Exxon Mobil Corporation 10-Q Summary
Business Context and Reporting Period
This filing is a Quarterly Report (Form 10-Q) for Exxon Mobil Corporation for the period ended June 30, 2007. The company is a large accelerated filer incorporated in New Jersey. As of June 30, 2007, there were 5,546,261,560 shares of common stock outstanding.
Key Financial Metrics
| Metric | Three Months Ended June 30, 2007 | Six Months Ended June 30, 2007 |
|---|---|---|
| Net Income | $10,260 million | $19,540 million |
| Earnings Per Share (Diluted) | $1.83 | $3.45 |
| Total Revenues | $98,350 million | $185,573 million |
| Operating Cash Flow | Filing text does not provide a clear value for the quarter | $25,604 million |
| Cash and Cash Equivalents | $28,959 million (plus $4,604 million restricted) | $28,959 million (plus $4,604 million restricted) |
| Total Debt | $8,790 million ($2,033m current + $6,757m long-term) | $8,790 million |
| Debt to Total Capital Ratio | 6.8% | 6.8% |
| Capital & Exploration Expenditures | $5,039 million | $9,261 million |
Material Changes vs. Prior Period
- Net Income: For the six months ended June 30, 2007, net income increased 4% to $19.54 billion compared to $18.76 billion in the prior year. For the quarter, net income was relatively flat at $10.26 billion versus $10.36 billion in 2006.
- Earnings Per Share: Diluted EPS increased 12% year-over-year for the six-month period ($3.45 vs. $3.09) and 6% for the quarter ($1.83 vs. $1.72), driven by strong earnings and a reduction in shares outstanding.
- Segment Performance:
- Upstream: Earnings decreased due to lower natural gas realizations and lower gains on asset sales. Liquids production increased 5% excluding entitlements and divestments.
- Downstream: Earnings increased significantly (up $1.55 billion for the six months) driven by higher refining and marketing margins and the sale of the Ingolstadt refinery in Germany.
- Chemical: Earnings increased due to improved margins.
- Share Repurchases: The company purchased 99 million shares in the second quarter for $8.1 billion. For the first six months, gross share purchases totaled $16.0 billion, reducing shares outstanding by 3.2%.
Guidance, Outlook, Risks, and Contingencies
- Capital Expenditures: Management expects full-year 2007 capital and exploration expenditures to remain in the range of $19.9 billion, similar to 2006.
- Venezuela Nationalization: On June 27, 2007, the Venezuelan government took over ExxonMobil's 41.67% interest in the Cerro Negro heavy oil development (net investment approx. $750 million) after failing to reach an agreement on a "mixed enterprise" structure. Compensation discussions are ongoing. Management does not expect a material effect on operations or financial condition.
- Legal Proceedings:
- Exxon Valdez: The Ninth Circuit Court of Appeals reduced the punitive damage award to $2.5 billion. ExxonMobil is petitioning the U.S. Supreme Court for a writ of certiorari.
- Alabama Royalty Dispute: A $3.5 billion punitive damage judgment is on appeal to the Alabama Supreme Court. Management believes the likelihood of the judgment being upheld is remote.
- Environmental: Various consent orders and lawsuits regarding air pollution and petroleum discharges (e.g., Brooklyn terminal, Baytown plant) are pending. Penalties are generally not expected to be material individually, though specific amounts are not always specified.
- Tax Accounting Change: The company adopted FASB Interpretation No. 48 (FIN 48) on January 1, 2007, resulting in a transition gain of $267 million in shareholders' equity.
Investor Verification Checklist
- Verify the status and potential financial impact of the Venezuela Cerro Negro nationalization and ongoing compensation negotiations.
- Monitor the outcome of the Exxon Valdez Supreme Court petition and the Alabama royalty dispute appeal.
- Review the share repurchase program execution and its impact on future earnings per share.
- Assess the sustainability of Downstream margins which drove the significant earnings increase in the first half of 2007.
- Confirm the timeline for resolution of unrecognized tax benefits totaling $3.7 billion as disclosed under FIN 48.
