Exxon Mobil Corp 10-Q

ITEM 1. FINANCIAL STATEMENTS CONDENSED CONSOLIDATED STATEMENT OF INCOME (millions of dollars, unless noted) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Revenues and other income Sales and other operating revenue 89,986 80,795 170,397 164,439 Income from equity affiliates 1,744 1,382 3,586 3,763 Other income 1,330 737 2,160 1,276 Total revenues and other income 93,060 82,914 176,143 169,478 Costs and other deductions Crude oil and product purchases 54,199 47,598 101,800 93,601 Production and manufacturing expenses 9,804 8,860 18,895 18,296 Selling, general and administrative expenses 2,568 2,449 5,063 4,839 Depreciation and depletion (includes impairments) 5,787 4,242 10,599 8,486 Exploration expenses, including dry holes 153 133 301 274 Non-service pension and postretirement benefit expense 34 164 57 331 Interest expense 271 249 492 408 Other taxes and duties 6,579 7,563 12,902 14,784 Total costs and other deductions 79,395 71,258 150,109 141,019 Income (loss) before income taxes 13,665 11,656 26,034 28,459 Income tax expense (benefit) 4,094 3,503 7,897 8,463 Net income (loss) including noncontrolling interests 9,571 8,153 18,137 19,996 Net income (loss) attributable to noncontrolling interests 331 273 677 686 Net income (loss) attributable to ExxonMobil 9,240 7,880 17,460 19,310 Earnings (loss) per common share (dollars) 2.14 1.94 4.20 4.73 Earnings (loss) per common share - assuming dilution (dollars) 2.14 1.94 4.20 4.73 The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements. 3 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (millions of dollars) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net income (loss) including noncontrolling interests 9,571 8,153 18,137 19,996 Other comprehensive income (net of income taxes) Foreign exchange translation adjustment ( 115 ) 514 ( 1,382 ) 687 Postretirement benefits reserves adjustment (excluding amortization) 29 17 ( 13 ) 36 Amortization and settlement of postretirement benefits reserves adjustment included in net periodic benefit costs 17 7 26 13 Total other comprehensive income (loss) ( 69 ) 538 ( 1,369 ) 736 Comprehensive income (loss) including noncontrolling interests 9,502 8,691 16,768 20,732 Comprehensive income (loss) attributable to noncontrolling interests 280 373 506 809 Comprehensive income (loss) attributable to ExxonMobil 9,222 8,318 16,262 19,923 The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements. 4 CONDENSED CONSOLIDATED BALANCE SHEET (millions of dollars, unless noted) June 30, 2024 December 31, 2023 ASSETS Current assets Cash and cash equivalents 26,460 31,539 Cash and cash equivalents – restricted 28 29 Notes and accounts receivable – net 43,071 38,015 Inventories Crude oil, products and merchandise 19,685 20,528 Materials and supplies 4,818 4,592 Other current assets 2,176 1,906 Total current assets 96,238 96,609 Investments, advances and long-term receivables 47,948 47,630 Property, plant and equipment – net 298,283 214,940 Other assets, including intangibles – net 18,238 17,138 Total Assets 460,707 376,317 LIABILITIES Current liabilities Notes and loans payable 6,621 4,090 Accounts payable and accrued liabilities 60,107 58,037 Income taxes payable 4,035 3,189 Total current liabilities 70,763 65,316 Long-term debt 36,565 37,483 Postretirement benefits reserves 10,398 10,496 Deferred income tax liabilities 40,080 24,452 Long-term obligations to equity companies 1,612 1,804 Other long-term obligations 25,023 24,228 Total Liabilities 184,441 163,779 Commitments and contingencies (Note 3) EQUITY Common stock without par value ( 9,000 million shares authorized, 8,019 million shares issued) 46,781 17,781 Earnings reinvested 463,294 453,927 Accumulated other comprehensive income ( 13,187 ) ( 11,989 ) Common stock held in treasury ( 3,576 million shares at June 30, 2024 and 4,048 million shares at December 31, 2023) ( 228,483 ) ( 254,917 ) ExxonMobil share of equity 268,405 204,802 Noncontrolling interests 7,861 7,736 Total Equity 276,266 212,538 Total Liabilities and Equity 460,707 376,317 The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements. 5 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (millions of dollars) Six Months Ended June 30, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) including noncontrolling interests 18,137 19,996 Depreciation and depletion (includes impairments) 10,599 8,486 Changes in operational working capital, excluding cash and debt ( 2,608 ) ( 3,885 ) All other items – net ( 904 ) 1,127 Net cash provided by operating activities 25,224 25,724 CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment ( 11,309 ) ( 10,771 ) Proceeds from asset sales and returns of investments 1,629 2,141 Additional investments and advances ( 744 ) ( 834 ) Other investing activities including collection of advances 224 183 Cash acquired from mergers and acquisitions 754 0 Net cash used in investing activities ( 9,446 ) ( 9,281 ) CASH FLOWS FROM FINANCING ACTIVITIES Additions to long-term debt 217 136 Reductions in long-term debt ( 1,142 ) ( 6 ) Reductions in short-term debt ( 2,771 ) ( 172 ) Additions/(reductions) in debt with three months or less maturity ( 6 ) ( 172 ) Contingent consideration payments ( 27 ) ( 68 ) Cash dividends to ExxonMobil shareholders ( 8,093 ) ( 7,439 ) Cash dividends to noncontrolling interests ( 397 ) ( 293 ) Changes in noncontrolling interests 16 11 Common stock acquired ( 8,337 ) ( 8,680 ) Net cash used in financing activities ( 20,540 ) ( 16,683 ) Effects of exchange rate changes on cash ( 318 ) 132 Increase/(decrease) in cash and cash equivalents ( 5,080 ) ( 108 ) Cash and cash equivalents at beginning of period 31,568 29,665 Cash and cash equivalents at end of period 26,488 29,557 SUPPLEMENTAL DISCLOSURES Income taxes paid 6,968 8,841 Cash interest paid Included in cash flows from operating activities 321 295 Capitalized, included in cash flows from investing activities 590 561 Total cash interest paid 911 856 Noncash right of use assets recorded in exchange for lease liabilities Operating leases 647 1,036 Finance leases 53 438 Non-Cash Transaction: The Corporation acquired Pioneer Natural Resources in an all-stock transaction on May 3, 2024, having issued 545 million shares of ExxonMobil common stock having a fair value of $ 63 billion and assumed debt with a fair value of $ 5 billion. See Note 2 for additional information. The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements. 6 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ExxonMobil Share of Equity (millions of dollars, unless noted) Common Stock Earnings Reinvested Accumulated Other Comprehensive Income Common Stock Held in Treasury ExxonMobil Share of Equity Non-controlling Interests Total Equity Balance as of March 31, 2023 15,904 440,552 ( 13,095 ) ( 244,676 ) 198,685 7,729 206,414 Amortization of stock-based awards 130 — — — 130 — 130 Other ( 5 ) — — — ( 5 ) 27 22 Net income (loss) for the period — 7,880 — — 7,880 273 8,153 Dividends - common shares — ( 3,701 ) — — ( 3,701 ) ( 178 ) ( 3,879 ) Other comprehensive income (loss) — — 438 — 438 100 538 Share repurchases, at cost — — — ( 4,383 ) ( 4,383 ) — ( 4,383 ) Dispositions — — — 2 2 — 2 Balance as of June 30, 2023 16,029 444,731 ( 12,657 ) ( 249,057 ) 199,046 7,951 206,997 Balance as of March 31, 2024 17,971 458,339 ( 13,169 ) ( 257,891 ) 205,250 7,802 213,052 Amortization of stock-based awards 178 — — — 178 — 178 Other ( 117 ) — — — ( 117 ) 10 ( 107 ) Net income (loss) for the period — 9,240 — — 9,240 331 9,571 Dividends - common shares — ( 4,285 ) — — ( 4,285 ) ( 231 ) ( 4,516 ) Other comprehensive income (loss) — — ( 18 ) — ( 18 ) ( 51 ) ( 69 ) Share repurchases, at cost — — — ( 5,310 ) ( 5,310 ) — ( 5,310 ) Issued for acquisitions 28,749 — — 34,603 63,352 — 63,352 Dispositions — — — 115 115 — 115 Balance as of June 30, 2024 46,781 463,294 ( 13,187 ) ( 228,483 ) 268,405 7,861 276,266 Three Months Ended June 30, 2024 Three Months Ended June 30, 2023 Common Stock Share Activity (millions of shares) Issued Held in Treasury Outstanding Issued Held in Treasury Outstanding Balance as of March 31 8,019 ( 4,076 ) 3,943 8,019 ( 3,976 ) 4,043 Share repurchases, at cost — ( 45 ) ( 45 ) — ( 40 ) ( 40 ) Issued for acquisitions — 545 545 — — — Dispositions — — — — — — Balance as of June 30 8,019 ( 3,576 ) 4,443 8,019 ( 4,016 ) 4,003 The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements. 7 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ExxonMobil Share of Equity (millions of dollars, unless noted) Common Stock Earnings Reinvested Accumulated Other Comprehensive Income Common Stock Held in Treasury ExxonMobil Share of Equity Non-controlling Interests Total Equity Balance as of December 31, 2022 15,752 432,860 ( 13,270 ) ( 240,293 ) 195,049 7,424 202,473 Amortization of stock-based awards 288 — — — 288 — 288 Other ( 11 ) — — — ( 11 ) 11 — Net income (loss) for the period — 19,310 — — 19,310 686 19,996 Dividends - common shares — ( 7,439 ) — — ( 7,439 ) ( 293 ) ( 7,732 ) Other comprehensive income (loss) — — 613 — 613 123 736 Share repurchases, at cost — — — ( 8,768 ) ( 8,768 ) — ( 8,768 ) Dispositions — — — 4 4 — 4 Balance as of June 30, 2023 16,029 444,731 ( 12,657 ) ( 249,057 ) 199,046 7,951 206,997 Balance as of December 31, 2023 17,781 453,927 ( 11,989 ) ( 254,917 ) 204,802 7,736 212,538 Amortization of stock-based awards 375 — — — 375 — 375 Other ( 124 ) — — — ( 124 ) 16 ( 108 ) Net income (loss) for the period — 17,460 — — 17,460 677 18,137 Dividends - common shares — ( 8,093 ) — — ( 8,093 ) ( 397 ) ( 8,490 ) Other comprehensive income (loss) — — ( 1,198 ) — ( 1,198 ) ( 171 ) ( 1,369 ) Share repurchases, at cost — — — ( 8,288 ) ( 8,288 ) — ( 8,288 ) Issued for acquisitions 28,749 — — 34,603 63,352 — 63,352 Dispositions — — — 119 119 — 119 Balance as of June 30, 2024 46,781 463,294 ( 13,187 ) ( 228,483 ) 268,405 7,861 276,266 Six Months Ended June 30, 2024 Six Months Ended June 30, 2023 Common Stock Share Activity (millions of shares) Issued Held in Treasury Outstanding Issued Held in Treasury Outstanding Balance as of December 31 8,019 ( 4,048 ) 3,971 8,019 ( 3,937 ) 4,082 Share repurchases, at cost — ( 73 ) ( 73 ) — ( 79 ) ( 79 ) Issued for acquisitions — 545 545 — — — Dispositions — — — — — — Balance as of June 30 8,019 ( 3,576 ) 4,443 8,019 ( 4,016 ) 4,003 The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements. 8 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 1. Basis of Financial Statement Preparation These unaudited condensed consolidated financial statements should be read in the context of the consolidated financial statements and notes thereto filed with the Securities and Exchange Commission in the Corporation's 2023 Annual Report on Form 10-K. In the opinion of the Corporation, the information furnished herein reflects all known accruals and adjustments necessary for a fair statement of the results for the periods reported herein. All such adjustments are of a normal recurring nature. The Corporation's exploration and production activities are accounted for under the "successful efforts" method. Note 2. Pioneer Natural Resources Merger On May 3, 2024, the Corporation acquired Pioneer Natural Resources Company ("Pioneer"), an independent oil and gas exploration and production company. The acquisition included over 850 thousand net acres in the Midland Basin of West Texas and proved reserves in excess of 2 billion oil-equivalent barrels. In connection with the acquisition, we issued 545 million shares of ExxonMobil common stock having a fair value of $ 63 billion on the acquisition date, and assumed debt with a fair value of $ 5 billion. The transaction was accounted for as a business combination in accordance with ASC 805, which requires that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The following table summarizes the provisional fair values of the assets acquired and liabilities assumed. (billions of dollars) Pioneer Current assets (1) 3 Other non-current assets 1 Property, plant & equipment (2) 84 Total identifiable assets acquired 88 Current liabilities (1) 3 Long-term debt (3) 5 Deferred income tax liabilities (4) 16 Other non-current liabilities 2 Total liabilities assumed 26 Net identifiable assets acquired 62 Goodwill (5) 1 Net assets (6) 63 (1) Current assets and current liabilities consist primarily of accounts receivable and payable, with their respective fair values approximating historical values given their short-term duration, expectation of insignificant bad debt expense, and our credit rating. (2) Property, plant and equipment was preliminarily valued using the income approach. Significant inputs and assumptions used in the income approach included estimates for commodity prices, future oil and gas production profiles, operating expenses, capital expenditures, and a risk-adjusted discount rate. Collectively, these inputs are Level 3 inputs. (3) Long-term debt was valued using market prices as of the acquisition date, which reflects the use of Level 1 inputs. (4) Deferred income taxes represent the tax effects of differences in the tax basis and acquisition date fair values of assets acquired and liabilities assumed. (5) Goodwill was allocated to the Upstream segment. (6) Provisional fair value measurements were made for assets acquired and liabilities assumed. Adjustments to those measurements may be made in subsequent periods, up to one year from the date of acquisition, as we continue to evaluate the information necessary to complete the analysis. 9 Debt Assumed in the Merger The following table presents long-term debt assumed at closing: (millions of dollars) Par Value Fair Value as of May 2, 2024 0.250 % Convertible Senior Notes due May 2025 (1) 450 1,327 1.125 % Senior Notes due January 2026 750 699 5.100 % Senior Notes due March 2026 1,100 1,096 7.200 % Senior Notes due January 2028 241 252 4.125 % Senior Notes due February 2028 138 130 1.900 % Senior Notes due August 2030 1,100 914 2.150 % Senior Notes due January 2031 1,000 832 (1) In June 2024, the Corporation redeemed in full all of the Convertible Senior Notes assumed from Pioneer for an amount consistent with the acquisition date fair value. Actual and Pro Forma Impact of Merger The following table presents revenues and earnings for Pioneer since the acquisition date (May 3, 2024), for the periods presented: (millions of dollars) Three Months Ended June 30, 2024 Six Months Ended June 30, 2024 Sales and other operating revenues 4,372 4,372 Net income (loss) attributable to ExxonMobil 398 398 The following table presents unaudited pro forma information for the Corporation as if the merger with Pioneer had occurred at the beginning of January 1, 2023: Unaudited (millions of dollars) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Sales and other operating revenues 92,167 86,076 178,557 175,425 Net income (loss) attributable to ExxonMobil 9,265 8,577 18,256 20,663 The historical financial information was adjusted to give effect to the pro forma events that were directly attributable to the merger and factually supportable. The unaudited pro forma consolidated results are not necessarily indicative of what the consolidated results of operations actually would have been had the merger been completed on January 1, 2023. In addition, the unaudited pro forma consolidated results reflect pro forma adjustments primarily related to conforming Pioneer's accounting policies to ExxonMobil, additional depreciation expense related to the fair value adjustment of the acquired property, plant and equipment, our capital structure, Pioneer's transaction-related costs, and applicable income tax impacts of the pro forma adjustments. Our transaction costs to effect the acquisition were immaterial. 10 Note 3. Litigation and Other Contingencies Litigation A variety of claims have been made against ExxonMobil and certain of its consolidated subsidiaries in a number of pending lawsuits. Management has regular litigation reviews, including updates from corporate and outside counsel, to assess the need for accounting recognition or disclosure of these contingencies. The Corporation accrues an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. The Corporation does not record liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote. For contingencies where an unfavorable outcome is reasonably possible and which are significant, the Corporation discloses the nature of the contingency and, where feasible, an estimate of the possible loss. For purposes of our contingency disclosures, “significant” includes material matters, as well as other matters which management believes should be disclosed. State and local governments and other entities in various jurisdictions across the United States and its territories have filed a number of legal proceedings against several oil and gas companies, including ExxonMobil, requesting unprecedented legal and equitable relief for various alleged injuries purportedly connected to climate change. These lawsuits assert a variety of novel, untested claims under statutory and common law. Additional such lawsuits may be filed. We believe the legal and factual theories set forth in these proceedings are meritless and represent an inappropriate attempt to use the court system to usurp the proper role of policymakers in addressing the societal challenges of climate change. Local governments in Louisiana have filed unprecedented legal proceedings against a number of oil and gas companies, including ExxonMobil, requesting compensation for the restoration of coastal marsh erosion in the state. We believe the factual and legal theories set forth in these proceedings are meritless. While the outcome of any litigation can be unpredictable, we believe the likelihood is remote that the ultimate outcomes of these lawsuits will have a material adverse effect on the Corporation’s operations, financial condition, or financial statements taken as a whole. We will continue to defend vigorously against these claims. Other Contingencies The Corporation and certain of its consolidated subsidiaries were contingently liable at June 30, 2024, for guarantees relating to notes, loans and performance under contracts. Where guarantees for environmental remediation and other similar matters do not include a stated cap, the amounts reflect management’s estimate of the maximum potential exposure. Where it is not possible to make a reasonable estimation of the maximum potential amount of future payments, future performance is expected to be either immaterial or have only a remote chance of occurrence. June 30, 2024 (millions of dollars) Equity Company Obligations (1) Other Third-Party Obligations Total Guarantees Debt-related 1,070 135 1,205 Other 678 5,896 6,574 Total 1,748 6,031 7,779 (1) ExxonMobil share Additionally, 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. 11 Note 4. Other Comprehensive Income Information ExxonMobil Share of Accumulated Other Comprehensive Income (millions of dollars) Cumulative Foreign Exchange Translation Adjustment Postretirement Benefits Reserves Adjustment Total Balance as of December 31, 2022 ( 14,591 ) 1,321 ( 13,270 ) Current period change excluding amounts reclassified from accumulated other comprehensive income (1) 570 35 605 Amounts reclassified from accumulated other comprehensive income — 8 8 Total change in accumulated other comprehensive income 570 43 613 Balance as of June 30, 2023 ( 14,021 ) 1,364 ( 12,657 ) Balance as of December 31, 2023 ( 13,056 ) 1,067 ( 11,989 ) Current period change excluding amounts reclassified from accumulated other comprehensive income (1) ( 1,197 ) ( 21 ) ( 1,218 ) Amounts reclassified from accumulated other comprehensive income — 20 20 Total change in accumulated other comprehensive income ( 1,197 ) ( 1 ) ( 1,198 ) Balance as of June 30, 2024 ( 14,253 ) 1,066 ( 13,187 ) (1) Cumulative Foreign Exchange Translation Adjustment includes net investment hedge gain/(loss) net of taxes of $ 123 million and $( 70 ) million in 2024 and 2023, respectively. Amounts Reclassified Out of Accumulated Other Comprehensive Income - Before-tax Income/(Expense) (millions of dollars) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Amortization and settlement of postretirement benefits reserves adjustment included in net periodic benefit costs (Statement of Income line: Non-service pension and postretirement benefit expense) ( 22 ) ( 6 ) ( 34 ) ( 14 ) Income Tax (Expense)/Credit For Components of Other Comprehensive Income (millions of dollars) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Foreign exchange translation adjustment 69 85 ( 6 ) 133 Postretirement benefits reserves adjustment (excluding amortization) ( 10 ) 20 ( 6 ) 31 Amortization and settlement of postretirement benefits reserves adjustment included in net periodic benefit costs ( 5 ) 1 ( 8 ) ( 1 ) Total 54 106 ( 20 ) 163 12 Note 5. Earnings Per Share Earnings per common share Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net income (loss) attributable to ExxonMobil (millions of dollars) 9,240 7,880 17,460 19,310 Weighted-average number of common shares outstanding (millions of shares) (1) 4,317 4,066 4,158 4,084 Earnings (loss) per common share (dollars) (2) 2.14 1.94 4.20 4.73 Dividends paid per common share (dollars) 0.95 0.91 1.90 1.82 (1) Includes restricted shares not vested as well as 545 million shares issued for the Pioneer merger on May 3, 2024. (2) Earnings (loss) per common share and earnings (loss) per common share – assuming dilution are the same in each period shown. Note 6. Pension and Other Postretirement Benefits (millions of dollars) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Components of net benefit cost Pension Benefits - U.S. Service cost 117 122 230 242 Interest cost 168 165 336 331 Expected return on plan assets ( 181 ) ( 133 ) ( 362 ) ( 266 ) Amortization of actuarial loss/(gain) 21 21 42 42 Amortization of prior service cost ( 8 ) ( 7 ) ( 16 ) ( 14 ) Net pension enhancement and curtailment/settlement cost 14 7 17 15 Net benefit cost 131 175 247 350 Pension Benefits - Non-U.S. Service cost 86 81 169 163 Interest cost 198 232 425 466 Expected return on plan assets ( 230 ) ( 172 ) ( 491 ) ( 346 ) Amortization of actuarial loss/(gain) 24 14 49 28 Amortization of prior service cost 12 13 25 25 Net benefit cost 90 168 177 336 Other Postretirement Benefits Service cost 19 20 37 40 Interest cost 62 69 125 139 Expected return on plan assets ( 5 ) ( 3 ) ( 10 ) ( 7 ) Amortization of actuarial loss/(gain) ( 26 ) ( 31 ) ( 52 ) ( 61 ) Amortization of prior service cost ( 15 ) ( 11 ) ( 31 ) ( 21 ) Net benefit cost 35 44 69 90 13 Note 7. Financial Instruments and Derivatives The estimated fair value of financial instruments and derivatives at June 30, 2024 and December 31, 2023, and the related hierarchy level for the fair value measurement was as follows: June 30, 2024 Fair Value (millions of dollars) Level 1 Level 2 Level 3 Total Gross Assets & Liabilities Effect of Counterparty Netting Effect of Collateral Netting Difference in Carrying Value and Fair Value Net Carrying Value Assets Derivative assets (1) 4,790 1,187 — 5,977 ( 5,510 ) ( 24 ) — 443 Advances to/receivables from equity companies (2)(6) — 2,475 4,206 6,681 — — 476 7,157 Other long-term financial assets (3) 1,400 — 1,515 2,915 — — 237 3,152 Liabilities Derivative liabilities (4) 4,996 1,457 — 6,453 ( 5,510 ) ( 230 ) — 713 Long-term debt (5) 28,874 1,469 — 30,343 — — 4,063 34,406 Long-term obligations to equity companies (6) — — 1,680 1,680 — — ( 68 ) 1,612 Other long-term financial liabilities (7) — — 516 516 — — 49 565 December 31, 2023 Fair Value (millions of dollars) Level 1 Level 2 Level 3 Total Gross Assets & Liabilities Effect of Counterparty Netting Effect of Collateral Netting Difference in Carrying Value and Fair Value Net Carrying Value Assets Derivative assets (1) 4,544 1,731 — 6,275 ( 5,177 ) ( 528 ) — 570 Advances to/receivables from equity companies (2)(6) — 2,517 4,491 7,008 — — 519 7,527 Other long-term financial assets (3) 1,389 — 944 2,333 — — 202 2,535 Liabilities Derivative liabilities (4) 4,056 1,608 — 5,664 ( 5,177 ) ( 40 ) — 447 Long-term debt (5) 30,556 2,004 — 32,560 — — 3,102 35,662 Long-term obligations to equity companies (6) — — 1,896 1,896 — — ( 92 ) 1,804 Other long-term financial liabilities (7) — — 697 697 — — 45 742 (1) Included in the Balance Sheet lines: Notes and accounts receivable - net and Other assets, including intangibles - net. (2) Included in the Balance Sheet line: Investments, advances and long-term receivables. (3) Included in the Balance Sheet lines: Investments, advances and long-term receivables and Other assets, including intangibles - net. (4) Included in the Balance Sheet lines: Accounts payable and accrued liabilities and Other long-term obligations. (5) Excluding finance lease obligations. (6) Advances to/receivables from equity companies and long-term obligations to equity companies are mainly designated as hierarchy level 3 inputs. The fair value is calculated by discounting the remaining obligations by a rate consistent with the credit quality and industry of the company. (7) Included in the Balance Sheet line: Other long-term obligations. Includes contingent consideration related to a prior year acquisition where fair value is based on expected drilling activities and discount rates. 14 At June 30, 2024 and December 31, 2023, respectively, the Corporation had $ 675 million and $ 800 million of collateral under master netting arrangements not offset against the derivatives on the Condensed Consolidated Balance Sheet, primarily related to initial margin requirements. The Corporation may use non-derivative financial instruments, such as its foreign currency-denominated debt, as hedges of its net investments in certain foreign subsidiaries. Under this method, the change in the carrying value of the financial instruments due to foreign exchange fluctuations is reported in accumulated other comprehensive income. As of June 30, 2024, the Corporation has designated $ 3.2 billion of its Euro-denominated debt and related accrued interest as a net investment hedge of its European business. The net investment hedge is deemed to be perfectly effective. The Corporation had undrawn short-term committed lines of credit of $ 237 million and undrawn long-term committed lines of credit of $ 1,795 million as of second quarter 2024. Derivative Instruments The Corporation’s size, strong capital structure, geographic diversity, and the complementary nature of its business segments reduce the Corporation’s enterprise-wide risk from changes in commodity prices, currency rates and interest rates. In addition, the Corporation uses commodity-based contracts, including derivatives, to manage commodity price risk and to generate returns from trading. Commodity contracts held for trading purposes are presented in the Condensed Consolidated Statement of Income on a net basis in the line “Sales and other operating revenue" and in the Consolidated Statement of Cash Flows in “Cash Flows from Operating Activities”. The Corporation’s commodity derivatives are not accounted for under hedge accounting. At times, the Corporation also enters into currency and interest rate derivatives, none of which are material to the Corporation’s financial position as of June 30, 2024 and December 31, 2023, or results of operations for the periods ended June 30, 2024 and 2023. Credit risk associated with the Corporation’s derivative position is mitigated by several factors, including the use of derivative clearing exchanges and the quality of and financial limits placed on derivative counterparties. The Corporation maintains a system of controls that includes the authorization, reporting, and monitoring of derivative activity. The net notional long/(short) position of derivative instruments at June 30, 2024 and December 31, 2023, was as follows: (millions) June 30, 2024 December 31, 2023 Crude oil (barrels) 6 ( 7 ) Petroleum products (barrels) ( 44 ) ( 43 ) Natural gas (MMBTUs) ( 568 ) ( 560 ) Realized and unrealized gains/(losses) on derivative instruments that were recognized in the Condensed Consolidated Statement of Income are included in the following lines on a before-tax basis: (millions of dollars) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Sales and other operating revenue ( 103 ) 332 ( 895 ) 983 Crude oil and product purchases ( 5 ) 5 ( 2 ) ( 20 ) Total ( 108 ) 337 ( 897 ) 963 15 Note 8. Disclosures about Segments and Related Information (millions of dollars) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Earnings (Loss) After Income Tax Upstream United States 2,430 920 3,484 2,552 Non-U.S. 4,644 3,657 9,250 8,482 Energy Products United States 450 1,528 1,286 3,438 Non-U.S. 496 782 1,036 3,055 Chemical Products United States 526 486 1,030 810 Non-U.S. 253 342 534 389 Specialty Products United States 447 373 851 824 Non-U.S. 304 298 661 621 Corporate and Financing ( 310 ) ( 506 ) ( 672 ) ( 861 ) Corporate total 9,240 7,880 17,460 19,310 Sales and Other Operating Revenue Upstream United States 6,729 1,673 8,919 4,443 Non-U.S. 3,317 3,739 6,843 9,126 Energy Products United States 26,415 26,128 51,218 51,052 Non-U.S. 43,014 38,945 82,423 78,921 Chemical Products United States 2,213 1,992 4,407 4,021 Non-U.S. 3,620 3,678 7,266 7,370 Specialty Products United States 1,538 1,542 3,007 3,110 Non-U.S. 3,115 3,095 6,265 6,384 Corporate and Financing 25 3 49 12 Corporate total 89,986 80,795 170,397 164,439 Intersegment Revenue Upstream United States 5,545 5,044 11,533 10,000 Non-U.S. 11,043 8,412 21,023 17,811 Energy Products United States 6,537 5,074 13,095 10,525 Non-U.S. 6,395 6,988 13,147 13,957 Chemical Products United States 1,950 2,084 3,815 3,872 Non-U.S. 998 977 2,023 1,754 Specialty Products United States 634 684 1,289 1,364 Non-U.S. 151 169 315 268 Corporate and Financing 71 64 150 128 16 Geographic Sales and Other Operating Revenue (millions of dollars) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 United States 36,895 31,335 67,551 62,626 Non-U.S. 53,091 49,460 102,846 101,813 Total 89,986 80,795 170,397 164,439 Significant Non-U.S. revenue sources include: (1) Canada 8,126 6,825 15,182 13,546 United Kingdom 5,036 5,242 10,196 12,253 Singapore 3,985 3,758 8,003 7,489 France 3,512 3,494 6,985 6,978 Australia 2,450 2,392 4,875 4,820 Germany 2,448 2,256 4,795 4,549 Belgium 2,302 2,410 4,709 5,059 (1) Revenue is determined by primary country of operations. Excludes certain sales and other operating revenues in non-U.S. operations where attribution to a specific country is not practicable. Revenue from Contracts with Customers Sales and other operating revenue include both revenue within the scope of ASC 606 and outside the scope of ASC 606. Trade receivables in Notes and accounts receivable – net reported on the Balance Sheet also includes both receivables within the scope of ASC 606 and those outside the scope of ASC 606. Revenue and receivables outside the scope of ASC 606 primarily relate to physically settled commodity contracts accounted for as derivatives. Contractual terms, credit quality, and type of customer are generally similar between those revenues and receivables within the scope of ASC 606 and those outside it. Sales and other operating revenue (millions of dollars) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Revenue from contracts with customers 64,181 63,322 122,600 127,626 Revenue outside the scope of ASC 606 25,805 17,473 47,797 36,813 Total 89,986 80,795 170,397 164,439 17 Note 9. Divestment Activities Through June 30, 2024, the Corporation realized proceeds of approximately $ 1.6 billion and net after-tax earnings of $ 0.4 billion from its divestment activities. This included the sale of the Santa Ynez Unit and associated facilities in California, certain conventional and unconventional assets in the United States, as well as other smaller divestments. In 2023, the Corporation realized proceeds of approximately $ 4.1 billion and recognized net after-tax earnings of approximately $ 0.6 billion from its divestment activities. This included the sale of the Aera Energy joint venture, Esso Thailand Ltd., the Billings Refinery, certain unconventional assets in the United States, as well as other smaller divestments. In February 2022, the Corporation signed an agreement with Seplat Energy Offshore Limited for the sale of Mobil Producing Nigeria Unlimited. The agreement is subject to certain conditions precedent and government approvals. In mid-2022, a Nigerian court issued an order to halt transition activities and enter into arbitration with the Nigerian National Petroleum Company. In June 2024, the court order was lifted and arbitration suspended. The closing date and any loss on sale will depend on resolution of the conditions precedent and government approvals. 18