Exxon Mobil Corp 10-Q

ITEM 1. FINANCIAL STATEMENTS CONDENSED CONSOLIDATED STATEMENT OF INCOME (millions of dollars, unless noted) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Revenues and other income Sales and other operating revenue 80,795 111,265 164,439 198,999 Income from equity affiliates 1,382 3,688 3,763 6,226 Other income 737 728 1,276 956 Total revenues and other income 82,914 115,681 169,478 206,181 Costs and other deductions Crude oil and product purchases 47,598 65,613 93,601 118,001 Production and manufacturing expenses 8,860 10,686 18,296 20,927 Selling, general and administrative expenses 2,449 2,530 4,839 4,939 Depreciation and depletion (includes impairments) 4,242 4,451 8,486 13,334 Exploration expenses, including dry holes 133 286 274 459 Non-service pension and postretirement benefit expense 164 120 331 228 Interest expense 249 194 408 382 Other taxes and duties 7,563 6,868 14,784 14,422 Total costs and other deductions 71,258 90,748 141,019 172,692 Income (loss) before income taxes 11,656 24,933 28,459 33,489 Income tax expense (benefit) 3,503 6,359 8,463 9,165 Net income (loss) including noncontrolling interests 8,153 18,574 19,996 24,324 Net income (loss) attributable to noncontrolling interests 273 724 686 994 Net income (loss) attributable to ExxonMobil 7,880 17,850 19,310 23,330 Earnings (loss) per common share (dollars) 1.94 4.21 4.73 5.49 Earnings (loss) per common share - assuming dilution (dollars) 1.94 4.21 4.73 5.49 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 June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net income (loss) including noncontrolling interests 8,153 18,574 19,996 24,324 Other comprehensive income (loss) (net of income taxes) Foreign exchange translation adjustment 514 ( 2,537 ) 687 ( 1,796 ) Postretirement benefits reserves adjustment (excluding amortization) 17 155 36 260 Amortization and settlement of postretirement benefits reserves adjustment included in net periodic benefit costs 7 102 13 195 Total other comprehensive income (loss) 538 ( 2,280 ) 736 ( 1,341 ) Comprehensive income (loss) including noncontrolling interests 8,691 16,294 20,732 22,983 Comprehensive income (loss) attributable to noncontrolling interests 373 547 809 906 Comprehensive income (loss) attributable to ExxonMobil 8,318 15,747 19,923 22,077 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) June 30, 2023 December 31, 2022 ASSETS Current assets Cash and cash equivalents 29,528 29,640 Cash and cash equivalents – restricted 29 25 Notes and accounts receivable – net 35,915 41,749 Inventories Crude oil, products and merchandise 20,006 20,434 Materials and supplies 4,243 4,001 Other current assets 2,039 1,782 Total current assets 91,760 97,631 Investments, advances and long-term receivables 47,273 49,793 Property, plant and equipment – net 206,736 204,692 Other assets, including intangibles – net 17,479 16,951 Total Assets 363,248 369,067 LIABILITIES Current liabilities Notes and loans payable 3,929 634 Accounts payable and accrued liabilities 54,404 63,197 Income taxes payable 3,482 5,214 Total current liabilities 61,815 69,045 Long-term debt 37,567 40,559 Postretirement benefits reserves 10,278 10,045 Deferred income tax liabilities 23,460 22,874 Long-term obligations to equity companies 2,036 2,338 Other long-term obligations 21,095 21,733 Total Liabilities 156,251 166,594 Commitments and contingencies (Note 3) EQUITY Common stock without par value ( 9,000 million shares authorized, 8,019 million shares issued) 16,029 15,752 Earnings reinvested 444,731 432,860 Accumulated other comprehensive income ( 12,657 ) ( 13,270 ) Common stock held in treasury ( 4,016 million shares at June 30, 2023 and 3,937 million shares at December 31, 2022) ( 249,057 ) ( 240,293 ) ExxonMobil share of equity 199,046 195,049 Noncontrolling interests 7,951 7,424 Total Equity 206,997 202,473 Total Liabilities and Equity 363,248 369,067 The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements. 5 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (millions of dollars) Six Months Ended June 30, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) including noncontrolling interests 19,996 24,324 Depreciation and depletion (includes impairments) 8,486 13,334 Changes in operational working capital, excluding cash and debt ( 3,885 ) ( 1,661 ) All other items – net 1,127 ( 1,246 ) Net cash provided by operating activities 25,724 34,751 CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment ( 10,771 ) ( 7,748 ) Proceeds from asset sales and returns of investments 2,141 1,232 Additional investments and advances ( 834 ) ( 643 ) Other investing activities including collection of advances 183 150 Net cash used in investing activities ( 9,281 ) ( 7,009 ) CASH FLOWS FROM FINANCING ACTIVITIES Additions to long-term debt 136 — Reductions in long-term debt ( 6 ) — Reductions in short-term debt ( 172 ) ( 2,336 ) Additions/(reductions) in debt with three months or less maturity ( 172 ) 1,303 Contingent consideration payments ( 68 ) ( 58 ) Cash dividends to ExxonMobil shareholders ( 7,439 ) ( 7,487 ) Cash dividends to noncontrolling interests ( 293 ) ( 123 ) Changes in noncontrolling interests 11 ( 697 ) Common stock acquired ( 8,680 ) ( 5,986 ) Net cash used in financing activities ( 16,683 ) ( 15,384 ) Effects of exchange rate changes on cash 132 ( 299 ) Increase/(decrease) in cash and cash equivalents ( 108 ) 12,059 Cash and cash equivalents at beginning of period 29,665 6,802 Cash and cash equivalents at end of period 29,557 18,861 SUPPLEMENTAL DISCLOSURES Income taxes paid 8,841 5,545 Cash interest paid Included in cash flows from operating activities 295 352 Capitalized, included in cash flows from investing activities 561 388 Total cash interest paid 856 740 Noncash right of use assets recorded in exchange for lease liabilities Operating leases 1,036 1,039 Finance leases 438 656 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 March 31, 2022 15,879 393,779 ( 12,914 ) ( 227,529 ) 169,215 7,311 176,526 Amortization of stock-based awards 143 — — — 143 — 143 Other ( 4 ) — — — ( 4 ) ( 15 ) ( 19 ) Net income (loss) for the period — 17,850 — — 17,850 724 18,574 Dividends - common shares — ( 3,727 ) — — ( 3,727 ) ( 63 ) ( 3,790 ) Other comprehensive income (loss) — — ( 2,103 ) — ( 2,103 ) ( 177 ) ( 2,280 ) Acquisitions, at cost — — — ( 4,059 ) ( 4,059 ) ( 588 ) ( 4,647 ) Dispositions — — — 1 1 — 1 Balance as of June 30, 2022 16,018 407,902 ( 15,017 ) ( 231,587 ) 177,316 7,192 184,508 Balance as of March 31, 2023 15,904 440,552 ( 13,095 ) ( 244,676 ) 198,685 7,729 206,414 Amortization of stock-based awards 130 — — — 130 — 130 Other ( 5 ) — — — ( 5 ) 27 22 Net income (loss) for the period — 7,880 — — 7,880 273 8,153 Dividends - common shares — ( 3,701 ) — — ( 3,701 ) ( 178 ) ( 3,879 ) Other comprehensive income (loss) — — 438 — 438 100 538 Acquisitions, at cost — — — ( 4,383 ) ( 4,383 ) — ( 4,383 ) Dispositions — — — 2 2 — 2 Balance as of June 30, 2023 16,029 444,731 ( 12,657 ) ( 249,057 ) 199,046 7,951 206,997 Three Months Ended June 30, 2023 Three Months Ended June 30, 2022 Common Stock Share Activity (millions of shares) Issued Held in Treasury Outstanding Issued Held in Treasury Outstanding Balance as of March 31 8,019 ( 3,976 ) 4,043 8,019 ( 3,806 ) 4,213 Acquisitions — ( 40 ) ( 40 ) — ( 45 ) ( 45 ) Dispositions — — — — — — Balance as of June 30 8,019 ( 4,016 ) 4,003 8,019 ( 3,851 ) 4,168 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, 2021 15,746 392,059 ( 13,764 ) ( 225,464 ) 168,577 7,106 175,683 Amortization of stock-based awards 281 — — — 281 — 281 Other ( 9 ) — — — ( 9 ) ( 1 ) ( 10 ) Net income (loss) for the period — 23,330 — — 23,330 994 24,324 Dividends - common shares — ( 7,487 ) — — ( 7,487 ) ( 123 ) ( 7,610 ) Other comprehensive income (loss) — — ( 1,253 ) — ( 1,253 ) ( 88 ) ( 1,341 ) Acquisitions, at cost — — — ( 6,126 ) ( 6,126 ) ( 696 ) ( 6,822 ) Dispositions — — — 3 3 — 3 Balance as of June 30, 2022 16,018 407,902 ( 15,017 ) ( 231,587 ) 177,316 7,192 184,508 Balance as of December 31, 2022 15,752 432,860 ( 13,270 ) ( 240,293 ) 195,049 7,424 202,473 Amortization of stock-based awards 288 — — — 288 — 288 Other ( 11 ) — — — ( 11 ) 11 — Net income (loss) for the period — 19,310 — — 19,310 686 19,996 Dividends - common shares — ( 7,439 ) — — ( 7,439 ) ( 293 ) ( 7,732 ) Other comprehensive income (loss) — — 613 — 613 123 736 Acquisitions, at cost — — — ( 8,768 ) ( 8,768 ) — ( 8,768 ) Dispositions — — — 4 4 — 4 Balance as of June 30, 2023 16,029 444,731 ( 12,657 ) ( 249,057 ) 199,046 7,951 206,997 Six Months Ended June 30, 2023 Six Months Ended June 30, 2022 Common Stock Share Activity (millions of shares) Issued Held in Treasury Outstanding Issued Held in Treasury Outstanding Balance as of December 31 8,019 ( 3,937 ) 4,082 8,019 ( 3,780 ) 4,239 Acquisitions — ( 79 ) ( 79 ) — ( 71 ) ( 71 ) Dispositions — — — — — — Balance as of June 30 8,019 ( 4,016 ) 4,003 8,019 ( 3,851 ) 4,168 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 2022 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 2022 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 (includes impairments)” on the Condensed Consolidated Statement of Income. Effective October 14, 2022 the Russian government unilaterally terminated the Corporation’s interests in Sakhalin, transferring operations to a Russian operator. The Corporation’s fourth-quarter 2022 results included an after-tax benefit of $ 1.1 billion largely reflecting the impact of the expropriation on the company’s various obligations related to Sakhalin. The Corporation's exit from the project resulted in approximately 150 million oil-equivalent barrels no longer qualifying as proved reserves at year-end 2022. 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. State and local governments and other entities in various jurisdictions across the United States and its territories have filed a number of legal proceedings against several oil and gas companies, including ExxonMobil, requesting unprecedented legal and equitable relief for various alleged injuries purportedly connected to climate change. These lawsuits assert a variety of novel, untested claims under statutory and common law. Additional such lawsuits may be filed. We believe the legal and factual theories set forth in these proceedings are meritless and represent an inappropriate attempt to use the court system to usurp the proper role of policymakers in addressing the societal challenges of climate change. Local governments in Louisiana have filed unprecedented legal proceedings against a number of oil and gas companies, including ExxonMobil, requesting compensation for the restoration of coastal marshes in the state. We believe the factual and legal theories set forth in these proceedings are meritless. While the outcome of any litigation can be unpredictable, we believe the likelihood is remote that the ultimate outcomes of these lawsuits will have a material adverse effect on the Corporation’s operations, financial condition, or financial statements taken as a whole. We will continue to defend vigorously against these claims. Other Contingencies The Corporation and certain of its consolidated subsidiaries were contingently liable at June 30, 2023, 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. Where it is not possible to make a reasonable estimation of the maximum potential amount of future payments, future performance is expected to be either immaterial or have only a remote chance of occurrence. 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. June 30, 2023 (millions of dollars) Equity Company Obligations (1) Other Third-Party Obligations Total Guarantees Debt-related 1,164 150 1,314 Other 716 5,725 6,441 Total 1,880 5,875 7,755 (1) ExxonMobil share 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, 2021 ( 11,499 ) ( 2,265 ) ( 13,764 ) Current period change excluding amounts reclassified from accumulated other comprehensive income (1) ( 1,682 ) 245 ( 1,437 ) Amounts reclassified from accumulated other comprehensive income — 184 184 Total change in accumulated other comprehensive income ( 1,682 ) 429 ( 1,253 ) Balance as of June 30, 2022 ( 13,181 ) ( 1,836 ) ( 15,017 ) Balance as of December 31, 2022 ( 14,591 ) 1,321 ( 13,270 ) Current period change excluding amounts reclassified from accumulated other comprehensive income (1) 570 35 605 Amounts reclassified from accumulated other comprehensive income — 8 8 Total change in accumulated other comprehensive income 570 43 613 Balance as of June 30, 2023 ( 14,021 ) 1,364 ( 12,657 ) (1) Cumulative Foreign Exchange Translation Adjustment includes net investment hedge gain/(loss) net of taxes of $( 70 ) million and $ 327 million in 2023 and 2022, respectively. Amounts Reclassified Out of Accumulated Other Comprehensive Income - Before-tax Income/(Expense) (millions of dollars) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 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) ( 6 ) ( 132 ) ( 14 ) ( 252 ) Income Tax (Expense)/Credit For Components of Other Comprehensive Income (millions of dollars) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Foreign exchange translation adjustment 85 ( 68 ) 133 ( 90 ) Postretirement benefits reserves adjustment (excluding amortization) 20 ( 83 ) 31 ( 123 ) Amortization and settlement of postretirement benefits reserves adjustment included in net periodic benefit costs 1 ( 30 ) ( 1 ) ( 57 ) Total 106 ( 181 ) 163 ( 270 ) 11 Note 5. Earnings Per Share Earnings per common share Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net income (loss) attributable to ExxonMobil (millions of dollars) 7,880 17,850 19,310 23,330 Weighted-average number of common shares outstanding (millions of shares) (1) 4,066 4,233 4,084 4,248 Earnings (loss) per common share (dollars) (2) 1.94 4.21 4.73 5.49 Dividends paid per common share (dollars) 0.91 0.88 1.82 1.76 (1) Includes restricted shares not vested. (2) 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 June 30, Six Months Ended June 30, 2023 2022 2023 2022 Components of net benefit cost Pension Benefits - U.S. Service cost 122 177 242 356 Interest cost 165 129 331 258 Expected return on plan assets ( 133 ) ( 140 ) ( 266 ) ( 280 ) Amortization of actuarial loss/(gain) 21 39 42 78 Amortization of prior service cost ( 7 ) ( 7 ) ( 14 ) ( 14 ) Net pension enhancement and curtailment/settlement cost 7 53 15 90 Net benefit cost 175 251 350 488 Pension Benefits - Non-U.S. Service cost 81 145 163 295 Interest cost 232 157 466 317 Expected return on plan assets ( 172 ) ( 207 ) ( 346 ) ( 420 ) Amortization of actuarial loss/(gain) 14 47 28 94 Amortization of prior service cost 13 11 25 23 Net pension enhancement and curtailment/settlement cost — ( 1 ) — ( 1 ) Net benefit cost 168 152 336 308 Other Postretirement Benefits Service cost 20 38 40 78 Interest cost 69 53 139 108 Expected return on plan assets ( 3 ) ( 4 ) ( 7 ) ( 7 ) Amortization of actuarial loss/(gain) ( 31 ) — ( 61 ) 3 Amortization of prior service cost ( 11 ) ( 10 ) ( 21 ) ( 21 ) Net benefit cost 44 77 90 161 12 Note 7. Financial Instruments and Derivatives The estimated fair value of financial instruments and derivatives at June 30, 2023 and December 31, 2022, and the related hierarchy level for the fair value measurement was as follows: June 30, 2023 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) 4,768 1,980 — 6,748 ( 5,477 ) ( 807 ) — 464 Advances to/receivables from equity companies (2)(6) — 2,472 4,645 7,117 — — 592 7,709 Other long-term financial assets (3) 1,255 — 864 2,119 — — 283 2,402 Liabilities Derivative liabilities (4) 4,031 2,136 — 6,167 ( 5,477 ) ( 72 ) — 618 Long-term debt (5) 30,891 1,099 9 31,999 — — 3,790 35,789 Long-term obligations to equity companies (6) — — 2,161 2,161 — — ( 125 ) 2,036 Other long-term financial liabilities (7) — — 631 631 — — 44 675 December 31, 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) 4,309 3,455 — 7,764 ( 5,778 ) ( 969 ) — 1,017 Advances to/receivables from equity companies (2)(6) — 2,406 4,958 7,364 — — 685 8,049 Other long-term financial assets (3) 1,208 — 1,413 2,621 — — 346 2,967 Liabilities Derivative liabilities (4) 3,417 3,264 — 6,681 ( 5,778 ) ( 79 ) — 824 Long-term debt (5) 33,112 1,880 6 34,998 — — 4,173 39,171 Long-term obligations to equity companies (6) — — 2,467 2,467 — — ( 129 ) 2,338 Other long-term financial liabilities (7) — — 679 679 — — 38 717 (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 June 30, 2023 and December 31, 2022, respectively, the Corporation had $ 698 million and $ 1,494 million of collateral under master netting arrangements not offset against the derivatives on the Condensed 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 June 30, 2023, the Corporation has designated $ 4.9 billion of its Euro-denominated 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 $ 545 million and undrawn long-term committed lines of credit of $ 928 million as of second quarter 2023. 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 June 30, 2023 and December 31, 2022, or results of operations for the periods ended June 30, 2023 and 2022. 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 June 30, 2023 and December 31, 2022, was as follows: (millions) June 30, 2023 December 31, 2022 Crude oil (barrels) 34 4 Petroleum products (barrels) ( 69 ) ( 52 ) Natural gas (MMBTUs) ( 75 ) ( 64 ) 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 June 30, Six Months Ended June 30, 2023 2022 2023 2022 Sales and other operating revenue 332 ( 1,413 ) 983 ( 3,948 ) Crude oil and product purchases 5 — ( 20 ) ( 26 ) Total 337 ( 1,413 ) 963 ( 3,974 ) 14 Note 8. Disclosures about Segments and Related Information (millions of dollars) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Earnings (Loss) After Income Tax Upstream United States 920 3,749 2,552 6,125 Non-U.S. (1) 3,657 7,622 8,482 9,734 Energy Products United States 1,528 2,655 3,438 3,144 Non-U.S. 782 2,617 3,055 1,933 Chemical Products United States 486 625 810 1,395 Non-U.S. 342 450 389 1,086 Specialty Products United States 373 232 824 478 Non-U.S. 298 185 621 415 Corporate and Financing (1) ( 506 ) ( 286 ) ( 861 ) ( 980 ) Corporate total 7,880 17,850 19,310 23,330 Sales and Other Operating Revenue Upstream United States 1,673 3,958 4,443 6,614 Non-U.S. 3,739 7,101 9,126 13,444 Energy Products United States 26,128 34,473 51,052 59,326 Non-U.S. 38,945 52,804 78,921 94,519 Chemical Products United States 1,992 3,180 4,021 6,274 Non-U.S. 3,678 4,497 7,370 8,994 Specialty Products United States 1,542 1,653 3,110 3,044 Non-U.S. 3,095 3,591 6,384 6,769 Corporate and Financing 3 8 12 15 Corporate total 80,795 111,265 164,439 198,999 Intersegment Revenue Upstream United States 5,044 7,180 10,000 13,371 Non-U.S. 8,412 13,533 17,811 24,368 Energy Products United States 5,074 8,348 10,525 15,197 Non-U.S. 6,988 10,848 13,957 19,610 Chemical Products United States 2,084 2,558 3,872 4,325 Non-U.S. 977 1,600 1,754 3,107 Specialty Products United States 684 713 1,364 1,272 Non-U.S. 169 195 268 419 Corporate and Financing 64 59 128 116 (1) Results for first quarter 2022 include charges of $ 3.3 billion in non-U.S. Upstream and $ 0.1 billion in Corporate and Financing associated with the expropriation of the Corporation's interest in Sakhalin-1. 15 Geographic Sales and Other Operating Revenue (millions of dollars) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 United States 31,335 43,264 62,626 75,258 Non-U.S. 49,460 68,001 101,813 123,741 Total 80,795 111,265 164,439 198,999 Significant Non-U.S. revenue sources include: (1) Canada 6,825 9,642 13,546 16,638 United Kingdom 5,242 8,306 12,253 15,854 Singapore 3,758 4,774 7,489 9,096 France 3,494 5,265 6,978 9,622 Italy 2,527 3,063 5,063 5,898 Belgium 2,410 3,041 5,059 5,877 Australia 2,392 3,205 4,820 5,661 (1) Revenue is determined by primary country of operations. Excludes certain sales and other operating revenues in non-U.S. operations where attribution to a specific country is not practicable. Revenue from Contracts with Customers Sales and other operating revenue includes both revenue within the scope of ASC 606 and outside the scope of ASC 606. Trade receivables in Notes and accounts receivable – net reported on the Balance Sheet also includes 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. Contractual terms, credit quality, and type of customer are generally similar between those revenues and receivables within the scope of ASC 606 and those outside it. Sales and other operating revenue (millions of dollars) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Revenue from contracts with customers 63,322 85,851 127,626 154,667 Revenue outside the scope of ASC 606 17,473 25,414 36,813 44,332 Total 80,795 111,265 164,439 198,999 16 Note 9. Divestment Activities Through June 30, 2023, the Corporation realized proceeds of approximately $ 2.1 billion from its divestment activities in 2023 with negligible impact on net after-tax earnings. This included the sale of the Aera Energy joint venture, the Billings Refinery, certain unconventional assets in the United States, as well as other smaller divestments. In January 2023, the Corporation executed an agreement with Bangchak Corporation to sell its interest in Esso Thailand Ltd. that includes the Sriracha Refinery, select distribution terminals, and a network of retail stations. The transaction is anticipated to close in third quarter 2023. In 2022, the Corporation realized proceeds of approximately $ 5 billion and recognized net after-tax earnings of approximately $ 0.4 billion from its divestment activities. This included the sale of certain unproved assets in Romania and unconventional assets in Canada and the United States, as well as other smaller divestments. In November 2022, the Corporation executed 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. Should the conditions precedent be met and the potential transaction close, the Corporation would expect to recognize a loss of up to $ 2 billion. 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 mid-2022, 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. Note 10. Subsequent Events On July 13, 2023, the Corporation entered into an agreement to acquire Denbury Inc., a developer of carbon capture, utilization and storage solutions and enhanced oil recovery in exchange for ExxonMobil common stock. Based on the July 12 closing price for ExxonMobil shares, and at a fixed exchange rate of 0.84 per Denbury share, the transaction value was $ 4.9 billion. The number of shares issuable in connection with the transaction would have been approximately 45 million. The transaction is currently expected to close in the fourth quarter of 2023. In addition to carbon capture and storage assets, the acquisition includes Gulf Coast and Rocky Mountain oil and natural gas operations which consist of proved reserves totaling over 200 million barrels of oil equivalent, with 47 thousand oil-equivalent barrels per day of current production. 17