubricants, basestocks and waxes, synthetics, and elastomers and resins

Further information on financial performance related to the new segments are disclosed in Management's Discussion and Analysis and Note 8 to the Condensed Consolidated Financial Statements.

FUNCTIONAL EARNINGS SUMMARY

5 unchanged sentences

Three Months Ended

March 31, 2022 Upstream Downstream Chemical Corporate and Financing Total

(millions of dollars)

June 30, 2022

Upstream Energy Products Chemical Products Specialty Products Corporate and Financing Total

(millions of dollars) U.S.

Earnings (loss) (U.S.

1 unchanged sentence

Identified Items

Gain/(loss) on sale of assets 299 — — — — — — — — 299

Earnings (loss) excluding Identified Items 3,450 7,622 2,655 2,617 625 450 232 185 (286) 17,551

Three Months Ended

June 30, 2021 Upstream Energy Products Chemical Products Specialty Products Corporate and Financing Total

(millions of dollars) U.S.

Earnings (loss) (U.S.

GAAP) 663 2,522 (278) (578) 1,149 1,051 262 487 (588) 4,690

Identified Items

Severance charges — — — — — — — — (12) (12)

Earnings (loss) excluding Identified Items 663 2,522 (278) (578) 1,149 1,051 262 487 (576) 4,702

Six Months Ended

June 30, 2022 Upstream Energy Products Chemical Products Specialty Products Corporate and Financing Total

(millions of dollars) U.S.

Earnings (loss) (U.S.

GAAP) 6,125 9,734 3,144 1,933 1,395 1,086 478 415 (980) 23,330

Identified Items

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

Gain/(loss) on sale of assets 299 — — — — — — — — 299

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

Earnings (loss) excluding Identified Items 5,826 12,989 3,144 1,933 1,395 1,086 478 415 (882) 26,384

Three Months Ended

March 31, 2021 Upstream Downstream Chemical Corporate and Financing Total

(millions of dollars)

Six Months Ended

June 30, 2021 Upstream Energy Products Chemical Products Specialty Products Corporate and Financing Total

(millions of dollars) U.S.

Earnings (loss) (U.S.

4 unchanged sentences

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

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 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.

GAAP) from the Condensed Consolidated Statement of Income.

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

Due to rounding, numbers presented may not add up precisely to the totals indicated.

REVIEW OF SECOND QUARTER 2022 RESULTS

ExxonMobil’s second quarter 2022 earnings were $17.9 billion, or $4.21 per diluted share, compared with earnings of $4.7 billion a year earlier.

The increase in earnings was driven by higher Upstream realizations and Energy Products margins.

Capital and exploration expenditures were $4.6 billion, up $0.8 billion from second quarter 2021.

Earnings for the first six months of 2022 were $23.3 billion, or $5.49 per diluted share, compared with $7.4 billion a year earlier.

Capital and exploration expenditures were $9.5 billion, up $2.6 billion from 2021.

The Corporation distributed $7.5 billion in dividends to shareholders and repurchased $6.1 billion of common stock.

Upstream Financial Results

Three Months Ended

(millions of dollars) Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Earnings (loss) (U.S.

GAAP) (millions of dollars)

United States 3,749 663 6,125 1,026

7,622 2,522 9,734 4,713

Total 11,371 3,185 15,859 5,739

1 unchanged sentence

United States 299 — 299 —

— — (3,255) —

Total 299 — (2,956) —

1 unchanged sentence

United States 3,450 663 5,826 1,026

7,622 2,522 12,989 4,713

Total 11,072 3,185 18,815 5,739

Upstream Earnings Factor Analysis

Upstream Second Quarter Earnings Factor Analysis

(millions of dollars)

Price – Higher realizations increased earnings by $7,900 million as average realizations for crude oil increased 71%, while natural gas realizations increased 186%.

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.

Volume/Mix – Higher volumes increased earnings by $440 million, reflecting growth in Guyana and Permian and eased curtailments, partly offset by downtime, lower entitlements, and decline.

Other – All other items decreased earnings by $450 million due to divestment-related impairments and absence of prior year one-time tax impacts.

Identified Items (1) – 2Q 2022 $299 million gain on the sale of U.S.

Barnett Shale assets.

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

Upstream Year-to-Date Earnings Factor Analysis

(millions of dollars)

Price – Higher realizations increased earnings by $13,830 million as average realizations for crude oil increased 69% and natural gas realizations increased 161%.

Volume/Mix – Unfavorable volume and mix effects decreased earnings by $380 million, reflecting impacts from the reduced Groningen gas production limit in Netherlands, higher downtime including the effects of weather in the first quarter, and lower entitlements due to prices, partly offset by growth in Permian and Guyana.

Other – All other items decreased earnings by $370 million due to divestment-related impairments and the absence of prior year one-time tax impacts.

Identified Items (1) – 2022 $(2,956) million loss as a result of the company's plans to discontinue operations on the Russia Sakhalin-1 project, partly offset by a gain on the sale of U.S.

Barnett Shale assets.

(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)

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Net production of crude oil, natural gas liquids, bitumen and synthetic oil (thousands of barrels daily)

United States 777 687 765 676

Canada/Other Americas 556 529 516 552

Europe 4 16 4 25

Africa 224 254 240 254

Asia 691 669 714 680

Australia/Oceania 46 45 43 42

Worldwide 2,298 2,200 2,282 2,229

Natural gas production available for sale

Net production (millions of cubic feet daily)

Net natural gas production available for sale

(millions of cubic feet daily)

United States 2,699 2,804 2,738 2,786

1 unchanged sentence

Europe 825 654 798 1,026

Africa 67 46 63 35

Asia 3,320 3,433 3,330 3,515

1 unchanged sentence

Worldwide 8,606 8,294 8,530 8,731

(thousands of oil-equivalent barrels daily)

Oil-equivalent production (1)

(thousands of oil-equivalent barrels daily)

3,732 3,582 3,704 3,684

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

2Q 2022 versus 2Q 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.

Liquids production – 2.3 million barrels per day increased 98 thousand barrels per day from 2Q 2021, reflecting growth in Permian and Guyana and easing government-mandated curtailments, partly offset by lower entitlements due to higher prices, higher downtime, and divestments.

Natural gas production available for sale – 8.6 billion cubic feet per day increased 312 million cubic feet per day from 2Q 2021, reflecting reduced scheduled maintenance, partly offset by lower entitlements and divestments.

YTD 2022 versus YTD 2021

Liquids production – 2.3 million barrels per day increased 53 thousand barrels per day from 2021, reflecting growth in Permian and Guyana and easing government-mandated curtailments, partly offset by lower entitlements due to higher prices, higher downtime including the effects of weather in the first quarter of 2022, and divestments.

Natural gas production available for sale – 8.5 billion cubic feet per day decreased 201 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)

(thousands of barrels daily) Three Months Ended June 30 Six Months Ended June 30

Volumes reconciliation (Oil-equivalent production) (1)

2021 3,582 3,684

Entitlements - Net Interest (27) (29)

2 unchanged sentences

Divestments (28) (46)

2022 3,732 3,704

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

9 unchanged sentences

Such factors can also include other temporary changes in net interest as dictated by specific provisions in production agreements.

Government Mandates are changes to ExxonMobil's sustainable production levels due to temporary non-operational production limits imposed by governments, generally upon a sector, type or method of production.

Government Mandates are changes to ExxonMobil's sustainable production levels as a result of temporary non-operational production limits or sanctions imposed by governments, generally upon a country, sector, type or method of production.

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.

1 unchanged sentence

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.

Downstream Financial Results

Three Months Ended

ENERGY PRODUCTS

Energy Products Financial Results

(millions of dollars) Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Earnings (loss) (U.S.

GAAP) (millions of dollars)

United States 2,655 (278) 3,144 (510)

2,617 (578) 1,933 (1,267)

Total 5,273 (856) 5,077 (1,777)

1 unchanged sentence

United States 2,655 (278) 3,144 (510)

2,617 (578) 1,933 (1,267)

Total 5,273 (856) 5,077 (1,777)

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

Downstream Earnings Factor Analysis

Energy Products Second Quarter 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)

Margins – Higher margins increased earnings by $5,770 million due to improved industry refining margins and favorable derivative mark-to-market effects.

Volume/Mix – Favorable volume and mix effects increased earnings by $280 million, primarily as a result of lower scheduled maintenance and turnaround activity.

Other – All other items increased earnings by $80 million.

Energy Products Year-to-Date Earnings Factor Analysis

(millions of dollars)

Margins – Higher margins increased earnings by $5,960 million driven by an increase in industry refining margins.

Volume/Mix – Favorable volume and mix effects increased earnings by $580 million, mainly as a result of lower scheduled maintenance and turnaround activity.

Other – All other items increased earnings by $310 million, primarily due to the absence of terminal conversion impacts in the prior year.

Energy Products Operational Results

(thousands of barrels daily) Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Refinery throughput

United States 1,686 1,532 1,686 1,532

4 unchanged sentences

Worldwide 3,988 3,858 3,985 3,805

Petroleum product sales (1)

Energy Products sales (1)

United States 2,452 2,230 2,358 2,153

Canada 442 409

Europe 1,345 1,272

Asia Pacific 644 665

Other 471 458

2,858 2,776 2,853 2,766

Worldwide 5,310 5,006 5,211 4,920

3 unchanged sentences

Heavy fuels 228 275 238 266

Specialty petroleum products 784 753

Other energy products 769 709 753 707

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

CHEMICAL PRODUCTS

Chemical Products Financial Results

(millions of dollars) Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Earnings (loss) (U.S.

United States 625 1,149 1,395 1,803

450 1,051 1,086 1,788

Total 1,076 2,200 2,481 3,591

Earnings (loss) excluding Identified Items (1)

United States 625 1,149 1,395 1,803

450 1,051 1,086 1,788

Total 1,076 2,200 2,481 3,591

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

Chemical Products Second Quarter Earnings Factor Analysis

(millions of dollars)

Margins – Lower margins decreased earnings by $960 million, reflecting higher feed and energy costs only partly offset by price increases.

Volume/Mix – Higher volumes increased earnings by $40 million.

Other – All other items decreased earnings by $200 million, primarily driven by unfavorable foreign exchange, higher growth-related expenses, and increased planned maintenance.

Chemical Products Year-to-Date Earnings Factor Analysis

(millions of dollars)

Margins – Lower margins decreased earnings by $910 million, reflecting higher feed and energy costs, partly offset by price increases.

Volume/Mix – Higher volumes increased earnings by $130 million, primarily due to higher U.S.

sales including the start-up of the chemical complex in Corpus Christi, Texas.

Other – All other items decreased earnings by $330 million, primarily driven by higher growth-related expenses, increased planned maintenance, and unfavorable foreign exchange effects.

Chemical Products Operational Results

(thousands of metric tons) Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Chemical Products sales (1)

United States 1,998 1,782 4,030 3,403

2,812 2,949 5,798 6,093

Worldwide 4,811 4,731 9,829 9,496

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

Chemical Financial Results

Three Months Ended

SPECIALTY PRODUCTS

Specialty Products Financial Results

(millions of dollars) Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Earnings (loss) (U.S.

GAAP) (millions of dollars)

United States 232 262 478 442

185 487 415 862

Total 417 750 893 1,304

1 unchanged sentence

United States 232 262 478 442

185 487 415 862

Total 417 750 893 1,304

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

Chemical Earnings Factor Analysis

Specialty Products Second Quarter 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)

Margins – Lower margins decreased earnings by $210 million, primarily related to lower industry basestock margins.

Volume/Mix – Unfavorable volume mix effects decreased earnings by $90 million, primarily driven by higher scheduled maintenance.

Other – All other items decreased earnings by $30 million.

Specialty Products Year-to-Date Earnings Factor Analysis

(millions of dollars)

Margins – Lower margins decreased earnings by $360 million, primarily related to lower industry basestock margins as a result of increased feed costs.

Volume/Mix – Unfavorable volume mix effects decreased earnings by $60 million driven by higher scheduled maintenance.

Other – All other items increased earnings by $10 million.

Specialty Products Operational Results

(thousands of metric tons) Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Specialty Products sales (1)

United States 590 495 1,111 1,005

1,511 1,447 2,995 2,932

Worldwide 2,100 1,942 4,107 3,936

2 unchanged sentences

Corporate and Financing Financial Results

Three Months Ended

(millions of dollars)

(millions of dollars) Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Earnings (loss) (U.S.

1 unchanged sentence

Identified Items (1)

— (12) (98) (43)

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.

(286) (576) (882) (1,394)

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

Corporate and Financing expenses were $286 million for the second quarter of 2022, $302 million lower than the second quarter of 2021, reflecting favorable one-time tax impacts.

Corporate and Financing expenses were $980 million for the first six months of 2022, $457 million lower than 2021.

LIQUIDITY AND CAPITAL RESOURCES

Three Months Ended

(millions of dollars)

(millions of dollars) Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Net cash provided by/(used in)

11 unchanged sentences

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 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.

Cash flow from operations and asset sales in the second quarter of 2022 was $20.9 billion, an increase of $11.0 billion from the comparable 2021 period primarily reflecting higher earnings.

Cash provided by operating activities totaled $34.8 billion for the first six months of 2022, $15.8 billion higher than 2021.

Net income including noncontrolling interests was $24.3 billion, an increase of $16.7 billion from the prior year period.

The adjustment for the noncash provision of $13.3 billion for depreciation and depletion was up $3.4 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.

Changes in operational working capital were a reduction of $1.7 billion, compared to a contribution of $1.6 billion in the prior year period.

All other items net decreased cash flows by $1.2 billion in 2022 versus a reduction of $0.2 billion in 2021.

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

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.

Investing activities for the first six months of 2022 used net cash of $7.0 billion, an increase of $1.9 billion compared to the prior year.

Spending for additions to property, plant and equipment of $7.7 billion was $2.6 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.

Proceeds from asset sales were $1.2 billion compared to $0.6 billion in the prior year period.

Net investments and advances were essentially flat with prior year.

Net cash used in financing activities was $15.4 billion in the first six months of 2022, including $6.1 billion for the purchase of 71.1 million shares of ExxonMobil stock, as part of the previously announced buyback program.

This compares to net cash used in financing activities of $14.8 billion in the prior year, reflecting long-term debt repayments of $7.0 billion during the first six months of 2021.

Total debt at the end of the second quarter of 2022 was $46.9 billion compared to $47.7 billion at year-end 2021.

The Corporation's debt to total capital ratio was 20.3 percent at the end of the second quarter of 2022 compared to 21.4 percent at year-end 2021.

The net debt to capital ratio was 13.2 percent at the end of the second quarter, a decrease of 5.7 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.

1 unchanged sentence

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.

Cash and cash equivalents was $18.9 billion at the end of the second quarter of 2022.

The Corporation had undrawn short-term committed lines of credit of $10.6 billion, of which $10 billion will expire without renewal in the third quarter, and undrawn long-term committed lines of credit of $0.4 billion as of second quarter 2022.

The Corporation distributed a total of $7.5 billion to shareholders in the first six 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.

2 unchanged sentences

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

Three Months Ended

(millions of dollars)

(millions of dollars) Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Income taxes 6,359 1,526 9,165 2,322

1 unchanged sentence

Total other taxes and duties (1)

7,779 8,441 16,228 15,724

Total 14,138 9,967 25,393 18,046

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

Total taxes were $14.1 billion for the second quarter of 2022, an increase of $4.2 billion from 2021.

Income tax expense was $6.4 billion compared to $1.5 billion in the prior year reflecting higher commodity prices.

The effective income tax rate of 40 percent compared to 33 percent in the prior year period primarily due to a change in mix of results in jurisdictions with varying tax rates.

The effective income tax rate of 31 percent compared to 30 percent in the prior year period.

Total other taxes and duties decreased by $0.7 billion to $7.8 billion.

Total taxes were $25.4 billion for the first six months of 2022, an increase of $7.3 billion from 2021.

Income tax expense increased by $6.8 billion to $9.2 billion reflecting higher commodity prices.

The effective income tax rate of 34 percent compared to 31 percent in the prior year period primarily due to a change in mix of results in jurisdictions with varying tax rates and the impact of one-time items.

Total other taxes and duties increased by $0.5 billion to $16.2 billion.

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CAPITAL AND EXPLORATION EXPENDITURES

Three Months Ended

(millions of dollars)

(millions of dollars) Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Upstream (including exploration expenses) 3,627 2,817 7,506 5,174

Downstream 577 470

Chemical 448 306

Energy Products 506 429 1,072 878

Chemical Products 419 512 855 811

Specialty Products 56 44 79 72

Other 1 1 1 1

Total 4,609 3,803 9,513 6,936

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

Capital and exploration expenditures in the second quarter of 2022 were $4.6 billion, up 21 percent from the second quarter of 2021.

Capital and exploration expenditures in the first six months of 2022 were $9.5 billion, up 37 percent from the first six months of 2021.

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

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total capital expenditures and mix, including allocations of capital to low carbon solutions;

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

cost reductions and efficiency gains, including the ability to offset inflationary pressure;

plans to reduce future emissions and emissions intensity;

timing and outcome of projects to capture and store CO2, produced biofuels, and use of plastic waste as recycling feedstock;

timing and outcome of hydrogen projects;

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

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

the outcome of exploration projects;

the outcome of exploration projects and decisions to invest in future reserves;

timely completion of development and other construction projects;

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

Forward-looking and other statements regarding our environmental, social and other sustainability efforts and aspirations are not an indication that these statements are necessarily material to investors or requiring disclosure in our filing with the SEC.

In addition, historical, current, and forward-looking environmental, social and sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future, including future rule-making.

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 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.

Information about market risks for the six months ended June 30, 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