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Item 2. Management’s Discussion and Analysis

2024-04-29 compared with 2023-10-31 · 174 added, 256 removed, 223 unchanged (66% of the section changed)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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, and remained relatively flat during the second quarter.

In the third quarter, crude oil prices increased as a result of strong demand, tight inventory levels, and ongoing actions by OPEC+ oil producers to limit supply, which helped mitigate concerns over potential market impacts from a weakening global economy.

While natural gas prices remained above the 10-year average they have declined significantly over the first nine months of the year with storage levels increasing above historical averages in the United States and Europe on higher supply and lower demand.

During the first half of 2023, refining margins declined on easing supply concerns with stabilization of Russian supply.

However, in the third quarter, strong demand for gasoline and distillate combined with low inventories pushed refining margins above the 10-year range.

Chemical margins remained well below the 10-year range, as excess supply continued to outpace rising demand.

The Corporation’s results for the first nine months 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.

The Corporation tests assets or groups of assets for recoverability on an ongoing basis whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable and has a robust process to monitor for indicators of potential impairment across its asset groups throughout the year.

As part of its annual planning and budgeting process, the Corporation is currently assessing its portfolio to prioritize assets with the highest future value potential within its broad range of available opportunities while identifying potential asset divestment candidates.

This effort includes an ongoing re-assessment of industry and regulatory factors, macroeconomic considerations, and the company’s project execution plans.

Depending on the outcome of the planning process, including in particular significant future changes to the Corporation’s current development plans for its long-lived assets or increases in the likelihood of divestments, certain assets groups could be at risk for impairment.

This planning process is expected to be completed with required review by the Board of Directors in the fourth quarter.

If needed, assessments on an asset-level basis will be completed following this Board review.

In the first quarter of 2024 the price of crude oil remained flat relative to fourth quarter 2023 and near the middle of the pre-COVID 10-year range (2010-2019), as markets remained balanced.

More recently, the market for crude has tightened driven by ongoing concerns over conflict in the Middle East.

Natural gas prices decreased, moving back toward the middle of the 10-year range, on high inventory levels and lower demand.

Refining margins in the quarter rose to the top of the 10-year range, as demand grew while turnarounds and global disruptions weighed on supply.

Chemical margins remained relatively flat at bottom-of-cycle conditions, as new capacity additions offset demand growth.

Recent Mergers and Acquisitions

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.

On October 11, 2023, the Corporation announced that it had entered into a definitive merger agreement with Pioneer Natural Resources.

At close, ExxonMobil’s Permian production volume would more than double to 1.3 million barrels of oil equivalent per day, based on anticipated 2023 volumes.

In October 2023, ExxonMobil announced that it had entered into a definitive merger agreement with Pioneer Natural Resources.

The transaction represents an opportunity to deliver leading capital efficiency and cost performance as well as increase production by combining Pioneer's large scale, contiguous, high-quality undeveloped Midland acreage with ExxonMobil's Permian resource development approach.

See Note 11 of the Condensed Consolidated Financial Statements for additional information.

FUNCTIONAL EARNINGS SUMMARY

In addition to increasing production, we plan to pull forward Pioneer's Net Zero ambition by 15 years, from 2050 to 2035.

Pioneer Natural Resources Merger" of the Condensed Consolidated Financial Statements for additional information.

Selected Earnings Factor Definitions

The earnings factors have been updated to provide additional visibility into drivers of our business results starting this first quarter of 2024.

The company evaluates these factors periodically to determine if any enhancements may provide helpful insights to the market.

Listed below are descriptions of the earnings factors:

Advantaged Volume Growth.

Earnings impacts from change in volume/mix from advantaged assets, strategic projects, and high-value products.

• Advantaged Assets (Advantaged growth projects).

Includes Permian, Guyana, Brazil, and LNG.

• Strategic Projects.

Includes (i) the following completed projects:

Rotterdam Hydrocracker, Corpus Christi Chemical Complex, Baton Rouge Polypropylene, Beaumont Crude Expansion, Baytown Chemical Expansion, Permian Crude Venture, and the 2022 Baytown advanced recycling facility;

and (ii) the following projects still to be completed:

Fawley Hydrofiner, China Chemical Complex, Singapore Resid Upgrade, Strathcona Renewable Diesel, Proxxima Venture TM , USGC Reconfiguration, additional advanced recycling projects under evaluation worldwide, and additional projects in plan yet to be publicly announced.

• High-Value Products.

Includes performance products and lower-emission fuels.

Performance products (performance chemicals, performance lubricants) refers to products that provide differentiated performance for multiple applications through enhanced properties versus commodity alternatives and bring significant additional value to customers and end-users.

Lower-emission fuels refers to fuels with lower life cycle emissions than conventional transportation fuels for gasoline, diesel and jet transport.

Includes all volume/mix factors not included in Advantaged Volume Growth defined above.

Structural Cost Savings.

After-tax earnings effect of Structural Cost Savings as defined on page 19, including cash operating expenses related to divestments that were previously in the "volume/mix" factor.

Includes all expenses otherwise not included in other earnings factors.

Timing Effects.

Timing effects are primarily related to unsettled derivatives (mark-to-market) and other earnings impacts driven by timing differences between the settlement of derivatives and their offsetting physical commodity realizations (due to LIFO inventory accounting).

Earnings (loss) excluding Identified Items

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.

The earnings (loss) impact of an Identified Item for an individual segment in a given quarter 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.

3 unchanged sentences

Three Months Ended

September 30, 2023 Upstream Energy Products Chemical Products Specialty Products Corporate and Financing Total

March 31, 2024 Upstream Energy Products Chemical Products Specialty Products Corporate and Financing Total

(millions of dollars) U.S.

1 unchanged sentence

1,054 4,606 836 540 504 281 404 357 (362) 8,220

Identified Items

Tax-related items — (14) — (33) — — — — — (47)

Total Identified Items — — — — — — — — — —

Earnings (loss) excluding Identified Items (Non-GAAP)

1 unchanged sentence

Three Months Ended

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

(millions of dollars) U.S.

Earnings (loss) (U.S.

3,110 9,309 3,008 2,811 635 177 306 456 (152) 19,660

Identified Items

Impairments — (697) — — — — — — — (697)

Gain/(loss) on sale of assets — 587 — — — — — — — 587

Tax-related items — — — — — — — — 324 324

Other — 688 — — — — — — 76 764

Earnings (loss) excluding Identified Items (Non-GAAP)

3,110 8,731 3,008 2,811 635 177 306 456 (552) 18,682

Nine Months Ended

September 30, 2023 Upstream Energy Products Chemical Products Specialty Products Corporate and Financing Total

(millions of dollars) U.S.

Earnings (loss) (U.S.

4,118 13,041 4,794 4,141 1,148 300 1,150 914 (1,226) 28,380

Identified Items

Tax-related items — (184) — (45) — — — — — (229)

Earnings (loss) excluding Identified Items (Non-GAAP)

4,118 13,225 4,794 4,186 1,148 300 1,150 914 (1,226) 28,609

Nine Months Ended

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

March 31, 2023 Upstream Energy Products Chemical Products Specialty Products Corporate and Financing Total

(millions of dollars) U.S.

2 unchanged sentences

Identified Items

Impairments — (3,574) — — — — — — (98) (3,672)

Gain/(loss) on sale of assets 299 587 — — — — — — — 886

Tax-related items — (158) — (30) — — — — — (188)

Other — 310 — — — — — — 76 386

Earnings (loss) excluding Identified Items (Non-GAAP)

6 unchanged sentences

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

REVIEW OF THIRD QUARTER 2023 RESULTS

ExxonMobil’s third-quarter 2023 earnings were $9.1 billion, or $2.25 per share assuming dilution, compared with earnings of $19.7 billion a year earlier.

The decrease in earnings was driven by lower crude and natural gas prices, and declining industry refining and chemical margins.

Capital and exploration expenditures were $6.0 billion, up $0.3 billion from third quarter 2022.

Earnings for the first nine months of 2023 were $28.4 billion, or $6.98 per diluted share, compared with $43.0 billion a year earlier.

Capital and exploration expenditures were $18.6 billion, up $3.3 billion from 2022.

The Corporation distributed $11.1 billion in dividends to shareholders and repurchased $13.1 billion of common stock.

Structural Cost Savings

Structural Cost Savings describes decreases in cash opex excluding energy and production taxes as a result of operational efficiencies, workforce reductions, divestment-related reductions, and other cost-savings measures that are expected to be sustainable compared to 2019 levels.

Relative to 2019, estimated cumulative Structural Cost Savings totaled $10.1 billion, which included an additional $0.4 billion in the first three months of 2024.

The total change between periods in expenses below will reflect both Structural Cost Savings and other changes in spend, including market factors, such as inflation and foreign exchange impacts, as well as changes in activity levels and costs associated with new operations.

Estimates of cumulative annual structural savings may be revised depending on whether cost reductions realized in prior periods are determined to be sustainable compared to 2019 levels.

Structural Cost Savings are stewarded internally to support management's oversight of spending over time.

This measure is useful for investors to understand the Corporation's efforts to optimize spending through disciplined expense management.

Dollars in billions (unless otherwise noted) Twelve Months

Ended December 31, Three Months

Ended March 31,

2019 2023 2023 2024

Components of Operating Costs

From ExxonMobil’s Consolidated Statement of Income

Production and manufacturing expenses 36.8 36.9 9.4 9.1

Selling, general and administrative expenses 11.4 9.9 2.4 2.5

Depreciation and depletion (includes impairments) 19.0 20.6 4.2 4.8

Exploration expenses, including dry holes 1.3 0.8 0.1 0.1

Non-service pension and postretirement benefit expense 1.2 0.7 0.2 —

Subtotal 69.7 68.9 16.4 16.5

ExxonMobil’s share of equity company expenses (non-GAAP) 9.1 10.5 2.7 2.4

Total Adjusted Operating Costs (non-GAAP) 78.8 79.4 19.1 18.9

Depreciation and depletion (includes impairments) 19.0 20.6 4.2 4.8

Non-service pension and postretirement benefit expense 1.2 0.7 0.2 —

Other adjustments (includes equity company depreciation

and depletion) 3.6 3.7 0.8 0.9

Total Cash Operating Expenses (Cash Opex) (non-GAAP) 55.0 54.4 13.9 13.2

Energy and production taxes (non-GAAP) 11.0 14.9 4.3 3.4

Total Cash Operating Expenses (Cash Opex) excluding Energy and Production Taxes (non-GAAP) 44.0 39.5 9.6 9.8

2023 Estimated Cumulative vs

Total Cash Operating Expenses (Cash Opex) excluding Energy and Production Taxes (non-GAAP) -4.5 +0.2

Market +3.6 +0.1

Activity/Other +1.6 +0.5

Structural Cost Savings -9.7 -0.4 -10.1

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

REVIEW OF FIRST QUARTER 2024 RESULTS

ExxonMobil’s first-quarter 2024 earnings were $8.2 billion, or $2.06 per share assuming dilution, compared with earnings of $11.4 billion a year earlier.

The decrease in earnings was mainly driven by declining industry refining margins and lower natural gas prices.

Capital and exploration expenditures were $5.8 billion, down $0.5 billion from first quarter 2023.

Upstream Financial Results

(millions of dollars) Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Earnings (loss) (U.S.

United States 1,054 1,632

4,559 9,309 13,041 19,043

Total 5,660 6,457

1 unchanged sentence

United States — —

(14) 578 (184) (2,677)

Total — (158)

1 unchanged sentence

United States 1,054 1,632

4,573 8,731 13,225 21,720

Total 5,660 6,615

Upstream Third Quarter Earnings Factor Analysis

(millions of dollars)

Price – Price impacts decreased earnings by $5,690 million, driven by a 59% decrease in average natural gas realizations and a 14% decrease in average crude 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 increased earnings by $140 million.

Identified Items (1) – 3Q 2022 $578 million gain on the sale of Romania and XTO Energy Canada assets and one-time benefits from tax and other reserve adjustments, partly offset by impairments.

3Q 2023 $(14) million loss driven by additional European taxes.

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

Upstream Year-to-Date Earnings Factor Analysis

(1) Refer to page 18 for definition of Identified Items and earnings (loss) excluding Identified Items.

Upstream First Quarter Earnings Factor Analysis

(millions of dollars)

Price – Price impacts decreased earnings by $13,850 million, driven by a 40% decrease in average natural gas realizations and a 24% decrease in average realizations for crude oil.

Volume/Mix – Favorable volume and mix effects increased earnings by $420 million, driven by higher production from our advantaged projects in Guyana and the Permian.

Other – All other items increased earnings by $120 million, largely due to the absence of divestment-related impairments.

Identified Items (1) – 2022 $(2,378) million loss as a result of the Russia expropriation, partly offset by gains on the sale of the U.S.

Barnett Shale, Romania, and XTO Energy Canada assets and one-time benefits from tax and other reserve adjustments.

2023 $(184) million loss driven by additional European taxes.

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

Price – Price impacts decreased earnings by $820 million, driven by a 32% decrease in natural gas realizations, partially offset by a 4% increase in liquids realizations.

Advantaged Volume Growth – Higher volumes from advantaged assets increased earnings by $430 million, mainly driven by Guyana liquids growth.

Base Volume – Lower base volumes decreased earnings by $400 million, mainly driven by divestments, government-mandated curtailments, and unfavorable entitlement effects.

Structural Cost Savings – Increased earnings by $90 million.

Expenses – Higher expenses, primarily from depreciation, decreased earnings by $160 million.

Other – Other items decreased earnings by $470 million, reflecting other primarily non-cash impacts from tax and inventory adjustments as well as divestments.

Timing Effects – Less unfavorable timing effects from derivatives mark-to-market impacts increased earnings by $370 million.

Identified Items (1) – 1Q 2023 $(158) million loss driven by additional European taxes.

(1) Refer to page 18 for definition of Identified Items and earnings (loss) excluding Identified Items.

Upstream Operational Results

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net production of crude oil, natural gas liquids, bitumen and synthetic oil

2 unchanged sentences

Canada/Other Americas 772 670

Europe 4 4 4 4

Africa 224 220

Asia 713 666 721 698

Australia/Oceania 30 32

11 unchanged sentences

(thousands of oil-equivalent barrels daily)

3,688 3,716 3,709 3,708

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

1 unchanged sentence

(thousands of barrels daily) Three Months Ended

September 30 Nine Months Ended

Volumes reconciliation (Oil-equivalent production) (1)

2022 3,716 3,708

Entitlements - Net Interest —

3 unchanged sentences

Growth / Other 77

2023 3,688 3,709

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

3.7 million oil-equivalent barrels per day in 3Q 2023 decreased 28 thousand oil-equivalent barrels per day from 3Q 2022.

Excluding the impacts from entitlements, divestments, and higher government-mandated curtailments, net production grew by 79 thousand oil-equivalent barrels per day driven by Permian and Guyana.

3.7 million oil-equivalent barrels per day in 2023 increased 1 thousand oil-equivalent barrels per day from 2022.

Excluding the impacts from entitlements, Russia expropriation, divestments, and higher government-mandated curtailments, net production grew by 125 thousand oil-equivalent barrels per day driven by Permian and Guyana.

1Q 2024 production of 3.8 million oil-equivalent barrels per day decreased 47 thousand oil-equivalent barrels per day from 1Q 2023.

Excluding the impacts from entitlements, divestments, and higher government-mandated curtailments, net production grew by 77 thousand oil-equivalent barrels per day, mainly driven by Guyana.

Listed below are descriptions of ExxonMobil’s volumes reconciliation factors which are provided to facilitate understanding of the terms.

15 unchanged sentences

(millions of dollars) Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Earnings (loss) (U.S.

United States 836 1,910

1,086 2,811 4,141 4,744

Total 1,376 4,183

1 unchanged sentence

United States — —

(33) — (45) —

Total (33) — (45) —

Earnings (loss) excluding Identified Items (1) (Non-GAAP)

United States 836 1,910

1,119 2,811 4,186 4,744

Total 1,376 4,213

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

Energy Products Third Quarter Earnings Factor Analysis

Energy Products First Quarter Earnings Factor Analysis

(millions of dollars)

Margins – Weaker industry refining margins and trading-related impacts, including negative derivative mark-to-market effects and other timing effects that were largely non-cash, which were impacted by rising prices in the quarter compared to declining prices in the third quarter last year, decreased earnings by $2,970 million.

Volume/Mix – Volume and mix decreased earnings by $50 million, primarily driven by planned maintenance.

Other – All other items decreased earnings by $320 million, mainly related to unfavorable foreign exchange impacts and higher maintenance expenses.

Margin – Margins decreased earnings by $2,000 million driven by weaker industry refining margins.

Advantaged Volume Growth – Higher volumes from advantaged assets increased earnings by $140 million, primarily driven by the Beaumont refinery expansion.

Base Volume – Lower base volumes decreased earnings by $210 million, on divestment of three refining assets (Billings, Sriracha, and Trecate).

Structural Cost Savings – Increased earnings by $140 million.

Expenses – Higher expenses decreased earnings by $290 million, on higher scheduled maintenance and turnaround activity.

Other – All other items increased earnings by $40 million.

Timing Effects – Unfavorable timing effects from derivatives mark-to-market impacts decreased earnings by $660 million.

Identified Items (1) – 1Q 2023 $(30) million loss related to additional European taxes.

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

Energy Products Year-to-Date Earnings Factor Analysis

(millions of dollars)

Margins – Weaker industry refining margins and unfavorable derivative mark-to-market impacts offset by favorable other timing effects, mostly of a non-cash nature, decreased earnings by $1,490 million.

Volume/Mix – Favorable volume and mix effects increased earnings by $130 million, mainly driven by start-up of the Beaumont refinery expansion, partially offset by higher scheduled maintenance.

Other – All other items decreased earnings by $560 million, primarily due to higher project and maintenance expenses.

Identified Items (1) – 2023 $(45) million loss from additional European taxes.

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

(1) Refer to page 18 for definition of Identified Items and earnings (loss) excluding Identified Items.

Energy Products Operational Results

(thousands of barrels daily) Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Refinery throughput

7 unchanged sentences

United States 2,576 2,459

2,925 3,058 2,887 2,922

Worldwide 5,232 5,277

5 unchanged sentences

(1) 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.

CHEMICAL PRODUCTS

1 unchanged sentence

(millions of dollars) Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Earnings (loss) (U.S.

United States 504 324

(89) 177 300 1,263

Total 785 371

1 unchanged sentence

United States 504 324

(89) 177 300 1,263

Total 785 371

(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 Third Quarter Earnings Factor Analysis

(millions of dollars)

Margins – Weaker industry margins decreased earnings by $480 million.

Volume/Mix – Improved volume and mix effects, primarily from the growth of performance chemicals, increased earnings by $140 million.

Other – All other items decreased earnings by $220 million, primarily due to the absence of favorable tax items.

Chemical Products Year-to-Date Earnings Factor Analysis

(1) Refer to page 18 for definition of Identified Items and earnings (loss) excluding Identified Items.

Chemical Products First Quarter Earnings Factor Analysis

(millions of dollars)

Margins – Weaker industry margins decreased earnings by $1,060 million.

Volume/Mix – Lower sales decreased earnings by $370 million, reflecting softer demand.

Other – All other items decreased earnings by $420 million, primarily driven by higher project and planned maintenance expenses.

Margin – Increased North America feed advantage from lower natural gas prices and higher margins from performance chemicals realizations, more than offset industry margin decline, increasing earnings by $200 million.

Advantaged Volume Growth – Additional high-value product volumes increased earnings by $40 million.

Base Volume – Higher base volumes increased earnings by $160 million, primarily driven by strong reliability and absence of turnarounds.

Structural Cost Savings – Increased earnings by $20 million.

Expenses – Lower turnaround expenses increased earnings by $10 million.

Other – All other items decreased earnings by $20 million.

Chemical Products Operational Results

(thousands of metric tons) Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Chemical Products sales (2)

United States 1,847 1,561

3,358 3,023 9,570 8,821

Worldwide 5,054 4,649

3 unchanged sentences

(millions of dollars) Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Earnings (loss) (U.S.

United States 404 451

293 456 914 871

Total 761 774

1 unchanged sentence

United States 404 451

293 456 914 871

Total 761 774

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

Specialty Products Third Quarter Earnings Factor Analysis

(millions of dollars)

Margins – Weaker basestocks margins more than offset stronger finished lubes margins, decreasing earnings by $120 million.

Volume/Mix – Lower sales decreased earnings by $20 million.

Specialty Products Year-to-Date Earnings Factor Analysis

(1) Refer to page 18 for definition of Identified Items and earnings (loss) excluding Identified Items.

Specialty Products First Quarter Earnings Factor Analysis

(millions of dollars)

Margins – Stronger finished lubes margins drove increased earnings of $620 million, primarily related to lower feed costs.

Volume/Mix – Lower specialty products sales decreased earnings by $130 million, reflecting weaker demand.

Other – All other items decreased earnings by $80 million, mainly unfavorable foreign exchange impacts.

Margin – Stronger finished lubes margins due to lower feed costs more than offset weaker basestock margins, increasing earnings by $30 million.

Base Volume – Unfavorable volume/mix effects decreased earnings by $20 million.

Structural Cost Savings – Increased earnings by $20 million.

Expenses – Higher expenses decreased earnings by $40 million.

Specialty Products Operational Results

(thousands of metric tons) Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Specialty Products sales (2)

United States 495 476

1,414 1,434 4,268 4,430

Worldwide 1,959 1,940

(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.

CORPORATE AND FINANCING

1 unchanged sentence

(millions of dollars) Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Earnings (loss) (U.S.

GAAP) (362) (355)

Identified Items (2)

Earnings (loss) excluding Identified Items (1) (Non-GAAP)

(365) (552) (1,226) (1,434)

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

Corporate and Financing expenses were $365 million for the third quarter of 2023, $213 million higher than the third quarter of 2022, primarily due to the absence of favorable tax items, partly offset by lower financing costs.

Corporate and Financing expenses were $1,226 million for the first nine months of 2023, $94 million higher than 2022, primarily due to the absence of favorable tax items, partly offset by lower financing costs.

(1) Refer to page 18 for definition of Identified Items and earnings (loss) excluding Identified Items.

Corporate and Financing expenses were $362 million for the first quarter of 2024, $7 million higher than the first quarter of 2023.

LIQUIDITY AND CAPITAL RESOURCES

(millions of dollars) Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net cash provided by/(used in)

12 unchanged sentences

Because of the ongoing nature of our asset management and divestment program, we believe it is useful for investors to consider proceeds associated with asset sales together with cash provided by operating activities when evaluating cash available for investment in the business and financing activities, including shareholder distributions.

Cash flow from operations and asset sales in the third quarter of 2023 was $16.9 billion, a decrease of $10.2 billion from the comparable 2022 period primarily reflecting lower earnings.

Cash provided by operating activities totaled $41.7 billion for the first nine months of 2023, $17.5 billion lower than 2022.

Cash flow from operations and asset sales in the first quarter of 2024 was $15.4 billion, a decrease of $1.8 billion from the comparable 2023 period primarily reflecting lower earnings.

Cash provided by operating activities totaled $14.7 billion for the first three months of 2024, $1.7 billion lower than 2023.

Net income including noncontrolling interests was $8.6 billion, a decrease of $3.3 billion from the prior year period.

The adjustment for the noncash provision of $12.9 billion for depreciation and depletion was down $6.1 billion from 2022.

Changes in operational working capital were a reduction of $2.1 billion during the period.

All other items net increased cash flows by $1.5 billion in 2023 versus a reduction of $4.3 billion in 2022.

The adjustment for the noncash provision of $4.8 billion for depreciation and depletion was up $0.6 billion from 2023.

Changes in operational working capital were a contribution of $2.0 billion during the period.

All other items net decreased cash flows by $0.7 billion in 2024 versus a contribution of $0.6 billion in 2023.

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

Investing activities for the first nine months of 2023 used net cash of $13.6 billion, an increase of $4.2 billion compared to the prior year.

Spending for additions to property, plant and equipment of $15.7 billion was $3.1 billion higher than 2022.

Investing activities for the first three months of 2024 used net cash of $4.6 billion, a decrease of $0.3 billion compared to the prior year.

Spending for additions to property, plant and equipment of $5.1 billion was $0.3 billion lower than 2023.

Proceeds from asset sales were $0.7 billion, a decrease of $0.2 billion compared to the prior year.

Net investments and advances increased $0.3 billion to $0.9 billion.

Net cash used in financing activities was $24.7 billion in the first nine months of 2023, including $13.1 billion for the purchase of 119.4 million shares of ExxonMobil stock, as part of the previously announced buyback program.

Net investments and advances decreased $0.2 billion from $0.4 billion in 2023.

Net cash used in financing activities was $8.0 billion in the first three months of 2024, including $3.0 billion for the purchase of 27.5 million shares of ExxonMobil stock, as part of the previously announced buyback program.

This compares to net cash used in financing activities of $8.5 billion in the prior year.

Total debt at the end of the third quarter of 2023 was $41.3 billion compared to $41.2 billion at year-end 2022.

The Corporation's debt to total capital ratio was 16.6 percent at the end of the third quarter of 2023 compared to 16.9 percent at year-end 2022.

The net debt to capital ratio was 3.8 percent at the end of the third quarter, an decrease of 1.6 percentage points from year-end 2022.

Total debt at the end of the first quarter of 2024 was $40.4 billion compared to $41.6 billion at year-end 2023.

The Corporation's debt to total capital ratio was 16.0 percent at the end of the first quarter of 2024 compared to 16.4 percent at year-end 2023.

The net debt to capital ratio was 3.2 percent at the end of the first quarter, a decrease of 1.3 percentage points from year-end 2023.

The Corporation's capital allocation priorities are investing in competitively advantaged, high-return projects;

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and sharing our success with our shareholders through more consistent share repurchases and a growing dividend.

The Corporation distributed a total of $11.1 billion to shareholders in the first nine months of 2023 through dividends.

The Corporation distributed a total of $3.8 billion to shareholders in the first three months of 2024 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 $0.8 billion as of third quarter 2023.

The Corporation had undrawn short-term committed lines of credit of $0.3 billion and undrawn long-term committed lines of credit of $1.9 billion as of first quarter 2024.

The Corporation, as part of its ongoing asset management program, continues to evaluate its mix of assets for potential upgrade.

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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.

Key criteria for evaluating acquisitions include strategic fit, cost synergies, potential for future growth, low cost of supply, and attractive valuations.

Acquisitions may be made with cash, shares of the Corporation’s common stock, or both.

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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 the third quarter of 2023, the Corporation has entered into various long-term agreements with an estimated total obligation of approximately $6.9 billion.

As of September 30, undiscounted commitments for leases not yet commenced totaled $4.1 billion for operating leases and $2.2 billion for finance leases.

Through the first quarter of 2024, the Corporation entered into two long-term purchase agreements with an estimated total obligation of approximately $3.0 billion.

(millions of dollars) Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Income taxes 3,803 4,960

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Total other taxes and duties (1)

8,460 7,473 24,883 23,701

Total 10,963 13,055

(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 $12.8 billion for the third quarter of 2023, an increase of $0.1 billion from 2022.

Income tax expense was $4.4 billion compared to $5.2 billion in the prior year reflecting lower commodity prices.

The effective income tax rate of 34 percent increased from the 29 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 $1.0 billion to $8.5 billion.

Total taxes were $37.7 billion for the first nine months of 2023, a decrease of $0.4 billion from 2022.

Income tax expense decreased by $1.6 billion to $12.8 billion reflecting lower commodity prices.

The effective income tax rate of 34 percent was up compared to 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 $1.2 billion to $24.9 billion.

Total taxes were $11.0 billion for the first quarter of 2024, a decrease of $2.1 billion from 2023.

Income tax expense was $3.8 billion compared to $5.0 billion in the prior year.

The effective income tax rate, which is calculated based on consolidated company income taxes and Exxonmobil's share of equity company income taxes, was 36 percent.

This increased from the 34 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 decreased by $0.9 billion to $7.2 billion.

CAPITAL AND EXPLORATION EXPENDITURES

(millions of dollars) Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Upstream (including exploration expenses) 4,582 4,581

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Total 5,839 6,380

Capital and exploration expenditures in the third quarter of 2023 were $6.0 billion, up 5% from the third quarter of 2022.

Capital and exploration expenditures in the first nine months of 2023 were $18.6 billion, up 22% from the first nine months of 2022.

The Corporation expects 2023 capital spending to finish the year at the top end of the guidance of $23 billion to $25 billion.

Capital and exploration expenditures in the first quarter of 2024 were $5.8 billion, down 8% from the first quarter of 2023.

The Corporation plans to invest in the range of $23 billion to $25 billion in 2024.

Actual spending could vary depending on the progress of individual projects and property acquisitions.

IMPORTANT INFORMATION ABOUT THE PIONEER TRANSACTION AND DENBURY TRANSACTION AND WHERE TO FIND IT

In connection with the proposed transaction between Exxon Mobil Corporation (“ExxonMobil”) and Pioneer Natural Resources Company (“Pioneer”) (the “Pioneer Transaction”), ExxonMobil and Pioneer 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 Pioneer that also constitutes a prospectus of ExxonMobil.

A definitive proxy statement/prospectus will be mailed to stockholders of Pioneer.

In connection with the proposed transaction between ExxonMobil and Denbury Inc.

(“Denbury”) (the “Denbury Transaction”), ExxonMobil and Denbury have filed and will file relevant materials with the SEC.

On August 29, 2023, ExxonMobil filed with the SEC a registration statement on Form S-4, as amended (No.

333-274252) to register the shares of ExxonMobil common stock to be issued in connection with the Denbury Transaction.

The registration statement, which was declared effective by the SEC on September 29, 2023, includes a definitive proxy statement of Denbury that also constitutes a prospectus of ExxonMobil.

Such definitive proxy statement/prospectus was mailed to the stockholders of Denbury on September 29, 2023.

This communication is not a substitute for the registration statement, proxy statement or prospectus or any other document that ExxonMobil, Pioneer or Denbury (as applicable) has filed or may file with the SEC in connection with the Pioneer Transaction or the Denbury Transaction (as applicable).

BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS AND SECURITY HOLDERS OF EXXONMOBIL, PIONEER AND DENBURY ARE URGED TO READ THE APPLICABLE REGISTRATION STATEMENT, THE APPLICABLE 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 (AS APPLICABLE), CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PIONEER TRANSACTION OR THE DENBURY TRANSACTION (AS APPLICABLE) AND RELATED MATTERS.

Investors and security holders may obtain free copies of the applicable registration statement and the proxy statement/prospectus (in the case of the Pioneer Transaction, when they become available), as well as other filings containing important information about ExxonMobil, Pioneer or Denbury, without charge at the SEC’s Internet website (http://www.sec.gov).

Copies of the documents filed with the SEC by ExxonMobil are and will be available free of charge under the tab “SEC Filings” on the “Investors” page of ExxonMobil’s internet website at www.exxonmobil.com or by contacting ExxonMobil’s Investor Relations Department at investor.relations@exxonmobil.com.

Copies of the documents filed with the SEC by Pioneer are and will be available free of charge on Pioneer’s internet website at https://investors.pxd.com/investors/financials/sec-filings/.

Copies of the documents filed with the SEC by Denbury are and 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.

(972) 673-2000 or by contacting Denbury’s Investor Relations Department at IR@denbury.com.

The information included on, or accessible through, ExxonMobil’s, Pioneer’s or Denbury’s website is not incorporated by reference into this communication.

Participants in the Solicitation

ExxonMobil, Pioneer, 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 Pioneer Transaction or the Denbury Transaction (as applicable).

Information about the directors and executive officers of Pioneer is set forth in its proxy statement for its 2023 annual meeting of stockholders, which was filed with the SEC on April 13, 2023, in its Form 10-K for the year ended December 31, 2022, which was filed with the SEC on February 23, 2023, in its Form 8-K filed on May 30, 2023, in its Form 8-K filed on April 26, 2023 and in its Form 8-K filed on February 13, 2023.

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, in its Form 10-K for the year ended December 31, 2022, which was filed with the SEC on February 22, 2023, in its Form 8-K filed on June 6, 2023 and in its Form 8-K filed on February 24, 2023.

Additional information regarding the participants in the proxy solicitations and a description of their direct or indirect interests, by security holdings or otherwise, is (or, in the case of the Pioneer Transaction, will be) contained in the applicable proxy statement/prospectus and will be contained in 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.

FORWARD-LOOKING STATEMENTS

Statements related to outlooks;

Statements related to future events;

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 report, are forward-looking statements.

Similarly, discussion of future carbon capture, transportation and storage, as well as biofuel, hydrogen, and other plans to reduce emissions of ExxonMobil, its affiliates or companies it is seeking to acquire, are dependent on future market factors, such as continued technological progress, policy support and timely rule-making and permitting, and represent forward-looking statements.

and other statements of future events or conditions, are forward-looking statements.

Similarly, discussion of roadmaps or future plans related to carbon capture, transportation and storage, biofuel, hydrogen, direct air capture, and other future plans to reduce emissions and emission intensity of ExxonMobil, its affiliates, companies it is seeking to acquire and third parties 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, including completion of the Denbury acquisition and produced biofuels;

changes in law, taxes, or regulation including environmental and tax 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;

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

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

realization and maintenance of structural cost reductions and efficiency gains, including the ability to offset inflationary pressure;

plans to reduce future emissions and emissions intensity, including ambitions to reach Scope 1 and Scope 2 net zero from operated assets by 2050, to reach Scope 1 and 2 net zero in Upstream Permian Basin unconventional operated assets by 2030 and in Pioneer assets by 2035, to eliminate routine flaring in-line with World Bank Zero Routine Flaring, and to reach near-zero methane emissions from operated assets and other methane initiatives;

meeting ExxonMobil’s divestment and start-up plans, and associated project plans as well as technology advances, including the timing and outcome of projects to capture, transport and store CO2, produce hydrogen, produce biofuels, produce lithium, create new advanced carbon materials, and use plastic waste as a feedstock for advanced recycling;

timely granting of governmental permits and certifications;

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.

business and project plans, timing, costs, capacities and profitability;

resource recoveries and production rates;

and planned Denbury and Pioneer integrated benefits 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;

changes in law, regulations, taxes, trade sanctions, or policies, such as government policies supporting lower carbon and new market investment opportunities such as the U.S.

Inflation Reduction Act and the ability for projects to qualify for the financial incentives available thereunder, the punitive European taxes on the oil and gas sector and unequal support for different technological methods of emissions reduction or evolving, ambiguous and unharmonized standards imposed by various jurisdictions related to sustainability and GHG reporting;

variable impacts of trading activities on our margins and results each quarter;

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the outcome of commercial negotiations, including final agreed terms and conditions;

the ability to access debt markets;

the ultimate impacts of public health crises, including the effects of government responses on people and economies;

the ability to access debt markets on favorable terms or at all;

the occurrence, pace, rate of recovery and effects of public health crises, including the response from governments;

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

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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 regulation of our growth opportunities;

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;

final management approval of future projects and any changes in the scope, terms, costs or assumptions of such projects as approved;

the actions of government or other actors against our core business activities and acquisitions, divestitures or financing opportunities;

war, civil unrest, attacks against the company or industry, and other geopolitical or security disturbances, including disruption of land or sea transportation routes;

expropriations, seizure, or capacity, insurance, shipping or export limitations imposed by governments or laws;

opportunities for potential acquisitions, investments or divestments and satisfaction of applicable conditions to closing, including timely regulatory approvals;

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Risk Factors" of ExxonMobil’s 2023 Form 10-K.

Actions needed to advance ExxonMobil’s 2030 greenhouse gas emission-reductions plans are incorporated into its medium-term business plans, which are updated annually.

The reference case for planning beyond 2030 is based on the Company’s Energy Outlook research and publication.

The Outlook is reflective of the existing global policy environment.

The Energy Outlook does not attempt to project the degree of required future policy and technology advancement and deployment for the world, or ExxonMobil, to meet net zero by 2050.

As future policies and technology advancements emerge, they will be incorporated into the Outlook, and the Company’s business plans will be updated accordingly.

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

In addition, historical, current, and forward-looking environmental and other 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 report is provided under consistent SEC disclosure requirements and should not be misinterpreted as applying to any other disclosure standards.

Energy demand models are forward-looking by nature and aim to replicate system dynamics of the global energy system, requiring simplifications.

The reference to any scenario in this report, including any potential net-zero scenarios, does not imply ExxonMobil views any particular scenario as likely to occur.

In addition, energy demand scenarios require assumptions on a variety of parameters.

As such, the outcome of any given scenario using an energy demand model comes with a high degree of uncertainty.

Third-party scenarios discussed in this report reflect the modeling assumptions and outputs of their respective authors, not ExxonMobil, and their use by ExxonMobil is not an endorsement by ExxonMobil of their underlying assumptions, likelihood or probability.

Investment decisions are made on the basis of ExxonMobil’s separate planning process.

Any use of the modeling of a third-party organization within this report does not constitute or imply an endorsement by ExxonMobil of any or all of the positions or activities of such organization.

Actions needed to advance ExxonMobil’s 2030 greenhouse gas emission-reductions plans are incorporated into its medium-term business plans, which are updated annually.

The reference case for planning beyond 2030 is based on ExxonMobil’s Global Outlook (Outlook) research and publication.

The Outlook is reflective of the existing global policy environment and an assumption of increasing policy stringency and technology improvement to 2050.

However, the Outlook does not attempt to project the degree of required future policy and technology advancement and deployment for the world, or ExxonMobil, to meet net zero by 2050.

As future policies and technology advancements emerge, they will be incorporated into the Outlook, and ExxonMobil’s business plans will be updated accordingly.

References to projects or opportunities may not reflect investment decisions made by ExxonMobil or its affiliates.

Individual projects or opportunities may advance based on a number of factors, including availability of supportive policy, permitting, technological advancement for cost-effective abatement, insights from the company planning process, and alignment with our partners and other stakeholders.

Capital investment guidance in lower-emission investments is based on our corporate plan;

however, actual investment levels will be subject to the availability of the opportunity set, public policy support, and focused on returns.

The term “project” as used in this report can refer to a variety of different activities and does not necessarily have the same meaning as in any government payment transparency reports.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information about market risks for the nine months ended September 30, 2023, does not differ materially from that discussed under Item 7A of the registrant's Annual Report on Form 10-K for 2022.

Information about market risks for the three months ended March 31, 2024, does not differ materially from that discussed under Item 7A of the registrant's Annual Report on Form 10-K for 2023.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis