Exxon Mobil Corp 10-Q

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview During the first quarter of 2023, the price of crude oil declined towards the average of the 10-year range (2010-2019), impacted by higher inventory levels. Crude oil prices were relatively flat in the second quarter after OPEC+ oil producers further reduced oil output, which helped offset concerns over potential market impacts from a weakening global economy. Natural gas prices remained above the 10-year average despite declining significantly in the first half. Storage levels increased above historical averages in the United States and Europe on higher supply and lower demand. Refining margins declined on easing supply concerns with stabilization of Russian supply, yet remain above the 10-year average. Chemical margins remained well below the 10-year range due to continued bottom-of-cycle conditions in Asia Pacific; however, global margins improved in the second quarter on lower feed costs. The Corporation’s first half results included after-tax charges of $0.2 billion related to additional European taxes imposed on the energy sector, mainly reflected in the line “Income tax expense (benefit).” The enactment of regulations in late 2022 by European Member States and other countries imposed mandatory taxes on certain companies active in the crude petroleum, coal, natural gas, and refinery sectors. Denbury Acquisition On July 13, 2023, the Corporation announced that it had entered into a definitive agreement to acquire Denbury Inc. The acquisition further accelerates the Corporation’s Low Carbon Solutions opportunities. See Note 10 of the Condensed Consolidated Financial Statements for additional information. 18 FUNCTIONAL EARNINGS SUMMARY Earnings (loss) excluding Identified Items (non-GAAP) are earnings (loss) excluding individually significant non-operational events with, typically, an absolute corporate total earnings impact of at least $250 million in a given quarter. The earnings (loss) impact of an identified item for an individual segment may be less than $250 million when the item impacts several periods or several segments. Earnings (loss) excluding Identified Items does include non-operational earnings events or impacts that are generally below the $250 million threshold utilized for Identified Items. Management uses these figures to improve comparability of the underlying business across multiple periods by isolating and removing significant non-operational events from business results. The Corporation believes this view provides investors increased transparency into business results and trends and provides investors with a view of the business as seen through the eyes of management. Earnings (loss) excluding Identified Items is not meant to be viewed in isolation or as a substitute for net income (loss) attributable to ExxonMobil as prepared in accordance with U.S. GAAP. Three Months Ended June 30, 2023 Upstream Energy Products Chemical Products Specialty Products Corporate and Financing Total (millions of dollars) U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. Earnings (loss) (U.S. GAAP) 920 3,657 1,528 782 486 342 373 298 (506) 7,880 Identified Items Tax-related items — (12) — 18 — — — — — 6 Earnings (loss) excluding Identified Items (Non-GAAP) 920 3,669 1,528 764 486 342 373 298 (506) 7,874 Three Months Ended June 30, 2022 Upstream Energy Products Chemical Products Specialty Products Corporate and Financing Total (millions of dollars) U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. Earnings (loss) (U.S. GAAP) 3,749 7,622 2,655 2,617 625 450 232 185 (286) 17,850 Identified Items Gain/(loss) on sale of assets 299 — — — — — — — — 299 Earnings (loss) excluding Identified Items (Non-GAAP) 3,450 7,622 2,655 2,617 625 450 232 185 (286) 17,551 Six Months Ended June 30, 2023 Upstream Energy Products Chemical Products Specialty Products Corporate and Financing Total (millions of dollars) U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. Earnings (loss) (U.S. GAAP) 2,552 8,482 3,438 3,055 810 389 824 621 (861) 19,310 Identified Items Tax-related items — (170) — (12) — — — — — (182) Earnings (loss) excluding Identified Items (Non-GAAP) 2,552 8,652 3,438 3,067 810 389 824 621 (861) 19,492 Six Months Ended June 30, 2022 Upstream Energy Products Chemical Products Specialty Products Corporate and Financing Total (millions of dollars) U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. U.S. Non-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 — (378) — — — — — — — (378) Earnings (loss) excluding Identified Items (Non-GAAP) 5,826 12,989 3,144 1,933 1,395 1,086 478 415 (882) 26,384 References in this discussion to Corporate earnings (loss) mean net income (loss) attributable to ExxonMobil (U.S. 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 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. 19 REVIEW OF SECOND QUARTER 2023 RESULTS ExxonMobil’s second-quarter 2023 earnings were $7.9 billion, or $1.94 per share assuming dilution, compared with earnings of $17.9 billion a year earlier. The decrease in earnings was driven by lower crude and natural gas prices, and declining industry refining margins. Capital and exploration expenditures were $6.2 billion, up $1.6 billion from second quarter 2022. Earnings for the first six months of 2023 were $19.3 billion, or $4.73 per diluted share, compared with $23.3 billion a year earlier. Capital and exploration expenditures were $12.5 billion, up $3.0 billion from 2022. The Corporation distributed $7.4 billion in dividends to shareholders and repurchased $8.7 billion of common stock. UPSTREAM Upstream Financial Results (millions of dollars) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Earnings (loss) (U.S. GAAP) United States 920 3,749 2,552 6,125 Non-U.S. 3,657 7,622 8,482 9,734 Total 4,577 11,371 11,034 15,859 Identified Items (1) United States — 299 — 299 Non-U.S. (12) — (170) (3,255) Total (12) 299 (170) (2,956) Earnings (loss) excluding Identified Items (1) (Non-GAAP) United States 920 3,450 2,552 5,826 Non-U.S. 3,669 7,622 8,652 12,989 Total 4,589 11,072 11,204 18,815 Upstream Second Quarter Earnings Factor Analysis (millions of dollars) Price – Price impacts decreased earnings by $6,300 million, driven by a 33% decrease in average crude realizations and 51% decrease in average natural gas realizations. Volume/Mix – Lower volumes decreased earnings by $150 million, mainly driven by natural gas, partly offset by liquids growth in Guyana and the Permian. Other – All other items decreased earnings by $30 million. Identified Items (1) – 2Q 2022 $299 million gain on the sale of U.S. Barnett Shale assets. 2Q 2023 $(12) million loss driven by additional European taxes. (1) Refer to Functional Earnings Summary for definition of Identified Items and earnings (loss) excluding Identified Items. 20 Upstream Year-to-Date Earnings Factor Analysis (millions of dollars) Price – Price impacts decreased earnings by $8,110 million, driven by a 28% decrease in average realizations for crude oil and a 27% decrease in average natural gas realizations. Volume/Mix – Favorable volume and mix effects increased earnings by $520 million, driven by higher production from our advantaged projects in Guyana and the Permian. Other – All other items decreased earnings by $20 million. Identified Items (1) – 2022 $(2,956) million loss as a result of the Russia expropriation, partly offset by a gain on the sale of U.S. Barnett Shale assets. 2023 $(170) million loss driven by additional European taxes. (1) Refer to Functional Earnings Summary for definition of Identified Items and earnings (loss) excluding Identified Items. 21 Upstream Operational Results Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net production of crude oil, natural gas liquids, bitumen and synthetic oil (thousands of barrels daily) United States 785 777 802 765 Canada/Other Americas 618 556 645 516 Europe 4 4 4 4 Africa 206 224 213 240 Asia 702 691 725 714 Australia/Oceania 38 46 35 43 Worldwide 2,353 2,298 2,424 2,282 Net natural gas production available for sale (millions of cubic feet daily) United States 2,346 2,699 2,357 2,738 Canada/Other Americas 97 180 94 180 Europe 375 825 461 798 Africa 86 67 110 63 Asia 3,350 3,320 3,473 3,330 Australia/Oceania 1,275 1,515 1,276 1,421 Worldwide 7,529 8,606 7,771 8,530 Oil-equivalent production (1) (thousands of oil-equivalent barrels daily) 3,608 3,732 3,719 3,704 (1) Natural gas is converted to an oil-equivalent basis at six million cubic feet per one thousand barrels. 22 Upstream Additional Information (thousands of barrels daily) Three Months Ended June 30 Six Months Ended June 30 Volumes reconciliation (Oil-equivalent production) (1) 2022 3,732 3,704 Entitlements - Net Interest (26) (46) Entitlements - Price / Spend / Other 77 64 Government Mandates (47) (25) Divestments (152) (141) Growth / Other 24 163 2023 3,608 3,719 (1) Natural gas is converted to an oil-equivalent basis at six million cubic feet per one thousand barrels. 2Q 2023 versus 2Q 2022 3.6 million oil-equivalent barrels per day in 2Q 2023 decreased 124 thousand oil-equivalent barrels per day from 2Q 2022. Net production increased 24 thousand oil-equivalent barrels per day, excluding the impacts from entitlements, divestments, the Russia expropriation, and higher government-mandated curtailments. YTD 2023 versus YTD 2022 3.7 million oil-equivalent barrels per day in 2023 increased 15 thousand oil-equivalent barrels per day from 2022. Net production increased 163 thousand oil-equivalent barrels per day driven by growth in Guyana and Permian, excluding the impacts from entitlements, divestments, the Russia expropriation, and higher government-mandated curtailments. Listed below are descriptions of ExxonMobil’s volumes reconciliation factors which are provided to facilitate understanding of the terms. Entitlements - Net Interest are changes to ExxonMobil’s share of production volumes caused by non-operational changes to volume-determining factors. These factors consist of net interest changes specified in Production Sharing Contracts (PSCs), which typically occur when cumulative investment returns or production volumes achieve defined thresholds, changes in equity upon achieving pay-out in partner investment carry situations, equity redeterminations as specified in venture agreements, or as a result of the termination or expiry of a concession. Once a net interest change has occurred, it typically will not be reversed by subsequent events, such as lower crude oil prices. Entitlements - Price, Spend and Other are changes to ExxonMobil’s share of production volumes resulting from temporary changes to non-operational volume-determining factors. These factors include changes in oil and gas prices or spending levels from one period to another. According to the terms of contractual arrangements or government royalty regimes, price or spending variability can increase or decrease royalty burdens and/or volumes attributable to ExxonMobil. For example, at higher prices, fewer barrels are required for ExxonMobil to recover its costs. These effects generally vary from period to period with field spending patterns or market prices for oil and natural gas. 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 as a result of production limits or sanctions imposed by governments. Divestments are reductions in ExxonMobil’s production arising from commercial arrangements to fully or partially reduce equity in a field or asset in exchange for financial or other economic consideration. Growth and Other comprise all other operational and non-operational factors not covered by the above definitions that may affect volumes attributable to ExxonMobil. Such factors include, but are not limited to, production enhancements from project and work program activities, acquisitions including additions from asset exchanges, downtime, market demand, natural field decline, and any fiscal or commercial terms that do not affect entitlements. 23 ENERGY PRODUCTS Energy Products Financial Results (millions of dollars) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Earnings (loss) (U.S. GAAP) United States 1,528 2,655 3,438 3,144 Non-U.S. 782 2,617 3,055 1,933 Total 2,310 5,273 6,493 5,077 Identified Items (1) United States — — — — Non-U.S. 18 — (12) — Total 18 — (12) — Earnings (loss) excluding Identified Items (1) (Non-GAAP) United States 1,528 2,655 3,438 3,144 Non-U.S. 764 2,617 3,067 1,933 Total 2,292 5,273 6,505 5,077 Due to rounding, numbers presented may not add up precisely to the totals indicated. Energy Products Second Quarter Earnings Factor Analysis (millions of dollars) Margins – Lower margins decreased earnings by $3,100 million due to lower industry refining margins, partly offset by increased marketing and trading contributions. Volume/Mix – Favorable volume and mix increased earnings by $90 million, driven by the Beaumont refinery expansion. Other – All other items increased earnings by $30 million. Identified Items (1) – 2Q 2023 $18 million gain related to European taxes. (1) Refer to Functional Earnings Summary for definition of Identified Items and earnings (loss) excluding Identified Items. 24 Energy Products Year-to-Date Earnings Factor Analysis (millions of dollars) Margins – Margins increased earnings by $1,370 million as higher marketing and trading contributions more than offset declining industry refining margins. Volume/Mix – Favorable volume and mix effects increased earnings by $290 million, including start-up of the Beaumont refinery expansion. Other – All other items decreased earnings by $230 million, primarily due to higher project and maintenance expenses. Identified Items (1) – 2023 $(12) million loss from additional European taxes. (1) Refer to Functional Earnings Summary for definition of Identified Items and earnings (loss) excluding Identified Items. Energy Products Operational Results (thousands of barrels daily) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Refinery throughput United States 1,944 1,686 1,794 1,686 Canada 388 413 403 406 Europe 1,209 1,164 1,199 1,179 Asia Pacific 463 532 514 534 Other 169 193 176 180 Worldwide 4,173 3,988 4,086 3,985 Energy Products sales (2) United States 2,743 2,452 2,601 2,358 Non-U.S. 2,916 2,858 2,867 2,853 Worldwide 5,658 5,310 5,469 5,211 Gasoline, naphthas 2,401 2,208 2,290 2,161 Heating oils, kerosene, diesel 1,842 1,755 1,806 1,739 Aviation fuels 344 350 328 319 Heavy fuels 228 228 221 238 Other energy products 844 769 823 753 (2) Data reported net of purchases/sales contracts with the same counterparty. Due to rounding, numbers presented may not add up precisely to the totals indicated. 25 CHEMICAL PRODUCTS Chemical Products Financial Results (millions of dollars) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Earnings (loss) (U.S. GAAP) United States 486 625 810 1,395 Non-U.S. 342 450 389 1,086 Total 828 1,076 1,199 2,481 Earnings (loss) excluding Identified Items (1) (Non-GAAP) United States 486 625 810 1,395 Non-U.S. 342 450 389 1,086 Total 828 1,076 1,199 2,481 (1) Refer to Functional Earnings Summary for definition of Identified Items and earnings (loss) excluding Identified Items. Due to rounding, numbers presented may not add up precisely to the totals indicated. Chemical Products Second Quarter Earnings Factor Analysis (millions of dollars) Margins – Weaker industry margins decreased earnings by $150 million. Volume/Mix – Lower sales decreased earnings by $100 million. 26 Chemical Products Year-to-Date Earnings Factor Analysis (millions of dollars) Margins – Weaker industry margins decreased earnings by $730 million. Volume/Mix – Lower sales decreased earnings by $350 million, reflecting weaker market fundamentals. Other – All other items decreased earnings by $200 million, primarily driven by higher project and planned maintenance expenses. Chemical Products Operational Results (thousands of metric tons) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Chemical Products sales (1) United States 1,725 1,998 3,286 4,030 Non-U.S. 3,124 2,812 6,212 5,798 Worldwide 4,849 4,811 9,498 9,829 (1) Data reported net of purchases/sales contracts with the same counterparty. 27 SPECIALTY PRODUCTS Specialty Products Financial Results (millions of dollars) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Earnings (loss) (U.S. GAAP) United States 373 232 824 478 Non-U.S. 298 185 621 415 Total 671 417 1,445 893 Earnings (loss) excluding Identified Items (1) (Non-GAAP) United States 373 232 824 478 Non-U.S. 298 185 621 415 Total 671 417 1,445 893 (1) Refer to Functional Earnings Summary for definition of Identified Items and earnings (loss) excluding Identified Items. Specialty Products Second Quarter Earnings Factor Analysis (millions of dollars) Margins – Stronger finished lubes and basestock margins increased earnings by $320 million. Volume/Mix – Lower basestock sales decreased earnings by $90 million. Other – All other items increased earnings by $20 million. 28 Specialty Products Year-to-Date Earnings Factor Analysis (millions of dollars) Margins – Improved margins increased earnings by $690 million, primarily related to lower feed costs. Volume/Mix – Lower volumes decreased earnings by $80 million. Other – All other items decreased earnings by $60 million. Specialty Products Operational Results (thousands of metric tons) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Specialty Products sales (1) United States 514 590 991 1,111 Non-U.S. 1,391 1,511 2,855 2,995 Worldwide 1,905 2,100 3,845 4,107 (1) Data reported net of purchases/sales contracts with the same counterparty. CORPORATE AND FINANCING Corporate and Financing Financial Results (millions of dollars) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Earnings (loss) (U.S. GAAP) (506) (286) (861) (980) Identified Items (2) — — — (98) Earnings (loss) excluding Identified Items (2) (Non-GAAP) (506) (286) (861) (882) (2) Refer to Functional Earnings Summary for definition of Identified Items and earnings (loss) excluding Identified Items. Corporate and Financing expenses were $506 million for the second quarter of 2023, $220 million higher than the second quarter of 2022, reflecting unfavorable tax items and foreign exchange impacts, partly offset by lower financing costs. Corporate and Financing expenses were $861 million for the first six months of 2023, $119 million lower than 2022, primarily reflecting the absence of an identified item associated with the Sakhalin-1 expropriation. 29 LIQUIDITY AND CAPITAL RESOURCES (millions of dollars) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net cash provided by/(used in) Operating activities 25,724 34,751 Investing activities (9,281) (7,009) Financing activities (16,683) (15,384) Effect of exchange rate changes 132 (299) Increase/(decrease) in cash and cash equivalents (108) 12,059 Cash and cash equivalents (at end of period) 29,557 18,861 Cash flow from operations and asset sales Net cash provided by operating activities (U.S. GAAP) 9,383 19,963 25,724 34,751 Proceeds associated with sales of subsidiaries, property, plant & equipment, and sales and returns of investments 1,287 939 2,141 1,232 Cash flow from operations and asset sales (Non-GAAP) 10,670 20,902 27,865 35,983 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 second quarter of 2023 was $10.7 billion, a decrease of $10.2 billion from the comparable 2022 period primarily reflecting lower earnings. Cash provided by operating activities totaled $25.7 billion for the first six months of 2023, $9.0 billion lower than 2022. Net income including noncontrolling interests was $20.0 billion, a decrease of $4.3 billion from the prior year period. The adjustment for the noncash provision of $8.5 billion for depreciation and depletion was down $4.8 billion from 2022. Changes in operational working capital were a reduction of $3.9 billion, compared to a reduction of $1.7 billion in the prior year period. All other items net increased cash flows by $1.1 billion in 2023 versus a reduction of $1.2 billion in 2022. See the Condensed Consolidated Statement of Cash Flows for additional details. Investing activities for the first six months of 2023 used net cash of $9.3 billion, an increase of $2.3 billion compared to the prior year. Spending for additions to property, plant and equipment of $10.8 billion was $3.0 billion higher than 2022. Proceeds from asset sales were $2.1 billion. Net investments and advances increased $0.2 billion to $0.7 billion. Net cash used in financing activities was $16.7 billion in the first six months of 2023, including $8.7 billion for the purchase of 79.1 million shares of ExxonMobil stock, as part of the previously announced buyback program. This compares to net cash used in financing activities of $15.4 billion in the prior year. Total debt at the end of the second quarter of 2023 was $41.5 billion compared to $41.2 billion at year-end 2022. The Corporation's debt to total capital ratio was 16.7 percent at the end of the second quarter of 2023 compared to 16.9 percent at year-end 2022. The net debt to capital ratio was 5.5 percent at the end of the second quarter, an increase of 0.1 percentage points from year-end 2022. The Corporation's capital allocation priorities are investing in competitively advantaged, high-return projects; maintaining a strong balance sheet; and sharing our success with our shareholders through more consistent share repurchases and a growing dividend. The Corporation distributed a total of $7.4 billion to shareholders in the first six months of 2023 through dividends. The Corporation has access to significant capacity of long-term and short-term liquidity. Internally generated funds are expected to cover the majority of financial requirements, supplemented by long-term and short-term debt. The Corporation had undrawn short-term committed lines of credit of $0.5 billion and undrawn long-term committed lines of credit of $0.9 billion as of second quarter 2023. 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. 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. Key criteria for evaluating acquisitions include strategic fit, cost synergies, potential for future growth, and attractive current valuations. Acquisitions may be made with cash, shares of the Corporation’s common stock, or both. Litigation and other contingencies are discussed in Note 3 to the unaudited condensed consolidated financial statements. 30 Contractual Obligations 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. Through July 2023, the Corporation has entered into various long-term agreements with an estimated total obligation of approximately $6.9 billion. As of June 30, undiscounted commitments for leases not yet commenced totaled $4.1 billion for operating leases and $2.2 billion for finance leases. TAXES (millions of dollars) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Income taxes 3,503 6,359 8,463 9,165 Effective income tax rate 33 % 31 % 34 % 34 % Total other taxes and duties (1) 8,328 7,779 16,423 16,228 Total 11,831 14,138 24,886 25,393 (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 $11.8 billion for the second quarter of 2023, a decrease of $2.3 billion from 2022. Income tax expense was $3.5 billion compared to $6.4 billion in the prior year reflecting lower commodity prices. The effective income tax rate of 33 percent increased from the 31 percent rate in the prior year period due primarily to a change in mix of results in jurisdictions with varying tax rates. Total other taxes and duties increased by $0.5 billion to $8.3 billion. Total taxes were $24.9 billion for the first six months of 2023, a decrease of $0.5 billion from 2022. Income tax expense decreased by $0.7 billion to $8.5 billion reflecting lower commodity prices. The effective income tax rate of 34 percent was flat compared to the prior year period. Total other taxes and duties increased by $0.2 billion to $16.4 billion. CAPITAL AND EXPLORATION EXPENDITURES (millions of dollars) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Upstream (including exploration expenses) 4,609 3,627 9,190 7,506 Energy Products 731 506 1,416 1,072 Chemical Products 659 419 1,490 855 Specialty Products 103 56 194 79 Other 64 1 256 1 Total 6,166 4,609 12,546 9,513 Capital and exploration expenditures in the second quarter of 2023 were $6.2 billion, up 34% from the second quarter of 2022. Capital and exploration expenditures in the first six months of 2023 were $12.5 billion, up 32% from the first six months of 2022. The Corporation plans to invest in the range of $23 billion to $25 billion in 2023. Actual spending could vary depending on the progress of individual projects and property acquisitions. 31 IMPORTANT INFORMATION ABOUT THE TRANSACTION AND WHERE TO FIND IT In connection with the proposed transaction between Exxon Mobil Corporation (“ExxonMobil”) and Denbury Inc. (“Denbury”), ExxonMobil and Denbury will file relevant materials with the Securities and Exchange Commission (the “SEC”), including a registration statement on Form S-4 filed by ExxonMobil that will include a proxy statement of Denbury that also constitutes a prospectus of ExxonMobil. A definitive proxy statement/prospectus will be mailed to stockholders of Denbury. This communication is not a substitute for the registration statement, proxy statement or prospectus or any other document that ExxonMobil or Denbury (as applicable) may file with the SEC in connection with the proposed transaction. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS AND SECURITY HOLDERS OF EXXONMOBIL AND DENBURY ARE URGED TO READ THE REGISTRATION STATEMENT, THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND RELATED MATTERS. Investors and security holders may obtain free copies of the registration statement and the proxy statement/prospectus (when they become available), as well as other filings containing important information about ExxonMobil or Denbury, without charge at the SEC’s Internet website (http://www.sec.gov). Copies of the documents filed with the SEC by ExxonMobil will be available free of charge on ExxonMobil’s internet website at www.exxonmobil.com under the tab “investors” and then under the tab “SEC Filings” or by contacting ExxonMobil’s Investor Relations Department at investor.relations@exxonmobil.com. Copies of the documents filed with the SEC by Denbury will be available free of charge on Denbury’s internet website at https://investors.denbury.com/investors/financial-information/sec-filings/ or by directing a request to Denbury Inc., ATTN: Investor Relations, 5851 Legacy Circle, Suite 1200, Plano, TX 75024, Tel. No. (972) 673-2000. The information included on, or accessible through, ExxonMobil’s or Denbury’s website is not incorporated by reference into this communication. Participants in the Solicitation ExxonMobil, Denbury, their respective directors and certain of their respective executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information about the directors and executive officers of Denbury is set forth in its proxy statement for its 2023 annual meeting of stockholders, which was filed with the SEC on April 18, 2023, and in its Form 10-K for the year ended December 31, 2022, which was filed with the SEC on February 23, 2023. Information about the directors and executive officers of ExxonMobil is set forth in its proxy statement for its 2023 annual meeting of stockholders, which was filed with the SEC on April 13, 2023, and in its Form 10-K for the year ended December 31, 2022, which was filed with the SEC on February 22, 2023. Additional information regarding the participants in the proxy solicitations and a description of their direct or indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus and other relevant materials filed with the SEC when they become available. No Offer or Solicitation This communication is for informational purposes and is not intended to, and shall not, constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any offer, solicitation or sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended. 32 FORWARD-LOOKING STATEMENTS Statements related to outlooks; projections; descriptions of strategic, operating, and financial plans and objectives; statements of future ambitions and plans; and other statements of future events or conditions in this release, are forward-looking statements. Similarly, discussion of future carbon capture, transportation and storage, as well as biofuel, hydrogen, and other plans to reduce emissions are dependent on future market factors, such as continued technological progress, policy support and timely rule-making and permitting, and represent forward-looking statements. Actual future results, including financial and operating performance; total capital expenditures and mix, including allocations of capital to low carbon solutions; structural earnings improvement and structural cost reductions and efficiency gains, including the ability to offset inflationary pressure; plans to reduce future emissions and emissions intensity; ambitions to reach Scope 1 and Scope 2 net zero from operated assets by 2050, plans to reach net zero Scope 1 and 2 emissions in Upstream Permian Basin unconventional operated assets by 2030, eliminating routine flaring in-line with World Bank Zero Routine Flaring, reaching near-zero methane emissions from its operations, meeting ExxonMobil’s emission reduction goals and plans, divestment and start-up plans, and associated project plans as well as technology efforts, timing and outcome of projects related to the capture, transportation and storage of CO2, and produced biofuels, including completion of the Denbury acquisition; changes in law, taxes, or regulation including environmental regulations, trade sanctions, and timely granting of governmental permits and certifications; timing and outcome of hydrogen projects; cash flow, dividends and shareholder returns, including the timing and amounts of share repurchases; future debt levels and credit ratings; business and project plans, timing, costs, capacities and returns; and resource recoveries and production rates could differ materially due to a number of factors. These include global or regional changes in the supply and demand for oil, natural gas, petrochemicals, and feedstocks and other market factors, economic conditions, and seasonal fluctuations that impact prices and differentials for our products; government policies supporting lower carbon investment opportunities such as the U.S. Inflation Reduction Act or policies limiting the attractiveness of future investment such as the additional European taxes on the energy sector; variable impacts of trading activities on our margins and results each quarter; actions of competitors and commercial counterparties; the outcome of commercial negotiations, including final agreed terms and conditions; the ability to access debt markets; the ultimate impacts of COVID-19 or other public health crises, including the effects of government responses on people and economies; reservoir performance, including variability and timing factors applicable to unconventional resources; the level and outcome of exploration projects and decisions to invest in future reserves; timely completion of development and other construction projects; final management approval of future projects and any changes in the scope, terms, or costs of such projects as approved; government policies and support and market demand for low carbon technologies; war, civil unrest, attacks against the company or industry, and other political or security disturbances; expropriations, seizure, or capacity, insurance or shipping limitations by foreign governments or laws; opportunities for potential acquisitions, investments or divestments and satisfaction of applicable conditions to closing, including timely regulatory approvals; the capture of efficiencies within and between business lines and the ability to maintain near-term cost reductions as ongoing efficiencies; unforeseen technical or operating difficulties and unplanned maintenance; the development and competitiveness of alternative energy and emission reduction technologies; the results of research programs and the ability to bring new technologies to commercial scale on a cost-competitive basis; and other factors discussed under Item 1A. Risk Factors of ExxonMobil’s 2022 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. 33 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Information about market risks for the six months ended June 30, 2023, does not differ materially from that discussed under Item 7A of the registrant's Annual Report on Form 10-K for 2022.