What changed in this filing

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Item 1A. Risk Factors

2024-02-28 compared with 2023-02-22 · 41 added, 35 removed, 136 unchanged (36% of the section changed)

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On the other hand, a material increase in oil or natural gas prices could have a material adverse effect on the company’s operations, especially in the Energy Products, Chemical Products, and Specialty Products segments.

Our pursuit of lower-emission business opportunities including carbon capture and storage, hydrogen, and lower-emission fuels also depends on the growth and development of markets for those products and services, including implementation of supportive government policies and developments in technology to enable those products and services to be provided on a cost-effective basis at commercial scale.

Our pursuit of lower-emission business opportunities including carbon capture and storage, hydrogen, lower-emission fuels, and lithium also depends on the growth and development of markets for those products and services, including implementation of supportive government policies and developments in technology to enable those products and services to be provided on a cost-effective basis at commercial scale.

See "Climate Change and the Energy Transition" in this Item 1A.

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Sovereign debt downgrades, defaults, inability to access debt markets due to rating, banking, or legal constraints, liquidity crises, the breakup or restructuring of fiscal, monetary, or political systems such as the European Union, and other events or conditions that impair the functioning of financial markets and institutions also pose risks to ExxonMobil, including risks to the safety of our financial assets and to the ability of our partners and customers to fulfill their commitments to ExxonMobil.

Our future business results, including cash flows and financing needs, will also be affected by the rate of recovery from the COVID-19 pandemic, as well as the occurrence and severity of future outbreaks, the responsive actions taken by governments and others, and the resulting effects on regional and global markets and economies.

Our future business results, including cash flows and financing needs, may also be affected by the occurrence, severity, pace and rate of recovery of future public health epidemics or pandemics;

the responsive actions taken by governments and others;

and the resulting effects on regional and global markets and economies.

Other demand-related factors.

Other factors that may affect the demand for oil, gas, and petrochemicals, and therefore impact our results, include technological improvements in energy efficiency;

Other factors that may affect the demand for oil, gas, petrochemicals or our other products, and therefore impact our results, include technological improvements in energy efficiency;

seasonal weather patterns;

increased competitiveness of, or government policy support for, alternative energy sources;

changes in technology that alter fuel choices, such as technological advances in energy storage that make wind and solar more competitive for power generation;

changes in technology that alter fuel choices, such as technological advances in energy storage or other critical areas that make wind, solar, hydrogen, nuclear or other alternatives more competitive for power generation;

changes in consumer preferences for our products, including consumer demand for alternative-fueled or electric transportation or alternatives to plastic products;

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government policies, including actions intended to reduce greenhouse gas emissions, that restrict oil and gas production or increase associated costs;

and the occurrence of wars, hostile actions, natural disasters, disruptions in competitors’ operations, logistics constraints, or unexpected unavailability of distribution channels that may disrupt supplies.

the occurrence of wars or hostile actions, including disruption of land or sea transportation routes;

natural disasters;

disruptions in competitors’ operations;

and logistics constraints or unexpected unavailability of distribution channels that may disrupt supplies.

Technological change can also alter the relative costs for competitors to find, produce and refine oil and gas, and to manufacture petrochemicals.

Other market factors.

ExxonMobil’s business results are also exposed to potential negative impacts due to changes in interest rates, inflation, currency exchange rates, and other local or regional market conditions.

ExxonMobil’s business results are also exposed to potential negative impacts due to changes in interest rates, inflation, currency exchange rates, changes in usage of the U.S.

dollar in global trade, and other local or regional market conditions.

In addition to direct potential impacts on our costs and revenues, market factors such as rates of inflation may indirectly impact our results to the extent such factors reduce general rates of economic growth and therefore energy demand, as discussed under “Economic conditions”.

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Restrictions on production of oil and gas could increase to the extent governments view such measures as a viable approach for pursuing national and global energy and climate policies.

Restrictions on foreign investment in the oil and gas sector tend to increase in times of high commodity prices, when national governments may have less need for outside sources of private capital.

Restrictions on foreign investment in the oil and gas sector tend to increase in times of high commodity prices or when national governments may have less need for outside sources of private capital.

Many countries also restrict the import or export of certain products based on point of origin.

Restrictions on doing business.

ExxonMobil is subject to laws and sanctions imposed by the United States or by other jurisdictions where we do business that may prohibit ExxonMobil or its affiliates from doing business in certain countries, or restricting the kind of business that may be conducted.

ExxonMobil is subject to laws and sanctions imposed by the United States or by other jurisdictions where we do business that may prohibit ExxonMobil or its affiliates from doing business in certain countries or restrict the kind of business that may be conducted, including acquiring or divesting certain assets.

Such restrictions may provide a competitive advantage to competitors who may not be subject to comparable restrictions.

Lack of legal certainty.

Some countries in which we do business lack well-developed legal systems, or have not yet adopted, or may be unable to maintain, clear regulatory frameworks for oil and gas development.

Lack of legal certainty exposes our operations to increased risk of adverse or unpredictable actions by government officials, and also makes it more difficult for us to enforce our contracts.

Some countries in which we do business lack well-developed legal systems, have not yet adopted or may be unable to maintain clear regulatory frameworks, or may have evolving and unharmonized standards that vary or conflict across jurisdictions.

Lack of legal certainty exposes us to increased risk of adverse or unpredictable actions by government officials, and also makes it more difficult for us to enforce our contracts.

In some cases, these risks can be partially offset by agreements to arbitrate disputes in an international forum, but the adequacy of this remedy may still depend on the local legal system to enforce an award.

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Even in countries with well-developed legal systems where ExxonMobil does business, we remain exposed to changes in law or interpretation of settled law (including changes that result from international treaties and accords) and changes in policy that could adversely affect our results, such as:

• increases in taxes, duties, or government royalty rates (including retroactive claims);

• increases in taxes, duties, or government royalty rates (including retroactive claims or punitive taxes on oil, gas and petrochemical operations);

• price controls;

• changes in environmental regulations or other laws that increase our cost of compliance or reduce or delay available business opportunities (including changes in laws affecting offshore drilling operations, water use, emissions, hydraulic fracturing, or production or use of new or recycled plastics);

• actions by policy-makers, regulators, or other actors to delay or deny necessary licenses and permits, restrict the availability of oil and gas leases or the transportation of our products, or otherwise require changes in the company's business or strategy that could result in reduced returns;

• changes in environmental regulations or other laws that increase our cost of operation or compliance or reduce or delay available business opportunities (including changes in laws affecting offshore drilling operations, standards to complete decommissioning, water use, emissions, hydraulic fracturing, or production or use of new or recycled plastics, as well as laws and regulations affecting trading);

• actions by policy-makers, regulators, or other actors to delay or deny necessary licenses and permits, restrict the availability of oil and gas leases or the transportation or export of our products, or otherwise require changes in the company's business or strategy that could result in reduced returns;

• regulatory interpretations that exclude or disfavor our products under government policies or programs intended to support new or developing markets or technologies, or that otherwise are not technology-neutral;

• adoption of regulations mandating efficiency standards, the use of alternative fuels or uncompetitive fuel components;

• adoption of government payment transparency regulations that could require us to disclose competitively sensitive commercial information, or that could cause us to violate the non-disclosure laws of other countries;

• adoption of disclosure regulations that could create competitive disadvantages, require us to incur disproportionate costs, or increase legal risk due to a need to rely on uncertain estimates or extrapolations (such as emissions of third parties) and lack of uniform standards across jurisdictions, or by requiring us to disclose competitively sensitive commercial information or to violate the non-disclosure laws of other countries;

• government actions to cancel contracts, redenominate the official currency, renounce or default on obligations, renegotiate terms unilaterally, or expropriate assets.

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or by state and local government actors as well as private plaintiffs acting in parallel that attempt to use the legal system to promote public policy agendas (including seeking to reduce the production and sale of hydrocarbon products through litigation targeting the company or other industry participants), gain political notoriety, or obtain monetary awards from the company.

The adoption of similar legal practices in the European Union or elsewhere would broaden this risk and has begun to be applied to some of our competitors in the European Union.

The continued adoption of similar legal practices in the European Union or elsewhere would broaden this risk and has begun to be applied to some of our competitors in the European Union.

Security concerns.

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Net-zero scenarios.

Driven by concern over the risks of climate change, a number of countries have adopted, or are considering the adoption of, regulatory frameworks to reduce greenhouse gas emissions including emissions from the production and use of oil and gas and their products.

These actions are being taken both independently by national and regional governments and within the framework of United Nations Conference of the Parties summits under which many countries of the world have endorsed objectives to reduce the atmospheric concentration of CO2 over the coming decades, with an ambition ultimately to achieve “net zero”.

These actions are being taken both independently by national and regional governments and within the framework of United Nations Conference of the Parties summits under which many countries of the world have endorsed objectives to reduce the atmospheric concentration of carbon dioxide (CO2) over the coming decades, with an ambition ultimately to achieve “net zero”.

Net zero means that emissions of greenhouse gases from human activities would be balanced by actions that remove such gases from the atmosphere.

Expectations for transition of the world’s energy system to lower-emission sources, and ultimately net-zero, derive from hypothetical scenarios that reflect many assumptions about the future and reflect substantial uncertainties.

The company’s objective to play a leading role in the energy transition, including the company’s announced ambition ultimately to achieve net zero with respect to Scope 1 and 2 emissions from operations where ExxonMobil is the operator, carries risks that the transition, including underlying technologies, policies, and markets as discussed in more detail below, will not develop at the pace or in the manner expected by current net-zero scenarios.

The success of our strategy for the energy transition will also depend on our ability to recognize key signposts of change in the global energy system on a timely basis, and our corresponding ability to direct investment to the technologies and businesses, at the appropriate stage of development, to best capitalize on our competitive strengths.

The company’s objective to play a leading role in the energy transition, including the company’s announced ambition ultimately to achieve net zero with respect to Scope 1 and 2 emissions from operations with continued technology development and policy support where ExxonMobil is the operator, carries risks that the transition, including underlying technologies, policies, and markets as discussed in more detail below, will not be available or develop at the pace or in the manner expected by current net-zero scenarios.

The success of our strategy for the energy transition will also depend on our ability to recognize key signposts of changes in the global energy system on a timely basis, and our corresponding ability to direct investment to the technologies and businesses, at the appropriate stage of development, to best capitalize on our competitive strengths.

Greenhouse gas restrictions.

Government actions intended to reduce greenhouse gas emissions include adoption of cap and trade regimes, carbon taxes, carbon-based import duties or other trade tariffs, minimum renewable usage requirements, restrictive permitting, increased mileage and other efficiency standards, mandates for sales of electric vehicles, mandates for use of specific fuels or technologies, and other incentives or mandates designed to support transitioning to lower-emission energy sources.

Political and other actors and their agents also increasingly seek to advance climate change objectives indirectly, such as by seeking to reduce the availability or increase the cost of financing and investment in the oil and gas sector and taking actions intended to promote changes in business strategy for oil and gas companies.

These actions include delaying or blocking needed infrastructure, utilizing shareholder governance mechanisms against companies or their shareholders or financial institutions in an effort to deter investment in oil and gas activities, and taking other actions intended to promote changes in business strategy for oil and gas companies.

Depending on how policies are formulated and applied, such policies could negatively affect our investment returns, make our hydrocarbon-based products more expensive or less competitive, lengthen project implementation times, and reduce demand for hydrocarbons, as well as shift hydrocarbon demand toward relatively lower-carbon alternatives.

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CCS technologies, focused initially on capturing and sequestering CO2 emissions from high-intensity industrial activities, can assist in meeting society’s objective to mitigate atmospheric greenhouse gas levels while also helping ensure the availability of the reliable and affordable energy the world requires.

ExxonMobil has established a Low Carbon Solutions (LCS) business unit to advance the development and deployment of these technologies and projects, including CCS, hydrogen, and lower-emission fuels, breakthrough energy efficiency processes, advanced energy-saving materials, and other technologies.

ExxonMobil has established a Low Carbon Solutions (LCS) business unit to advance the development and deployment of these technologies and projects, including CCS, hydrogen, lower-emission fuels, and lithium, breakthrough energy efficiency processes, advanced energy-saving materials, and other technologies.

The company’s efforts include both in-house research and development as well as collaborative efforts with leading universities and with commercial partners involved in advanced lower-emission energy technologies.

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Operational and Other Factors

In addition to external economic and political factors, our future business results also depend on our ability to manage successfully those factors that are, at least in part, within our control.

In addition to external economic and political factors, our future business results also depend on our ability to manage successfully those factors that are, at least in part, within our control, including our capital allocation into existing and new businesses.

The extent to which we manage these factors will impact our performance relative to competition.

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develop markets for project outputs, whether through long-term contracts or the development of effective spot markets;

qualify for certain incentives available under supportive government policies for emerging markets and technologies;

manage changes in operating conditions and costs, including costs of third party equipment or services such as drilling rigs and shipping, supply-chain disruptions, and inflationary cost pressures;

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and influence the performance of project operators where ExxonMobil does not perform that role.

In addition to the effective management of individual projects, ExxonMobil’s success, including our ability to mitigate risk and provide attractive returns to shareholders, depends on our ability to successfully manage our overall portfolio, including diversification among types and locations of our projects, products produced, and strategies to divest assets.

We may not be able to divest assets at a price or on the timeline we contemplate in our strategies.

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Operational efficiency.

This requires continuous management focus, including technology improvements, cost control, productivity enhancements, regular reappraisal of our asset portfolio, and the recruitment, development, and retention of high caliber employees.

An important component of ExxonMobil’s competitive performance, especially given the commodity-based nature of many of our businesses, is our ability to operate efficiently, including our ability to manage expenses, improve production yields on an ongoing basis and successfully integrate and achieve the anticipated synergies of acquisitions, including the acquisition of Pioneer Natural Resources Company.

This requires continuous management focus, including technology integration and improvements, cost control, productivity enhancements, harmonizing the functions, policies, procedures and processes, regular reappraisal of our asset portfolio, and the recruitment, development, and retention of high caliber employees.

Research and development and technological change.

To maintain our competitive position, especially in light of the technological nature of our businesses and the need for continuous efficiency improvement, ExxonMobil’s technology, research, and development organizations must be successful and able to adapt to a changing market and policy environment, including developing technologies to help reduce greenhouse gas emissions.

To maintain our competitive position, especially in light of the technological nature of our businesses and the need for continuous efficiency improvement, ExxonMobil’s technology, research, and development organizations must be successful and able to adapt to a changing market and policy environment, including continuous improvement in the efficiency of hydraulic fracturing technology and developing technologies to help reduce greenhouse gas emissions.

To remain competitive, we must also continuously adapt and capture the benefits of new and emerging technologies, including successfully applying advances in the ability to process very large amounts of data to our businesses.

Safety, business controls, and environmental risk management.

Our results depend on management’s ability to minimize the inherent risks of oil, gas, and petrochemical operations, to effectively control our business activities, and to minimize the potential for human error.

Our results depend on management’s ability to minimize the inherent risks of oil, gas, and petrochemical operations, to effectively control our business activities, including trading, and to minimize the potential for human error.

We apply rigorous management systems and continuous focus on workplace safety and avoiding spills or other adverse environmental events.

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Similarly, we are implementing cost-effective new technologies and adopting new operating practices to reduce emissions, not only in response to government requirements but also to address community priorities.

We employ a comprehensive enterprise risk management system to identify and manage risk across our businesses.

We employ a robust and actively evolving enterprise risk management system to identify and manage risk across our businesses.

We also maintain a disciplined framework of internal controls and apply a controls management system for monitoring compliance with this framework.

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ExxonMobil is regularly subject to attempted cybersecurity disruptions from a variety of sources including state-sponsored actors.

ExxonMobil’s defensive preparedness includes multi-layered technological capabilities for prevention and detection of cybersecurity disruptions;

non-technological measures such as threat information sharing with governmental and industry groups;

annual internal training and awareness campaigns including routine testing of employee awareness and an emphasis on resiliency, including business response and recovery.

See Item 1C in this Report for information on ExxonMobil’s program for managing cybersecurity risks.

If the measures we are taking to protect against cybersecurity disruptions prove to be insufficient or if our proprietary data is otherwise not protected, ExxonMobil, as well as our customers, employees, or third parties, could be adversely affected.

We are also exposed to potential harm from cybersecurity events that may affect the operations of third-parties, including our partners, suppliers, service providers (including providers of cloud-hosting services for our data or applications), and customers.

We have limited ability to influence third parties, including our partners, suppliers and service providers (including providers of cloud-hosting services for our data or applications), to implement strong cybersecurity controls and are exposed to potential harm from cybersecurity events that may affect their operations.

Cybersecurity disruptions could cause physical harm to people or the environment;

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ExxonMobil’s reputation may also be harmed by events which negatively affect the image of our industry as a whole.

Projections, estimates, and descriptions of ExxonMobil’s plans and objectives included or incorporated in Items 1, 1A, 2, 7, and 7A of this report are forward-looking statements.

Projections, estimates, and descriptions of ExxonMobil’s plans and objectives included or incorporated in Items 1, 1A, 1C, 2, 5, 7, and 7A of this report are forward-looking statements.

Actual future results, including project completion dates, production rates, capital expenditures, costs, and business plans could differ materially due to, among other things, the factors discussed above and elsewhere in this report.

UNRESOLVED STAFF COMMENTS

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What changed 10-K

Item 1A. Risk Factors