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Item 2. Management’s Discussion and Analysis

2024-08-05 compared with 2024-04-29 · 191 added, 80 removed, 317 unchanged (46% of the section changed)

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

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.

Second quarter crude prices were essentially unchanged versus the first quarter, near the middle of the 10-year historical range (2010-2019), as the market remains relatively balanced.

Natural gas prices declined due to lower demand from milder weather, though remained toward the middle of the 10-year range.

Industry refining margins declined from the top of the 10-year range to the lower half of the range, as increased supply more than met record global demand in the second quarter.

Chemical margins showed a slight improvement compared to the first quarter of 2024, although margins remained at bottom-of-cycle conditions and well below the 10-year range, as capacity additions outpaced demand growth.

Recent Mergers and Acquisitions

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.

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

On May 3, 2024, ExxonMobil acquired Pioneer Natural Resources Company (Pioneer), an independent oil and gas exploration and production company.

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 updated earnings factors introduced in the first quarter 2024 provide additional visibility into drivers of our business results.

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

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• Advantaged Assets (Advantaged growth projects).

Includes Permian, Guyana, Brazil, and LNG.

Includes Permian (heritage Permian (1) and Pioneer), Guyana, Brazil, and LNG.

• Strategic Projects.

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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.

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

• High-Value Products.

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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).

(1) Heritage Permian basin assets exclude assets acquired as part of the acquisition of Pioneer that closed May 3, 2024.

Earnings (loss) excluding Identified Items

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Three Months Ended

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

June 30, 2024 Upstream Energy Products Chemical Products Specialty Products Corporate and Financing Total

(millions of dollars) U.S.

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2,430 4,644 450 496 526 253 447 304 (310) 9,240

Identified Items

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

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Three Months Ended

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

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

(millions of dollars) U.S.

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920 3,669 1,528 764 486 342 373 298 (506) 7,874

Six Months Ended

June 30, 2024 Upstream Energy Products Chemical Products Specialty Products Corporate and Financing Total

(millions of dollars) U.S.

Earnings (loss) (U.S.

3,484 9,250 1,286 1,036 1,030 534 851 661 (672) 17,460

Identified Items

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

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

3,484 9,250 1,286 1,036 1,030 534 851 661 (672) 17,460

Six Months Ended

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

(millions of dollars) U.S.

Earnings (loss) (U.S.

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

References in this discussion to Corporate earnings (loss) mean net income (loss) attributable to ExxonMobil (U.S.

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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.

Relative to 2019, estimated cumulative Structural Cost Savings totaled $10.7 billion, which included an additional $1.0 billion in the first six months of 2024.

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.

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Dollars in billions (unless otherwise noted) Twelve Months

Ended December 31, Three Months

Ended March 31,

Ended December 31, Six Months

Ended June 30,

2019 2023 2023 2024

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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.

REVIEW OF SECOND QUARTER 2024 RESULTS

ExxonMobil’s second quarter 2024 earnings were $9.2 billion, or $2.14 per share assuming dilution, compared with earnings of $7.9 billion a year earlier.

The increase in earnings was mainly driven by improved realizations and increased volumes for advantaged Upstream investments in the Permian and Guyana, partially offset by weaker industry refining margins and higher scheduled maintenance.

Capital and exploration expenditures were $7.0 billion, up $0.9 billion from second quarter 2023.

Earnings for the first six months of 2024 were $17.5 billion, or $4.20 per diluted share, compared with $19.3 billion a year earlier.

Capital and exploration expenditures were $12.9 billion, up $0.3 billion from the first six months of 2023.

The Corporation distributed $8.1 billion in dividends to shareholders and repurchased $8.3 billion of common stock.

Upstream Financial Results

(millions of dollars) Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Earnings (loss) (U.S.

United States 2,430 920 3,484 2,552

4,644 3,657 9,250 8,482

Total 7,074 4,577 12,734 11,034

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United States — — — —

— (12) — (170)

Total — (12) — (170)

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United States 2,430 920 3,484 2,552

4,644 3,669 9,250 8,652

Total 7,074 4,589 12,734 11,204

(1) Refer to page 20 for definition of Identified Items and earnings (loss) excluding Identified Items.

Upstream First Quarter Earnings Factor Analysis

Upstream Second Quarter Earnings Factor Analysis

(millions of dollars)

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.

Price – Price impacts increased earnings by $1,370 million, driven by an increase in liquids realizations, partly offset by a decrease in natural gas realizations.

Advantaged Volume Growth – Higher volumes from advantaged assets increased earnings by $1,250 million, driven by record production from Guyana, growth in heritage Permian (2) , and the Pioneer acquisition.

Base Volume – Higher base volumes increased earnings by $30 million.

Structural Cost Savings – Increased earnings by $210 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.

Expenses – Higher expenses decreased earnings by $340 million, primarily from depreciation.

Other – All other items increased earnings by $130 million, driven by favorable impacts from divestments, partly offset by Pioneer-related transaction costs.

Timing Effects – Less favorable timing effects from derivatives mark-to-market impacts decreased earnings by $170 million.

Identified Items (1) – 2Q 2023 $(12) million loss driven by additional European taxes.

(1) Refer to page 20 for definition of Identified Items and earnings (loss) excluding Identified Items.

(2) Heritage Permian basin assets exclude assets acquired as part of the acquisition of Pioneer that closed May 3, 2024.

Upstream Year-to-Date Earnings Factor Analysis

(millions of dollars)

Price – Price impacts increased earnings by $570 million, driven by an increase in average realizations for crude oil, partially offset by a decrease in average natural gas realizations.

Advantaged Volume Growth – Higher volumes from advantaged assets increased earnings by $1,680 million, driven by record production from Guyana, growth in heritage Permian (2) , and the Pioneer acquisition.

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

Structural Cost Savings – Increased earnings by $320 million, due to operational efficiencies and divestments.

Expenses – Higher expenses decreased earnings by $510 million, primarily from depreciation.

Other – All other items, including costs related to the Pioneer transaction, decreased earnings by $340 million.

Timing Effects – Less unfavorable timing effects from derivatives mark-to-market impacts increased earnings by $210 million.

Identified Items (1) – 2023 $(170) million loss driven by additional European taxes.

(1) Refer to page 20 for definition of Identified Items and earnings (loss) excluding Identified Items.

(2) Heritage Permian basin assets exclude assets acquired as part of the acquisition of Pioneer that closed May 3, 2024.

Upstream Operational Results

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

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

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Canada/Other Americas 760 618 767 645

Europe 4 4 4 4

Africa 215 206 220 213

Asia 714 702 712 725

Australia/Oceania 30 38 30 35

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(thousands of oil-equivalent barrels daily)

4,358 3,608 4,071 3,719

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

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(thousands of barrels daily) Three Months Ended

June 30 Six Months Ended

Volumes reconciliation (Oil-equivalent production) (1)

Entitlements - Net Interest —

2023 3,608 3,719

Entitlements - Price / Spend / Other 2 (21)

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Growth / Other 769 424

2024 4,358 4,071

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

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.

2Q 2024 production of 4.4 million oil-equivalent barrels per day increased 750 thousand oil-equivalent barrels per day from 2Q 2023, driven by the Pioneer acquisition and record production in Guyana and heritage Permian (1) .

4.1 million oil-equivalent barrels per day in 2024 increased 352 thousand oil-equivalent barrels per day from 2023, driven by the Pioneer acquisition and record production in Guyana and heritage Permian (1) .

(1) Heritage Permian basin assets exclude assets acquired as part of the acquisition of Pioneer that closed May 3, 2024.

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

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(millions of dollars) Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Earnings (loss) (U.S.

United States 450 1,528 1,286 3,438

496 782 1,036 3,055

Total 946 2,310 2,322 6,493

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United States — — — —

Total — 18 — (12)

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

United States 450 1,528 1,286 3,438

496 764 1,036 3,067

Total 946 2,292 2,322 6,505

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

Energy Products First Quarter Earnings Factor Analysis

Energy Products Second Quarter Earnings Factor Analysis

(millions of dollars)

Margin – Margins decreased earnings by $860 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).

Advantaged Volume Growth – Higher volumes from strategic projects increased earnings by $20 million.

Base Volume – Lower base volumes decreased earnings by $500 million, driven by higher scheduled maintenance and divestments.

Structural Cost Savings – Increased earnings by $180 million.

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

Expenses – Higher expenses decreased earnings by $260 million from higher planned maintenance and turnaround activity.

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

Timing Effects – Favorable timing effects from derivatives mark-to-market impacts increased earnings by $90 million.

Identified Items (1) – 2Q 2023 $18 million gain related to European taxes.

(1) Refer to page 20 for definition of Identified Items and earnings (loss) excluding Identified Items.

Energy Products Year-to-Date Earnings Factor Analysis

(millions of dollars)

Margins – Margins decreased earnings by $2,880 million, driven by significantly weaker industry refining margins, which normalized from the historically high levels in early 2023.

Advantaged Volume Growth – Higher volumes from the Beaumont refinery expansion increased earnings by $130 million.

Base Volume – Lower base volumes from divestments and higher scheduled maintenance decreased earnings by $650 million.

Structural Cost Savings – Increased earnings by $320 million due primarily to divestments and maintenance related efficiencies.

Expenses – Higher expenses decreased earnings by $550 million, driven by increased turnaround and higher planned maintenance activity.

Other – All other items increased earnings by $20 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.

Timing Effects – Unfavorable timing effects mainly from derivatives mark-to-market impacts decreased earnings by $570 million.

Identified Items (1) – 2023 $(12) million loss from additional European taxes.

(1) Refer to page 20 for definition of Identified Items and earnings (loss) excluding Identified Items.

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(thousands of barrels daily) Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Refinery throughput

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United States 2,639 2,743 2,607 2,601

2,681 2,916 2,669 2,867

Worldwide 5,320 5,658 5,276 5,469

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(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

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(millions of dollars) Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Earnings (loss) (U.S.

United States 526 486 1,030 810

253 342 534 389

Total 779 828 1,564 1,199

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United States 526 486 1,030 810

253 342 534 389

Total 779 828 1,564 1,199

(1) Refer to page 20 for definition of Identified Items and earnings (loss) excluding Identified Items.

Chemical Products First Quarter Earnings Factor Analysis

Chemical Products Second Quarter Earnings Factor Analysis

(millions of dollars)

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.

Margin – Lower realizations, partially offset by lower energy costs, decreased earnings by $30 million.

Advantaged Volume Growth – High-value product sales growth increased earnings by $120 million.

Structural Cost Savings – Increased earnings by $40 million.

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

Expenses – Higher expenses, including increased project and maintenance costs, decreased earnings by $140 million.

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

Chemical Products Year-to-Date Earnings Factor Analysis

(millions of dollars)

Margins – Despite weaker global industry margins, overall margins increased earnings by $100 million, driven by North American feed advantage, lower energy costs, and stronger high-value product margins.

Advantaged Volume Growth – Growth in high-value product sales increased earnings by $260 million.

Base Volume – Higher base volumes increased earnings by $120 million, driven by modest demand growth and lower turnaround impacts.

Structural Cost Savings – Increased earnings by $50 million, primarily from operational efficiencies.

Expenses – Higher growth projects spend and maintenance decreased earnings by $150 million.

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

Chemical Products Operational Results

(thousands of metric tons) Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Chemical Products sales (1)

United States 1,802 1,725 3,649 3,286

3,071 3,124 6,278 6,212

Worldwide 4,873 4,849 9,927 9,498

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(millions of dollars) Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Earnings (loss) (U.S.

United States 447 373 851 824

304 298 661 621

Total 751 671 1,512 1,445

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United States 447 373 851 824

304 298 661 621

Total 751 671 1,512 1,445

(1) Refer to page 20 for definition of Identified Items and earnings (loss) excluding Identified Items.

Specialty Products First Quarter Earnings Factor Analysis

Specialty Products Second Quarter Earnings Factor Analysis

(millions of dollars)

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.

Margin – Stronger finished lubes and basestocks margins increased earnings by $100 million.

Advantaged Volume – High-value products volume growth increased earnings by $30 million.

Structural Cost Savings – Increased earnings by $20 million.

Expenses – Higher expenses decreased earnings by $30 million.

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

Specialty Products Year-to-Date Earnings Factor Analysis

(millions of dollars)

Margins – Stronger finished lubes margins increased earnings by $100 million, driven by technology-enabled feed optimization, partially offset by weaker industry basestocks margins.

Advantaged Volume Growth – Additional high-value product sales increased earnings by $20 million.

Base Volume – Higher basestocks sales increased earnings by $30 million.

Structural Cost Savings – Increased earnings by $50 million.

Expenses – Higher expenses, primarily related to new business development, decreased earnings by $80 million.

Other – All other items, primarily unfavorable foreign exchange impacts, decreased earnings by $50 million.

Specialty Products Operational Results

(thousands of metric tons) Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Specialty Products sales (1)

United States 506 514 1,001 991

1,428 1,391 2,892 2,855

Worldwide 1,933 1,905 3,893 3,845

(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.

CORPORATE AND FINANCING

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(millions of dollars) Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Earnings (loss) (U.S.

GAAP) (362) (355)

(310) (506) (672) (861)

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

(310) (506) (672) (861)

(1) Refer to page 20 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.

Corporate and Financing expenses were $310 million for the second quarter of 2024, $196 million lower than the second quarter of 2023, mainly due to lower financing costs.

Corporate and Financing expenses were $672 million for the first six months of 2024, $189 million lower than 2023, mainly due to lower financing costs, partially offset by Pioneer-related costs.

LIQUIDITY AND CAPITAL RESOURCES

(millions of dollars) Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Net cash provided by/(used in)

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Net cash provided by operating activities (U.S.

GAAP) 14,664 16,341

10,560 9,383 25,224 25,724

Proceeds associated with sales of subsidiaries, property, plant & equipment, and sales and returns of investments 926 1,287 1,629 2,141

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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 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.

Cash flow from operations and asset sales in the second quarter of 2024 was $11.5 billion, an increase of $0.8 billion from the comparable 2023 period primarily reflecting higher earnings.

Cash provided by operating activities totaled $25.2 billion for the first six months of 2024, $0.5 billion lower than 2023.

Net income including noncontrolling interests was $18.1 billion, a decrease of $1.9 billion from the prior year period.

The adjustment for the noncash provision of $10.6 billion for depreciation and depletion was up $2.1 billion from 2023.

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

Changes in operational working capital were a reduction of $2.6 billion during the period.

All other items net decreased cash flows by $0.9 billion in 2024 versus a contribution of $1.1 billion in 2023.

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

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.

Investing activities for the first six months of 2024 used net cash of $9.4 billion, an increase of $0.2 billion compared to the prior year.

Spending for additions to property, plant and equipment of $11.3 billion was $0.5 billion higher than 2023.

Proceeds from asset sales were $1.6 billion, a decrease of $0.5 billion compared to the prior year.

Net investments and advances decreased $0.1 billion from $0.7 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.

Cash acquired from mergers and acquistions during the first six months of 2024 was $0.8 billion.

Net cash used in financing activities was $20.5 billion in the first six months of 2024, including $8.3 billion for the purchase of 72.1 million shares of ExxonMobil stock, as part of the previously announced buyback program, and $1.3 billion to repay Pioneer convertible debt.

This compares to net cash used in financing activities of $16.7 billion in the prior year.

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.

Total debt at the end of the second quarter of 2024 was $43.2 billion compared to $41.6 billion at year-end 2023.

The Corporation's debt to total capital ratio was 13.5 percent at the end of the second quarter of 2024 compared to 16.4 percent at year-end 2023.

The net debt to capital ratio (1) was 5.7 percent at the end of the second quarter, an increase of 1.2 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 $3.8 billion to shareholders in the first three months of 2024 through dividends.

The Corporation distributed a total of $8.1 billion to shareholders in the first six 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 $0.3 billion and undrawn long-term committed lines of credit of $1.9 billion as of first quarter 2024.

The Corporation had undrawn short-term committed lines of credit of $0.2 billion and undrawn long-term committed lines of credit of $1.8 billion as of second 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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Litigation and other contingencies are discussed in Note 3 to the unaudited condensed consolidated financial statements.

(1) Net debt is total debt of $43.2 billion less $26.5 billion of cash and cash equivalents excluding restricted cash .

Net debt to capital ratio is net debt divided by net debt plus total equity of $276.3 billion.

Total debt is the sum of notes and loans payable and long-term debt, as reported in the consolidated balance sheet.

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

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

The Corporation assumed take-or-pay obligations of $4.9 billion associated with the Pioneer acquisition that include long-term purchase, gathering, processing, and transportation commitments.

(millions of dollars) Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Income taxes 4,094 3,503 7,897 8,463

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Total other taxes and duties (1)

7,531 8,328 14,691 16,423

Total 11,625 11,831 22,588 24,886

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

Total taxes were $11.6 billion for the second quarter of 2024, a decrease of $0.2 billion from 2023.

Income tax expense was $4.1 billion compared to $3.5 billion in the prior year.

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Total other taxes and duties decreased by $0.8 billion to $7.5 billion.

Total taxes were $22.6 billion for the first six months of 2024, a decrease of $2.3 billion from 2023.

Income tax expense decreased by $0.6 billion to $7.9 billion reflecting lower refining margins.

The effective income tax rate of 35 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 decreased by $1.7 billion to $14.7 billion.

CAPITAL AND EXPLORATION EXPENDITURES

(millions of dollars) Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Upstream (including exploration expenses) 5,747 4,609 10,329 9,190

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Total 7,039 6,166 12,878 12,546

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.

Capital and exploration expenditures in the second quarter of 2024 were $7.0 billion, up 14% from the second quarter of 2023.

Capital and exploration expenditures in the first six months of 2024 were $12.9 billion, up 3% from the first six months of 2023.

The Corporation anticipates an investment level of approximately $28 billion in 2024.

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

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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.

Similarly, discussion of roadmaps or future plans related to carbon capture, transportation and storage, biofuel, hydrogen, ammonia, direct air capture, and other future plans to reduce emissions and emission intensity of ExxonMobil, its affiliates, 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;

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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;

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 heritage Upstream Permian Basin (1) 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 and ammonia, 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;

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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;

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.

changes in law, regulations, taxes, trade sanctions, or policies, such as the development or changes in 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;

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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;

reservoir performance, including variability and timing factors applicable to unconventional resources and the success of new unconventional technologies;

the level and outcome of exploration projects and decisions to invest in future reserves;

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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.

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.

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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.

Current trends for policy stringency and development of lower-emission solutions are not yet on a pathway to achieve net-zero by 2050.

As such, the Outlook does not 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.

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;

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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 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.

(1) Heritage Permian basin assets exclude assets acquired as part of the acquisition of Pioneer that closed May 3, 2024.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis