Exxon Mobil Corp 10-Q

ITEM 1. FINANCIAL STATEMENTS CONDENSED CONSOLIDATED STATEMENT OF INCOME (millions of dollars, unless noted) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Revenues and other income Sales and other operating revenue 106,512 71,892 305,511 195,387 Income from equity affiliates 4,632 1,670 10,858 4,579 Other income 926 224 1,882 709 Total revenues and other income 112,070 73,786 318,251 200,675 Costs and other deductions Crude oil and product purchases 60,197 39,745 178,198 109,675 Production and manufacturing expenses 11,317 8,719 32,244 25,252 Selling, general and administrative expenses 2,324 2,287 7,263 7,060 Depreciation and depletion (including impairments) 5,642 4,990 18,976 14,946 Exploration expenses, including dry holes (1) 218 190 677 530 Non-service pension and postretirement benefit expense 154 146 382 686 Interest expense 209 214 591 726 Other taxes and duties 6,587 7,889 21,009 22,295 Total costs and other deductions 86,648 64,180 259,340 181,170 Income (loss) before income taxes 25,422 9,606 58,911 19,505 Income taxes 5,224 2,664 14,389 4,986 Net income (loss) including noncontrolling interests 20,198 6,942 44,522 14,519 Net income (loss) attributable to noncontrolling interests 538 192 1,532 349 Net income (loss) attributable to ExxonMobil 19,660 6,750 42,990 14,170 Earnings (loss) per common share (dollars) 4.68 1.57 10.17 3.31 Earnings (loss) per common share - assuming dilution (dollars) 4.68 1.57 10.17 3.31 (1) Includes $ 74 million related to the write-off of exploratory well costs in 2022 that were previously capitalized for greater than one year at December 31, 2021. The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements. 3 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (millions of dollars) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Net income (loss) including noncontrolling interests 20,198 6,942 44,522 14,519 Other comprehensive income (loss) (net of income taxes) Foreign exchange translation adjustment ( 3,361 ) ( 1,625 ) ( 5,157 ) ( 1,053 ) Postretirement benefits reserves adjustment (excluding amortization) 108 184 368 305 Amortization and settlement of postretirement benefits reserves adjustment included in net periodic benefit costs 128 196 323 789 Total other comprehensive income (loss) ( 3,125 ) ( 1,245 ) ( 4,466 ) 41 Comprehensive income (loss) including noncontrolling interests 17,073 5,697 40,056 14,560 Comprehensive income (loss) attributable to noncontrolling interests 199 57 1,105 381 Comprehensive income (loss) attributable to ExxonMobil 16,874 5,640 38,951 14,179 The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements. 4 CONDENSED CONSOLIDATED BALANCE SHEET (millions of dollars, unless noted) September 30, 2022 December 31, 2021 ASSETS Current assets Cash and cash equivalents 30,407 6,802 Cash and cash equivalents – restricted 57 — Notes and accounts receivable – net 42,411 32,383 Inventories Crude oil, products and merchandise 20,078 14,519 Materials and supplies 4,018 4,261 Other current assets 2,318 1,189 Total current assets 99,289 59,154 Investments, advances and long-term receivables 50,235 45,195 Property, plant and equipment – net 203,102 216,552 Other assets, including intangibles – net 17,526 18,022 Total Assets 370,152 338,923 LIABILITIES Current liabilities Notes and loans payable 6,182 4,276 Accounts payable and accrued liabilities 62,550 50,766 Income taxes payable 5,325 1,601 Total current liabilities 74,057 56,643 Long-term debt 39,246 43,428 Postretirement benefits reserves 16,799 18,430 Deferred income tax liabilities 21,274 20,165 Long-term obligations to equity companies 2,647 2,857 Other long-term obligations 23,086 21,717 Total Liabilities 177,109 163,240 Commitments and contingencies (Note 3) EQUITY Common stock without par value ( 9,000 million shares authorized, 8,019 million shares issued) 16,106 15,746 Earnings reinvested 423,877 392,059 Accumulated other comprehensive income ( 17,803 ) ( 13,764 ) Common stock held in treasury ( 3,901 million shares at September 30, 2022 and 3,780 million shares at December 31, 2021) ( 236,080 ) ( 225,464 ) ExxonMobil share of equity 186,100 168,577 Noncontrolling interests 6,943 7,106 Total Equity 193,043 175,683 Total Liabilities and Equity 370,152 338,923 The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements. 5 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW (millions of dollars) Nine Months Ended September 30, 2022 2021 CASH FLOW FROM OPERATING ACTIVITIES Net income (loss) including noncontrolling interests 44,522 14,519 Depreciation and depletion (including impairments) 18,976 14,946 Changes in operational working capital, excluding cash and debt 6 2,232 All other items – net ( 4,328 ) ( 692 ) Net cash provided by operating activities 59,176 31,005 CASH FLOW FROM INVESTING ACTIVITIES Additions to property, plant and equipment ( 12,624 ) ( 7,987 ) Proceeds from asset sales and returns of investments 3,914 575 Additional investments and advances ( 915 ) ( 1,055 ) Other investing activities including collection of advances 238 342 Net cash used in investing activities ( 9,387 ) ( 8,125 ) CASH FLOW FROM FINANCING ACTIVITIES Additions to long-term debt 55 46 Reductions in long-term debt — ( 4 ) Additions to short-term debt — 12,197 Reductions in short-term debt ( 3,895 ) ( 24,066 ) Additions/(reductions) in debt with three months or less maturity 1,638 997 Contingent consideration payments ( 58 ) ( 28 ) Cash dividends to ExxonMobil shareholders ( 11,172 ) ( 11,161 ) Cash dividends to noncontrolling interests ( 191 ) ( 166 ) Changes in noncontrolling interests ( 1,074 ) ( 278 ) Common stock acquired ( 10,480 ) ( 1 ) Net cash used in financing activities ( 25,177 ) ( 22,464 ) Effects of exchange rate changes on cash ( 950 ) ( 12 ) Increase/(decrease) in cash and cash equivalents 23,662 404 Cash and cash equivalents at beginning of period 6,802 4,364 Cash and cash equivalents at end of period 30,464 4,768 SUPPLEMENTAL DISCLOSURES Income taxes paid 10,172 3,516 Cash interest paid Included in cash flows from operating activities 660 818 Capitalized, included in cash flows from investing activities 605 478 Total cash interest paid 1,265 1,296 Noncash right of use assets recorded in exchange for lease liabilities Operating leases 1,648 804 Finance leases 730 168 The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements. 6 CONDENSED CONSOLIDATED STATEMENT OF CHANGE IN EQUITY ExxonMobil Share of Equity (millions of dollars, unless noted) 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, 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 ) Dispositions — — — — — — — Balance as of September 30, 2021 16,104 386,952 ( 16,696 ) ( 225,771 ) 160,589 6,917 167,506 Balance as of June 30, 2022 16,018 407,902 ( 15,017 ) ( 231,587 ) 177,316 7,192 184,508 Amortization of stock-based awards 91 — — — 91 — 91 Other ( 3 ) — — — ( 3 ) ( 29 ) ( 32 ) Net income (loss) for the period — 19,660 — — 19,660 538 20,198 Dividends - common shares — ( 3,685 ) — — ( 3,685 ) ( 68 ) ( 3,753 ) Other comprehensive income (loss) — — ( 2,786 ) — ( 2,786 ) ( 339 ) ( 3,125 ) Acquisitions, at cost — — — ( 4,494 ) ( 4,494 ) ( 351 ) ( 4,845 ) Dispositions — — — 1 1 — 1 Balance as of September 30, 2022 16,106 423,877 ( 17,803 ) ( 236,080 ) 186,100 6,943 193,043 Three Months Ended September 30, 2022 Three Months Ended September 30, 2021 Common Stock Share Activity (millions of shares) Issued Held in Treasury Outstanding Issued Held in Treasury Outstanding Balance as of June 30 8,019 ( 3,851 ) 4,168 8,019 ( 3,785 ) 4,234 Acquisitions — ( 50 ) ( 50 ) — — — Dispositions — — — — — — Balance as of September 30 8,019 ( 3,901 ) 4,118 8,019 ( 3,785 ) 4,234 The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements. 7 CONDENSED CONSOLIDATED STATEMENT OF CHANGE IN EQUITY ExxonMobil Share of Equity (millions of dollars, unless noted) 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, 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 Balance as of December 31, 2021 15,746 392,059 ( 13,764 ) ( 225,464 ) 168,577 7,106 175,683 Amortization of stock-based awards 372 — — — 372 — 372 Other ( 12 ) — — — ( 12 ) ( 30 ) ( 42 ) Net income (loss) for the period — 42,990 — — 42,990 1,532 44,522 Dividends - common shares — ( 11,172 ) — — ( 11,172 ) ( 191 ) ( 11,363 ) Other comprehensive income (loss) — — ( 4,039 ) — ( 4,039 ) ( 427 ) ( 4,466 ) Acquisitions, at cost — — — ( 10,620 ) ( 10,620 ) ( 1,047 ) ( 11,667 ) Dispositions — — — 4 4 — 4 Balance as of September 30, 2022 16,106 423,877 ( 17,803 ) ( 236,080 ) 186,100 6,943 193,043 Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021 Common Stock Share Activity (millions of shares) Issued Held in Treasury Outstanding Issued Held in Treasury Outstanding Balance as of December 31 8,019 ( 3,780 ) 4,239 8,019 ( 3,786 ) 4,233 Acquisitions — ( 121 ) ( 121 ) — — — Dispositions — — — — 1 1 Balance as of September 30 8,019 ( 3,901 ) 4,118 8,019 ( 3,785 ) 4,234 The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements. 8 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 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 2021 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. Note 2. Russia In response to Russia’s military action in Ukraine, the Corporation announced in early 2022 that it planned to discontinue operations on the Sakhalin-1 project (“Sakhalin”) and develop steps to exit the venture. In light of this, an impairment assessment was conducted, and management determined that the carrying value of the asset group was not recoverable. As a result, the Corporation’s first quarter earnings included after-tax charges of $ 3.4 billion largely representing the full impairment of its operations related to Sakhalin. On a before-tax basis, the charges amounted to $ 4.6 billion, substantially all of which is reflected in the line captioned “Depreciation and depletion (including impairments)” on the Condensed Consolidated Statement of Income. Effective October 14, the Russian government unilaterally terminated the Corporation’s interests in Sakhalin-1, and the project has been transferred to a Russian operator. The Corporation's exit from the project results in quantities estimated at 150 million oil-equivalent barrels no longer qualifying as proved reserves, which represents less than one percent of the Corporation's 18.5 billion oil-equivalent barrels of proved reserves at year-end 2021. 9 Note 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, 2022, 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. September 30, 2022 (millions of dollars) Equity Company Obligations (1) Other Third-Party Obligations Total Guarantees Debt-related 1,239 154 1,393 Other 727 5,032 5,759 Total 1,966 5,186 7,152 (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. In the third quarter, the Corporation entered into a long-term purchase agreement with minimum annual payments of approximately $ 0.4 billion from 2025 through 2045. As of September 30, undiscounted commitments for leases not yet commenced totaled $ 2.5 billion for operating leases and $ 4.3 billion for finance leases. 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; sanctions 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. 10 Note 4. Other Comprehensive Income Information ExxonMobil Share of Accumulated Other Comprehensive Income (millions of dollars) Cumulative Foreign Exchange Translation Adjustment Postretirement Benefits Reserves Adjustment Total 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 ) Balance as of December 31, 2021 ( 11,499 ) ( 2,265 ) ( 13,764 ) Current period change excluding amounts reclassified from accumulated other comprehensive income (1) ( 4,680 ) 335 ( 4,345 ) Amounts reclassified from accumulated other comprehensive income — 306 306 Total change in accumulated other comprehensive income ( 4,680 ) 641 ( 4,039 ) Balance as of September 30, 2022 ( 16,179 ) ( 1,624 ) ( 17,803 ) (1) Cumulative Foreign Exchange Translation Adjustment includes net investment hedge gain/(loss) net of taxes of $ 551 million and $ 240 million in 2022 and 2021, respectively. Amounts Reclassified Out of Accumulated Other Comprehensive Income - Before-tax Income/(Expense) (millions of dollars) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 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) ( 163 ) ( 256 ) ( 415 ) ( 1,020 ) Income Tax (Expense)/Credit For Components of Other Comprehensive Income (millions of dollars) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Foreign exchange translation adjustment ( 61 ) ( 26 ) ( 151 ) ( 60 ) Postretirement benefits reserves adjustment (excluding amortization) ( 82 ) ( 76 ) ( 205 ) ( 109 ) Amortization and settlement of postretirement benefits reserves adjustment included in net periodic benefit costs ( 35 ) ( 60 ) ( 92 ) ( 231 ) Total ( 178 ) ( 162 ) ( 448 ) ( 400 ) 11 Note 5. Earnings Per Share Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Earnings per common share Net income (loss) attributable to ExxonMobil (millions of dollars) 19,660 6,750 42,990 14,170 Weighted average number of common shares outstanding (millions of shares) 4,185 4,276 4,227 4,275 Earnings (loss) per common share (dollars) (1) 4.68 1.57 10.17 3.31 Dividends paid per common share (dollars) 0.88 0.87 2.64 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. Note 6. Pension and Other Postretirement Benefits (millions of dollars) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Components of net benefit cost Pension Benefits - U.S. Service cost 173 228 529 661 Interest cost 130 139 388 418 Expected return on plan assets ( 140 ) ( 181 ) ( 420 ) ( 542 ) Amortization of actuarial loss/(gain) 39 62 117 184 Amortization of prior service cost ( 8 ) ( 5 ) ( 22 ) ( 17 ) Net pension enhancement and curtailment/settlement cost 87 75 177 468 Net benefit cost 281 318 769 1,172 Pension Benefits - Non-U.S. Service cost 138 194 433 587 Interest cost 149 131 466 396 Expected return on plan assets ( 198 ) ( 256 ) ( 618 ) ( 777 ) Amortization of actuarial loss/(gain) 44 104 138 319 Amortization of prior service cost 10 14 33 43 Net pension enhancement and curtailment/settlement cost — 4 ( 1 ) 16 Net benefit cost 143 191 451 584 Other Postretirement Benefits Service cost 30 44 108 139 Interest cost 54 55 162 166 Expected return on plan assets ( 4 ) ( 5 ) ( 11 ) ( 14 ) Amortization of actuarial loss/(gain) 1 19 4 57 Amortization of prior service cost ( 10 ) ( 10 ) ( 31 ) ( 31 ) Net benefit cost 71 103 232 317 12 Note 7. Financial Instruments and Derivatives The estimated fair value of financial instruments and derivatives at September 30, 2022 and December 31, 2021, and the related hierarchy level for the fair value measurement was as follows: September 30, 2022 Fair Value (millions of dollars) 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) 5,972 4,379 — 10,351 ( 8,398 ) ( 519 ) — 1,434 Advances to/receivables from equity companies (2)(6) — 2,374 5,325 7,699 — — 734 8,433 Other long-term financial assets (3) 1,185 — 1,329 2,514 — — 313 2,827 Liabilities Derivative liabilities (4) 5,638 5,112 — 10,750 ( 8,398 ) ( 185 ) — 2,167 Long-term debt (5) 32,236 90 6 32,332 — — 4,638 36,970 Long-term obligations to equity companies (6) — — 2,711 2,711 — — ( 64 ) 2,647 Other long-term financial liabilities (7) — — 773 773 — — 56 829 December 31, 2021 Fair Value (millions of dollars) 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) 1,422 1,523 — 2,945 ( 1,930 ) ( 28 ) — 987 Advances to/receivables from equity companies (2)(6) — 3,076 5,373 8,449 — — ( 123 ) 8,326 Other long-term financial assets (3) 1,134 — 1,058 2,192 — — 181 2,373 Liabilities Derivative liabilities (4) 1,701 2,594 — 4,295 ( 1,930 ) ( 306 ) — 2,059 Long-term debt (5) 44,454 88 3 44,545 — — ( 2,878 ) 41,667 Long-term obligations to equity companies (6) — — 3,084 3,084 — — ( 227 ) 2,857 Other long-term financial liabilities (7) — — 902 902 — — 58 960 (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, 2022 and December 31, 2021, respectively, the Corporation had $ 1,826 million and $ 641 million of collateral under master netting arrangements not offset against the derivatives on the Consolidated Balance Sheet, primarily related to initial margin requirements. 13 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, 2022, the Corporation has designated $ 4.4 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 $ 549 million and undrawn long-term committed lines of credit of $ 351 million as of third quarter 2022. Undrawn short-term committed lines of credit amounting to $ 10 billion expired in the third quarter of 2022. Derivative Instruments The Corporation’s size, strong capital structure, geographic diversity and the complementary nature of its business segments 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 to generate returns from trading. Commodity contracts held for trading purposes are presented in the Condensed 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, 2022 and December 31, 2021, or results of operations for the periods ended September 30, 2022 and 2021. 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, 2022 and December 31, 2021, was as follows: (millions) September 30, 2022 December 31, 2021 Crude oil (barrels) ( 15 ) 82 Petroleum products (barrels) ( 22 ) ( 48 ) Natural gas (MMBTUs) ( 120 ) ( 115 ) Realized and unrealized gains/(losses) on derivative instruments that were recognized in the Condensed Consolidated Statement of Income are included in the following lines on a before-tax basis: (millions of dollars) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Sales and other operating revenue 945 ( 1,596 ) ( 3,003 ) ( 3,196 ) Crude oil and product purchases ( 56 ) ( 34 ) ( 82 ) ( 53 ) Total 889 ( 1,630 ) ( 3,085 ) ( 3,249 ) Note 8. Disclosures about Segments and Related Information Effective April 1, 2022, the Corporation streamlined its business structure by combining the Chemical and Downstream businesses into a single business, Product Solutions. 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 Information disclosed in this note has been recast for the new segmentation. 14 (millions of dollars) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Earnings (Loss) After Income Tax Upstream United States 3,110 869 9,235 1,895 Non-U.S. 9,309 3,082 19,043 7,795 Energy Products United States 3,008 479 6,152 ( 31 ) Non-U.S. 2,811 50 4,744 ( 1,217 ) Chemical Products United States 635 1,121 2,030 2,923 Non-U.S. 177 907 1,263 2,695 Specialty Products United States 306 247 784 689 Non-U.S. 456 592 871 1,454 Corporate and Financing ( 152 ) ( 596 ) ( 1,132 ) ( 2,033 ) Corporate total 19,660 6,750 42,990 14,170 Sales and Other Operating Revenue Upstream United States 4,163 2,072 10,777 5,683 Non-U.S. 8,770 2,295 22,214 9,181 Energy Products United States 31,324 20,988 90,650 55,292 Non-U.S. 50,215 34,305 144,734 91,120 Chemical Products United States 2,499 3,474 8,773 9,007 Non-U.S. 4,213 4,215 13,207 12,200 Specialty Products United States 1,615 1,227 4,659 3,606 Non-U.S. 3,709 3,309 10,478 9,382 Corporate and Financing 4 7 19 ( 84 ) Corporate total (1) 106,512 71,892 305,511 195,387 Intersegment Revenue Upstream United States 6,536 4,374 19,907 11,524 Non-U.S. 11,723 9,371 36,091 23,935 Energy Products United States 7,580 4,132 22,777 11,395 Non-U.S. 9,551 6,787 29,161 16,872 Chemical Products United States 2,579 1,479 6,904 4,285 Non-U.S. 1,252 1,098 4,359 2,849 Specialty Products United States 662 578 1,934 1,658 Non-U.S. 246 212 665 532 Corporate and Financing 59 57 175 166 (1) See footnote on the next page. 15 Geographic Sales and Other Operating Revenue (millions of dollars) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 United States 39,601 27,761 114,859 73,588 Non-U.S. 66,911 44,131 190,652 121,799 Total (1) 106,512 71,892 305,511 195,387 Significant Non-U.S. revenue sources include: (2) Canada 8,468 5,837 25,105 15,378 United Kingdom 8,845 3,379 24,699 10,137 Singapore 5,262 3,678 14,358 10,628 France 4,449 3,513 14,071 9,541 Italy 2,990 2,808 8,888 7,139 Belgium 2,755 2,409 8,632 6,590 Australia 2,936 1,751 8,597 5,499 (1) Includes approximately 25 % and 16 % related to revenue outside the scope of ASC 606 "Revenue from Contracts with Customers" for the three months ended September 30, 2022 and September 30, 2021, respectively, and 23 % and 16 % for the nine months ended September 30, 2022 and September 30, 2021, respectively. Trade receivables in Notes and accounts receivable – net reported on the Balance Sheet include both receivables within the scope of ASC 606 and those outside the scope of ASC 606. Revenue and receivables outside the scope of ASC 606 primarily relate to physically settled commodity contracts accounted for as derivatives. Credit quality and type of customer are generally similar between those revenues and receivables within the scope of ASC 606 and those outside it. (2) 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. 16 Note 9. Divestment Activities In the third quarter, the Corporation sold certain Upstream unproved assets in Romania and Upstream unconventional assets in Alberta, Canada, which resulted in total gains on sales of approximately $ 600 million which are largely included in "Other income" in the Condensed Consolidated Statement of Income. In August 2022, the Corporation executed an agreement for the sale of Upstream unconventional shale interests in the Arkoma basin (United States) to Flywheel, LLC. The transaction is anticipated to close in the fourth quarter. In August 2022, the Corporation executed an agreement for the sale of Mobil California Exploration and Producing Asset Company (United States), consisting of ExxonMobil's interest in the Aera Energy Joint Venture, to Green Gate Resources E, LLC. The transaction is anticipated to close in the fourth quarter. In February 2022, the Corporation signed an agreement with Seplat Energy Offshore Limited for the sale of Mobil Producing Nigeria Unlimited. The agreement is subject to certain conditions precedent and government approvals. In early July, a Nigerian court issued an order to halt transition activities and enter into arbitration with the Nigerian National Petroleum Company. The closing date and any loss on sale will depend on resolution of these matters. After the end of the third quarter, the Corporation signed an agreement for the sale of the Santa Ynez Unit and associated assets in California. The agreement is subject to certain conditions precedent and government approvals and does not yet meet held-for-sale criteria under ASC 360. The transaction would be expected to close in 2023. The Corporation expects to recognize a loss of up to $ 2 billion on the potential transaction. 17