Exxon Mobil Corp 10-Q

ITEM 1. FINANCIAL STATEMENTS CONDENSED CONSOLIDATED STATEMENT OF INCOME (millions of dollars, unless noted) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Revenues and other income Sales and other operating revenue 87,792 88,570 258,189 253,009 Income from equity affiliates 1,481 1,457 5,067 5,220 Other income 743 733 2,903 2,009 Total revenues and other income 90,016 90,760 266,159 260,238 Costs and other deductions Crude oil and product purchases 51,261 53,076 153,061 146,677 Production and manufacturing expenses 9,881 8,696 28,776 26,992 Selling, general and administrative expenses 2,296 2,489 7,359 7,328 Depreciation and depletion (includes impairments) 6,258 4,415 16,857 12,901 Exploration expenses, including dry holes 339 338 640 612 Non-service pension and postretirement benefit expense 33 166 90 497 Interest expense 207 169 699 577 Other taxes and duties 6,715 7,712 19,617 22,496 Total costs and other deductions 76,990 77,061 227,099 218,080 Income (loss) before income taxes 13,026 13,699 39,060 42,158 Income tax expense (benefit) 4,055 4,353 11,952 12,816 Net income (loss) including noncontrolling interests 8,971 9,346 27,108 29,342 Net income (loss) attributable to noncontrolling interests 361 276 1,038 962 Net income (loss) attributable to ExxonMobil 8,610 9,070 26,070 28,380 Earnings (loss) per common share (dollars) 1.92 2.25 6.12 6.98 Earnings (loss) per common share - assuming dilution (dollars) 1.92 2.25 6.12 6.98 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Net income (loss) including noncontrolling interests 8,971 9,346 27,108 29,342 Other comprehensive income (net of income taxes) Foreign exchange translation adjustment 1,315 ( 933 ) ( 67 ) ( 246 ) Adjustment for foreign exchange translation (gain)/loss included in net income — 549 — 549 Postretirement benefits reserves adjustment (excluding amortization) ( 17 ) 11 ( 30 ) 47 Amortization and settlement of postretirement benefits reserves adjustment included in net periodic benefit costs 16 6 42 19 Total other comprehensive income (loss) 1,314 ( 367 ) ( 55 ) 369 Comprehensive income (loss) including noncontrolling interests 10,285 8,979 27,053 29,711 Comprehensive income (loss) attributable to noncontrolling interests 447 340 953 1,149 Comprehensive income (loss) attributable to ExxonMobil 9,838 8,639 26,100 28,562 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) September 30, 2024 December 31, 2023 ASSETS Current assets Cash and cash equivalents 26,926 31,539 Cash and cash equivalents – restricted 46 29 Notes and accounts receivable – net 41,505 38,015 Inventories Crude oil, products and merchandise 19,183 20,528 Materials and supplies 4,692 4,592 Other current assets 1,997 1,906 Total current assets 94,349 96,609 Investments, advances and long-term receivables 48,869 47,630 Property, plant and equipment – net 299,543 214,940 Other assets, including intangibles – net 19,155 17,138 Total Assets 461,916 376,317 LIABILITIES Current liabilities Notes and loans payable 5,632 4,090 Accounts payable and accrued liabilities 60,518 58,037 Income taxes payable 3,843 3,189 Total current liabilities 69,993 65,316 Long-term debt 36,918 37,483 Postretirement benefits reserves 10,677 10,496 Deferred income tax liabilities 40,281 24,452 Long-term obligations to equity companies 1,637 1,804 Other long-term obligations 26,010 24,228 Total Liabilities 185,516 163,779 Commitments and contingencies (Note 3) EQUITY Common stock without par value ( 9,000 million shares authorized, 8,019 million shares issued) 46,936 17,781 Earnings reinvested 467,664 453,927 Accumulated other comprehensive income ( 11,959 ) ( 11,989 ) Common stock held in treasury ( 3,624 million shares at September 30, 2024 and 4,048 million shares at December 31, 2023) ( 234,049 ) ( 254,917 ) ExxonMobil share of equity 268,592 204,802 Noncontrolling interests 7,808 7,736 Total Equity 276,400 212,538 Total Liabilities and Equity 461,916 376,317 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) Nine Months Ended September 30, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) including noncontrolling interests 27,108 29,342 Depreciation and depletion (includes impairments) 16,857 12,901 Changes in operational working capital, excluding cash and debt ( 274 ) ( 2,064 ) All other items – net ( 898 ) 1,508 Net cash provided by operating activities 42,793 41,687 CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment ( 17,469 ) ( 15,691 ) Proceeds from asset sales and returns of investments 1,756 3,058 Additional investments and advances ( 1,038 ) ( 1,141 ) Other investing activities including collection of advances 311 214 Cash acquired from mergers and acquisitions 754 — Net cash used in investing activities ( 15,686 ) ( 13,560 ) CASH FLOWS FROM FINANCING ACTIVITIES Additions to long-term debt 426 805 Reductions in long-term debt ( 1,142 ) ( 11 ) Reductions in short-term debt ( 3,835 ) ( 222 ) Additions/(reductions) in debt with three months or less maturity ( 5 ) ( 283 ) Contingent consideration payments ( 27 ) ( 68 ) Cash dividends to ExxonMobil shareholders ( 12,333 ) ( 11,102 ) Cash dividends to noncontrolling interests ( 580 ) ( 511 ) Changes in noncontrolling interests ( 301 ) ( 258 ) Common stock acquired ( 13,849 ) ( 13,092 ) Net cash used in financing activities ( 31,646 ) ( 24,742 ) Effects of exchange rate changes on cash ( 57 ) ( 77 ) Increase/(decrease) in cash and cash equivalents ( 4,596 ) 3,308 Cash and cash equivalents at beginning of period 31,568 29,665 Cash and cash equivalents at end of period 26,972 32,973 SUPPLEMENTAL DISCLOSURES Income taxes paid 11,194 11,627 Cash interest paid Included in cash flows from operating activities 666 578 Capitalized, included in cash flows from investing activities 929 862 Total cash interest paid 1,595 1,440 Noncash right of use assets recorded in exchange for lease liabilities Operating leases 1,556 1,421 Finance leases 66 438 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 June 30, 2023 16,029 444,731 ( 12,657 ) ( 249,057 ) 199,046 7,951 206,997 Amortization of stock-based awards 138 — — — 138 — 138 Other ( 2 ) — — — ( 2 ) 59 57 Net income (loss) for the period — 9,070 — — 9,070 276 9,346 Dividends - common shares — ( 3,663 ) — — ( 3,663 ) ( 218 ) ( 3,881 ) Other comprehensive income (loss) — — ( 431 ) — ( 431 ) 64 ( 367 ) Share repurchases, at cost — — — ( 4,456 ) ( 4,456 ) ( 302 ) ( 4,758 ) Dispositions — — — 1 1 — 1 Balance as of September 30, 2023 16,165 450,138 ( 13,088 ) ( 253,512 ) 199,703 7,830 207,533 Balance as of June 30, 2024 46,781 463,294 ( 13,187 ) ( 228,483 ) 268,405 7,861 276,266 Amortization of stock-based awards 174 — — — 174 — 174 Other ( 19 ) — — — ( 19 ) ( 42 ) ( 61 ) Net income (loss) for the period — 8,610 — — 8,610 361 8,971 Dividends - common shares — ( 4,240 ) — — ( 4,240 ) ( 183 ) ( 4,423 ) Other comprehensive income (loss) — — 1,228 — 1,228 86 1,314 Share repurchases, at cost — — — ( 5,568 ) ( 5,568 ) ( 275 ) ( 5,843 ) Dispositions — — — 2 2 — 2 Balance as of September 30, 2024 46,936 467,664 ( 11,959 ) ( 234,049 ) 268,592 7,808 276,400 Three Months Ended September 30, 2024 Three Months Ended September 30, 2023 Common Stock Share Activity (millions of shares) Issued Held in Treasury Outstanding Issued Held in Treasury Outstanding Balance as of June 30 8,019 ( 3,576 ) 4,443 8,019 ( 4,016 ) 4,003 Share repurchases, at cost — ( 48 ) ( 48 ) — ( 40 ) ( 40 ) Dispositions — — — — — — Balance as of September 30 8,019 ( 3,624 ) 4,395 8,019 ( 4,056 ) 3,963 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 426 — — — 426 — 426 Other ( 13 ) — — — ( 13 ) 70 57 Net income (loss) for the period — 28,380 — — 28,380 962 29,342 Dividends - common shares — ( 11,102 ) — — ( 11,102 ) ( 511 ) ( 11,613 ) Other comprehensive income (loss) — — 182 — 182 187 369 Share repurchases, at cost — — — ( 13,224 ) ( 13,224 ) ( 302 ) ( 13,526 ) Dispositions — — — 5 5 — 5 Balance as of September 30, 2023 16,165 450,138 ( 13,088 ) ( 253,512 ) 199,703 7,830 207,533 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 549 — — — 549 — 549 Other ( 143 ) — — — ( 143 ) ( 26 ) ( 169 ) Net income (loss) for the period — 26,070 — — 26,070 1,038 27,108 Dividends - common shares — ( 12,333 ) — — ( 12,333 ) ( 580 ) ( 12,913 ) Other comprehensive income (loss) — — 30 — 30 ( 85 ) ( 55 ) Share repurchases, at cost — — — ( 13,856 ) ( 13,856 ) ( 275 ) ( 14,131 ) Issued for acquisitions 28,749 — — 34,603 63,352 — 63,352 Dispositions — — — 121 121 — 121 Balance as of September 30, 2024 46,936 467,664 ( 11,959 ) ( 234,049 ) 268,592 7,808 276,400 Nine Months Ended September 30, 2024 Nine Months Ended September 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 — ( 121 ) ( 121 ) — ( 119 ) ( 119 ) Issued for acquisitions — 545 545 — — — Dispositions — — — — — — Balance as of September 30 8,019 ( 3,624 ) 4,395 8,019 ( 4,056 ) 3,963 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 September 30, 2024 Nine Months Ended September 30, 2024 Sales and other operating revenues 6,291 10,663 Net income (loss) attributable to ExxonMobil 615 1,013 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Sales and other operating revenues 87,792 94,697 266,349 270,122 Net income (loss) attributable to ExxonMobil 8,610 10,049 26,866 30,712 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 September 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. September 30, 2024 (millions of dollars) Equity Company Obligations (1) Other Third-Party Obligations Total Guarantees Debt-related 1,092 138 1,230 Other 676 6,158 6,834 Total 1,768 6,296 8,064 (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) ( 241 ) 44 ( 197 ) Amounts reclassified from accumulated other comprehensive income 367 12 379 Total change in accumulated other comprehensive income 126 56 182 Balance as of September 30, 2023 ( 14,465 ) 1,377 ( 13,088 ) Balance as of December 31, 2023 ( 13,056 ) 1,067 ( 11,989 ) Current period change excluding amounts reclassified from accumulated other comprehensive income (1) 32 ( 34 ) ( 2 ) Amounts reclassified from accumulated other comprehensive income — 32 32 Total change in accumulated other comprehensive income 32 ( 2 ) 30 Balance as of September 30, 2024 ( 13,024 ) 1,065 ( 11,959 ) (1) Cumulative Foreign Exchange Translation Adjustment includes net investment hedge gain/(loss) net of taxes of $ 8 million and $ 25 million in 2024 and 2023, respectively. Amounts Reclassified Out of Accumulated Other Comprehensive Income - Before-tax Income/(Expense) (millions of dollars) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Foreign exchange translation gain/(loss) included in net income (Statement of Income line: Other income) — ( 549 ) — ( 549 ) 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) ( 21 ) ( 8 ) ( 55 ) ( 22 ) Income Tax (Expense)/Credit For Components of Other Comprehensive Income (millions of dollars) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Foreign exchange translation adjustment 90 83 84 216 Postretirement benefits reserves adjustment (excluding amortization) 30 ( 15 ) 24 16 Amortization and settlement of postretirement benefits reserves adjustment included in net periodic benefit costs ( 5 ) ( 2 ) ( 13 ) ( 3 ) Total 115 66 95 229 12 Note 5. Earnings Per Share Earnings per common share Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Net income (loss) attributable to ExxonMobil (millions of dollars) 8,610 9,070 26,070 28,380 Weighted-average number of common shares outstanding (millions of shares) (1) 4,462 4,025 4,260 4,064 Earnings (loss) per common share (dollars) (2) 1.92 2.25 6.12 6.98 Dividends paid per common share (dollars) 0.95 0.91 2.85 2.73 (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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Components of net benefit cost Pension Benefits - U.S. Service cost 135 111 365 353 Interest cost 168 169 504 500 Expected return on plan assets ( 181 ) ( 133 ) ( 543 ) ( 399 ) Amortization of actuarial loss/(gain) 20 21 62 63 Amortization of prior service cost ( 7 ) ( 8 ) ( 23 ) ( 22 ) Net pension enhancement and curtailment/settlement cost 13 8 30 23 Net benefit cost 148 168 395 518 Pension Benefits - Non-U.S. Service cost 85 81 254 244 Interest cost 203 231 628 697 Expected return on plan assets ( 235 ) ( 172 ) ( 726 ) ( 518 ) Amortization of actuarial loss/(gain) 25 15 74 43 Amortization of prior service cost 12 13 37 38 Net benefit cost 90 168 267 504 Other Postretirement Benefits Service cost 22 20 59 60 Interest cost 62 67 187 206 Expected return on plan assets ( 5 ) ( 4 ) ( 15 ) ( 11 ) Amortization of actuarial loss/(gain) ( 26 ) ( 30 ) ( 78 ) ( 91 ) Amortization of prior service cost ( 16 ) ( 11 ) ( 47 ) ( 32 ) Net benefit cost 37 42 106 132 13 Note 7. Financial Instruments and Derivatives The estimated fair value of financial instruments and derivatives at September 30, 2024 and December 31, 2023, and the related hierarchy level for the fair value measurement was as follows: September 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) 7,925 1,208 — 9,133 ( 8,118 ) ( 295 ) — 720 Advances to/receivables from equity companies (2)(6) — 2,486 4,548 7,034 — — 388 7,422 Other long-term financial assets (3) 1,436 — 1,548 2,984 — — 212 3,196 Liabilities Derivative liabilities (4) 7,689 1,247 — 8,936 ( 8,118 ) ( 59 ) — 759 Long-term debt (5) 30,386 1,688 — 32,074 — — 2,691 34,765 Long-term obligations to equity companies (6) — — 1,700 1,700 — — ( 63 ) 1,637 Other long-term financial liabilities (7) — — 539 539 — — 51 590 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 September 30, 2024 and December 31, 2023, respectively, the Corporation had $ 634 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 September 30, 2024, the Corporation has designated $ 3.4 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 $ 1,613 million as of the end of third 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 September 30, 2024 and December 31, 2023, or results of operations for the periods ended September 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 September 30, 2024 and December 31, 2023, was as follows: (millions) September 30, 2024 December 31, 2023 Crude oil (barrels) 7 ( 7 ) Petroleum products (barrels) ( 49 ) ( 43 ) Natural gas (MMBTUs) ( 674 ) ( 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Sales and other operating revenue 690 ( 1,049 ) ( 205 ) ( 66 ) Crude oil and product purchases ( 4 ) 34 ( 6 ) 14 Total 686 ( 1,015 ) ( 211 ) ( 52 ) 15 Note 8. Disclosures about Segments and Related Information (millions of dollars) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Earnings (Loss) After Income Tax Upstream United States 1,686 1,566 5,170 4,118 Non-U.S. 4,472 4,559 13,722 13,041 Energy Products United States 517 1,356 1,803 4,794 Non-U.S. 792 1,086 1,828 4,141 Chemical Products United States 367 338 1,397 1,148 Non-U.S. 526 ( 89 ) 1,060 300 Specialty Products United States 375 326 1,226 1,150 Non-U.S. 419 293 1,080 914 Corporate and Financing ( 544 ) ( 365 ) ( 1,216 ) ( 1,226 ) Corporate total 8,610 9,070 26,070 28,380 Sales and Other Operating Revenue Upstream United States 7,111 2,587 16,030 7,030 Non-U.S. 3,575 3,424 10,418 12,550 Energy Products United States 25,536 27,251 76,754 78,303 Non-U.S. 40,983 45,295 123,406 124,216 Chemical Products United States 2,200 1,924 6,607 5,945 Non-U.S. 3,709 3,557 10,975 10,927 Specialty Products United States 1,455 1,503 4,462 4,613 Non-U.S. 3,198 2,998 9,463 9,382 Corporate and Financing 25 31 74 43 Corporate total 87,792 88,570 258,189 253,009 Intersegment Revenue Upstream United States 6,672 5,091 18,205 15,091 Non-U.S. 10,543 10,532 31,566 28,343 Energy Products United States 5,500 6,724 18,595 17,249 Non-U.S. 6,556 7,286 19,703 21,243 Chemical Products United States 1,864 2,231 5,679 6,103 Non-U.S. 1,104 976 3,127 2,730 Specialty Products United States 545 594 1,834 1,958 Non-U.S. 145 142 460 410 Corporate and Financing 111 39 261 167 16 Geographic Sales and Other Operating Revenue (millions of dollars) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 United States 36,302 33,265 103,853 95,891 Non-U.S. 51,490 55,305 154,336 157,118 Total 87,792 88,570 258,189 253,009 Significant Non-U.S. revenue sources include: (1) Canada 7,777 8,314 22,958 21,860 United Kingdom 5,033 5,509 15,229 17,762 Singapore 4,157 3,880 12,159 11,369 France 3,574 4,017 10,559 10,995 Germany 2,465 2,468 7,260 7,016 Australia 2,365 2,448 7,239 7,269 (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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Revenue from contracts with customers 63,594 68,533 186,194 196,159 Revenue outside the scope of ASC 606 24,198 20,037 71,995 56,850 Total 87,792 88,570 258,189 253,009 17 Note 9. Divestment Activities Through September 30, 2024, the Corporation realized proceeds of approximately $ 1.8 billion and net after-tax earnings of $ 0.5 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