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Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) March 17, 2004

Exxon Mobil Corporation

(Exact name of registrant as specified in its charter)
         
New Jersey
(State or other jurisdiction
of incorporation)
  1-2256
(Commission
File Number)
  13-5409005
(IRS Employer
Identification No.)
     
5959 LAS COLINAS BOULEVARD, IRVING, TEXAS
(Address of principal executive offices)
  75039-2298
(Zip Code)

Registrant’s telephone number, including area code (972) 444-1000

            


(Former name or former address, if changed since last report.)



 


TABLE OF CONTENTS

ITEM 9. Regulation FD Disclosure; and
ITEM 12. Results of Operations and Financial Condition
SIGNATURES
INDEX TO EXHIBITS
2003 Financial and Operating Review


Table of Contents

ITEM 9. Regulation FD Disclosure; and

ITEM 12. Results of Operations and Financial Condition

The following information is furnished pursuant to both Item 9 and Item 12.

The Registrant hereby furnishes the information set forth in its 2003 Financial and Operating Review, a copy of which is included as Exhibit 99.

-2-


Table of Contents

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

         
  EXXON MOBIL CORPORATION
 
       
Date: March 17, 2004
  By:   /s/ Donald D. Humphreys
     
 
      Name: Donald D. Humphreys
Title: Vice President, Controller and
          Principal Accounting Officer

-3-


Table of Contents

INDEX TO EXHIBITS

     
Exhibit No.
  Description
99
  Exxon Mobil Corporation’s 2003 Financial and Operating Review.

-4-

exv99
 

EXHIBIT 99

     
2003
Financial & Operating Review
  (EXXONMOBIL LOGO)
Taking on the world’s toughest energy challenges.TM

(MAP)

 


 

Corporate

(GRAPHS AND BAR CHARTS)

             
o
  Corporate     1-17  
o
  Safety, Health & Environment     18-19  
o
  Technology     20-23  
o
  Upstream     24-61  
o
  Downstream     62-77  
o
  Chemical     78-85  
o
  Frequently Used Terms     86-89  
  Index     90  

Projections, targets, expectations, estimates, and business plans in this report are forward-looking statements. Actual future results, including demand growth and energy mix; capacity growth; the impact of new technologies; capital expenditures; project plans, dates, and capacities; production rates and resource recoveries; and efficiency gains and cost savings could differ materially due to, for example, changes in market conditions affecting the oil and gas industry; war and other political or security disturbances; changes in law or government regulation; the actions of competitors; unexpected technological developments; the occurrence and duration of economic recessions; the outcome of commercial negotiations; unforeseen technical difficulties; and other factors discussed in this report and under the heading “Factors Affecting Future Results” on our web site and in Item 1 of ExxonMobil’s most recent Form 10-K.

Definitions of certain financial and operating measures and other terms used in this report are contained in the section titled “Frequently Used Terms” on pages 86 through 89. In the case of financial measures that we believe constitute “non-GAAP financial measures” under SEC Regulation G, the definitions also include a reconciliation to the most comparable GAAP measure and other information required by that rule.

Certain reclassifications to prior years have been made to conform to the 2003 presentation.

 


 

ExxonMobil has a long history of leadership in the petroleum and petrochemical industries. The discipline we apply to the execution of the following key long-standing business strategies has led to sustainable competitive advantages and allowed us to take on the world’s toughest energy challenges. These key business strategies have helped us achieve industry-leading earnings and return on capital employed year after year.

  Upholding the highest ethical standards and business integrity
 
  Ensuring safe, environmentally-sound operations
 
  Capturing quality investment opportunities while maintaining a selective and disciplined approach
 
  Executing operational excellence in all aspects of our businesses
 
  Developing and employing cutting-edge proprietary technology
 
  Achieving leadership positions in each of our core businesses
 
  Optimizing financial performance through geographic and functional portfolio diversity and integration
 
  Maintaining a strong financial position to allow for the pursuit of all profitable opportunities
 
  Attracting and retaining an exceptionally qualified and highly motivated workforce
 
  Leveraging efficiency gains through our Global Functional Organization

     


2003 HIGHLIGHTS

  Record low safety incidents
 
  Record earnings — highest in the history of the Corporation
 
  Industry-leading return on capital employed of 21 percent
 
  Proved reserves additions replaced 105 percent of production
 
  Oil-equivalent production capacity increased 1 percent
 
  16 Upstream projects started up in 2003, with a combined targeted gross daily peak production of 1.2 million barrels of oil per day and 1.3 billion cubic feet per day of natural gas
 
  Key resource additions from Qatar, Angola, Canada, Nigeria, Brazil, Kazakhstan, and the United States
 
  Downstream operating cost, efficiency gains, and revenue enhancements in excess of $1.5 billion
 
  Chemical prime product sales equivalent to last year’s record level
 
  Annual dividend payments increased for the 21st consecutive year
 
  $11.5 billion returned to shareholders through dividends and share purchases

2003 Industry Conditions

  World GDP grew about 2.5 percent in 2003, versus 2.0 percent in 2002.
 
  World oil demand increased by about 1.4 million barrels per day in 2003. World natural gas consumption increased by about 6 billion cubic feet per day in 2003.
 
  Brent oil prices averaged almost $29 per barrel in 2003, up about $4 per barrel versus 2002.
 
  Natural gas prices in the United States were volatile, but on average were 74 percent higher versus 2002. In Europe, natural gas prices were up 23 percent versus 2002, and up 7 percent excluding foreign exchange effects.
 
  2003 industry refining margins throughout the world improved versus 2002 and were particularly strong during the first half of 2003. The stronger margins reflected many crude oil and finished product market factors, including stronger product demand in the U.S.and elsewhere.
 
  Worldwide industry chemical demand grew 3 percent during 2003, primarily driven by growth in Asia.

Exxon Mobil Corporation 1 Corporate

 


 

FINANCIAL HIGHLIGHTS

                                         
(millions of dollars)
  2003
2002
2001
2000
1999
Sales and other operating revenue
    237,054       200,949       208,715       227,596       181,759  
Net income
    21,510       11,460       15,320       17,720       7,910  
Cash flow from operations and asset sales
    30,788       24,061       23,967       28,707       15,985  
Capital and exploration expenditures
    15,525       13,955       12,311       11,168       13,307  
Cash dividends to ExxonMobil shareholders
    6,515       6,217       6,254       6,123       5,872  
Research and development costs
    618       631       603       564       630  
Cash and cash equivalents at year end
    10,626       7,229       6,547       7,080       1,688  
Total assets at year end
    174,278       152,644       143,174       149,000       144,521  
Total debt at year end
    9,545       10,748       10,802       13,441       18,972  
Shareholders’ equity at year end
    89,915       74,597       73,161       70,757       63,466  
Average capital employed(1)
    95,373       88,342       88,000       87,463       83,836  
Market valuation at year end
    269,294       234,101       267,577       301,239       280,150  
     
 
     
 
     
 
     
 
     
 
 
KEY FINANCIAL RATIOS
                                       
Net income per common share — assuming dilution (dollars)
    3.23       1.68       2.21       2.52       1.12  
Return on average capital employed(1) (percent)
    20.9       13.5       17.8       20.6       10.3  
Net income to average shareholders’ equity (percent)
    26.2       15.5       21.3       26.4       12.6  
Net income to total revenue and other income (percent)
    8.7       5.6       7.2       7.6       4.3  
Debt to capital(2)(percent)
    9.3       12.2       12.4       15.4       22.0  
Net debt to capital (net of all cash — percent)
    (1.2 )     4.4       5.3       7.9       20.4  
Current assets to current liabilities(3)
    1.20       1.15       1.18       1.06       0.80  
Fixed charge coverage (times)
    30.8       13.8       17.7       15.6       6.6  
     
 
     
 
     
 
     
 
     
 
 

(1)   See Frequently Used Terms.
 
(2)   Debt includes short- and long-term debt. Capital includes short- and long-term debt, shareholders’ equity, and minority interests.
 
(3)   Current liabilities include short-term debt (notes and loans payable).

(GRAPHS AND BAR CHARTS)

CORPORATE 2 Exxon Mobil Corporation

 


 

INDUSTRY OUTLOOK

Understanding energy supply and demand trends is a critical element of ExxonMobil’s strategic planning process. For several decades, we have produced a comprehensive worldwide energy outlook that typically covers 20 years into the future.

World Energy Needs Are Growing

Energy use and economic growth are closely linked, and growing economies will continue to require reliable energy supplies.

Economic growth is expected to remain the primary driver of energy demand. We expect the world’s economy will grow on average at about 3 percent per year through 2020, more slowly in developed countries and faster in developing nations.

Developing nations are expected to generate about 80 percent of the worldwide growth in energy demand from 2000 through 2020. Meeting this growing need for energy presents a vital opportunity. About one-quarter of the world’s population has no access to electricity and close to 40 percent rely on biomass for cooking and heating. Modern energy is critical for raising living standards in developing nations through better health, education, and productivity.

By 2020, we expect that the world in total will require about 40 percent more energy than in 2000, or close to 290 million barrels of oil-equivalent energy every single day, despite continuing conservation efforts and efficiency gains.

From a historical perspective, energy efficiency has improved dramatically. For example, industrialized nations now use about one-third less energy for each $1,000 of economic output than in 1970. We expect continuing worldwide efficiency gains of about 1 percent per year due to improved vehicles, power plants, construction standards, and other actions.

(BAR CHART)

Oil and Gas Will Remain Predominant Energy Sources

Meeting higher energy demands will require a broad portfolio of energy options. We anticipate that hydrocarbon fuels will remain the dominant energy source through the middle of the century.

Oil and gas are expected to remain essential to economic growth throughout the world. Their share of the world’s energy supply — close to 60 percent today — is expected to remain relatively stable over the next two decades. The economic advantages of these primary energy sources will continue as resources exist in sufficient quantity to meet the world’s growing demand.

Energy sources other than oil and gas will be important to meet world demand.

  Coal will grow, driven by strong demand in China and India and continued growth in the U.S.
 
  Hydropower and nuclear power will also grow, though public opposition and the lack of suitable sites will limit capacity.

We expect wind and solar energy to average double-digit growth rates through 2020, supported by continued public subsidies. However, because wind and solar energy start from a very small base, they are likely to provide only about one-half of 1 percent of the world’s energy in 2020.

Carbon emissions associated with energy use are expected to continue to rise through 2020. About 80 percent of the emissions growth is expected to occur in developing nations, a factor to be considered in approaches to reduce global emissions.

(GRAPHS)

Exxon Mobil Corporation 3 Corporate

 


 

Industry Outlook (continued)

Transportation Needs Drive Growing Oil Demand

About 60 percent of the expected increase in oil demand stems from growing transportation needs, reflecting a steady increase in the number of vehicles per capita as personal incomes rise. This is particularly significant in developing countries, which will account for about 75 percent of the increase in transportation demand.

Helping offset the growth in vehicle miles traveled are continuing advances in automotive technologies. Today’s gasoline internal combustion engine (ICE) represents the competitive standard, and new approaches are being researched by ExxonMobil and automobile companies to improve fuel efficiency and reduce CO2 emissions.

While there are a number of promising emerging technologies, continued advances in ICE technologies, including hybrids, will provide significant gains for fuel efficiency and reduced CO2 emission levels. In 2020, we believe essentially all automobiles will continue to use an ICE, and so we will continue to engage in developments that will make these technologies more efficient.

  ICE research is underway to better understand the complex interactions between the blend of molecules in gasoline or diesel fuel and an engine. This research will help optimize future fuel/engine systems for higher efficiency and lower emissions.
 
  A second path, called homogeneous charge compression ignition (HCCI), involves new combustion technologies that have attributes of both gasoline spark ignition and diesel compression ignition. Advances through research could lead to 30 percent better fuel efficiency as compared to current gasoline-fueled engines, and a significant reduction in smog-causing emissions and carbon dioxide.
 
  Another promising extension of ICE technology is hybrid-vehicle technology. Hybrids use a gasoline engine for steady speeds and an electric motor for extra power during the more energy demanding phases of start-up and acceleration. In city driving, where this technology has major advantages, these vehicles deliver a fuel economy improvement of more than 50 percent. Models using this technology are on the road today.

For the longer term, there is significant research underway related to automotive fuel cell systems powered by hydrogen. Hydrogen is abundant, and therefore appealing, but as it is not found freely in nature, it requires energy to produce it. Technical and economic issues related to the cost, safe distribution, and widespread use of hydrogen remain significant challenges.

Natural Gas Emerging as a Global Market

Over the next two decades, we expect natural gas will be the fastest growing primary energy source, capturing about one-third of all incremental energy growth and approaching one-quarter of global energy supplies. Driving this demand is the fact that natural gas remains the primary fuel of choice to meet worldwide electricity demand growth of about 3 percent per year.

As natural gas demand grows, inter-regional trade is expected to more than triple by 2020, increasing to about 18 percent of total demand. Effective international cooperation, as well as significant investments to sustain and enhance natural gas production and transportation systems, will be critical to achieving this growth

(BAR CHARTS)

Corporate 4 Exxon Mobil Corporation

 


 

An area of significant interest is development of a world-wide liquefied natural gas (LNG) market. We expect the LNG market to quadruple by 2020, accounting for about 13 percent of total world gas demand. With equity positions in many of the largest gas accumulations in the world, we are strongly positioned to benefit from our technology advances in gas liquefaction, transportation, and regasification that enable distant gas supplies to reach markets economically.

(BAR CHART)

Growing Oil and Gas Demand Requires New Supplies

Meeting growing oil and gas demand will be a challenge. Nevertheless, abundant resources exist. According to U.S. Geological Survey (USGS) estimates, the conventional recoverable liquid resource base is about 3 trillion barrels of oil. In addition, there are significant unconventional resources including extra heavy oil, oil sands, and other resources. The International Energy Agency (IEA) has compiled estimates that indicate there are over 4.3 trillion barrels of unconventional oil resources in place. To put this volume into perspective, a total of less than 1 trillion barrels of petroleum has been produced since the 1800’s.

New technologies will continue to extend the recoverable liquid hydrocarbon resource, as demonstrated in the past by improvements in 3D seismic imaging and reservoir modeling, advanced drilling, and arctic and deepwater resource development. In fact, according to the USGS, despite production of more than 400 billion barrels since 1980, remaining recoverable oil resources are more than 70 percent higher now versus 1980.

The ongoing task is to find, produce, and deliver this energy. By 2020, the industry will likely need to add about 125 million barrels of oil-equivalent per day to meet demand — an amount close to current production levels. Development of these supplies will require access to resources, continued technology advances, adequate financing, and the cooperation of host governments. New technology will also enable unconventional resources to contribute to future energy supplies.

(GRAPH)

The costs to develop these resources are large. According to the IEA’s World Energy Investment Outlook 2003 report, the investment required to meet total energy needs worldwide through 2030 will be $16 trillion with about 38 percent, or $200 billion per year, required for oil and gas.

(PIE CHART)

ExxonMobil, with its industry leading resource base, financial strength, disciplined investment approach, and technology portfolio, is well positioned to participate in substantial investments to develop new energy supplies. Our strong base will provide us with a sustainable competitive advantage and help us remain at the forefront in capitalizing on the opportunities ahead.

Exxon Mobil Corporation 5 Corporate

 


 

UNPARALLELED EXECUTION OF BUSINESS STRATEGIES BUILDS COMPETITIVE ADVANTAGE

Although other companies may take a similar approach, it is the execution of our strategies that distinguishes us from competition. It is this superior execution that delivers industry-leading results in all aspects of our business.

Upholding the Highest Ethical Standards and Business Integrity

ExxonMobil has long recognized the importance and value of sound corporate governance, high ethical standards and business integrity. We believe that the methods we employ to attain results are as important as the results themselves. We are committed to candor, honesty, and integrity in the reports that we make to our investors. Those messages are included in our Standards of Business Conduct, which has been widely communicated to our employees for decades. ExxonMobil employees and non-employee directors are expected to review the policies in our Standards of Business Conduct periodically and to apply them to all aspects of their work. Our straightforward business model, Standards of Business Conduct and culture of integrity and legal compliance are key to achieving long-term sustainable results.

Ensuring Safe, Environmentally Sound Operations

ExxonMobil is committed to maintaining high standards of safety, health, and environmental care. We comply with all applicable environmental laws and regulations, and apply responsible standards where laws and regulations do not exist. We believe that when a company is committed to safety, health, and the environment, as we are, this provides the sound foundation for all aspects of the business, and helps to deliver superior financial results. In 2003, ExxonMobil set another record in employee safety performance, and again led the industry in this area.

Capturing Quality Investment Opportunities While Maintaining a Selective and Disciplined Approach

ExxonMobil applies a highly disciplined approach in selecting and pursuing the most attractive investment opportunities. Ours is a long-term business where large capital investments are required. Potential investment opportunities are tested over a wide range of economic scenarios to establish the resiliency of each opportunity. Our disciplined approach continues through execution of all phases of the investment from design through start-up and ongoing operations. Once investments are made, a rigorous reappraisal process is completed to ensure relevant lessons are learned and improvements are incorporated into future projects. This rigorous approach ensures that we obtain the maximum value for our investments, and clearly distinguishes us from competition.

ExxonMobil views return on capital employed as the most critical and best measure of historical capital productivity in our capital-intensive, long-term industry. ExxonMobil has a long history of leadership in return on capital employed. The combination of our disciplined investments and operational excellence eliminates the need for periodic large asset write-offs and leads to consistent industry-leading returns throughout the business cycles. In 2003, ExxonMobil remained the industry leader in return on capital employed, with a return of 20.9 percent.

(GRAPHS AND BAR CHARTS)

             
Growth in Shareholder Value
Disciplined Investment
  Operational Excellence   Superior Cash Flow   Industry-Leading Returns

Execution of Resilient Business Model Delivers Results ExxonMobil’s fundamental approach to its business is disciplined, straightforward, and focused on the long-term. With over 120 years of industry experience, ExxonMobil has managed through the business cycles with our resilient business model. Consistently applying the ExxonMobil business model is self-sustaining in that success in one area provides the basis for success in the next, creating ever-greater shareholder value.

Corporate 6 Exxon Mobile Corporation

 


 

Executing Operational Excellence in All Aspects of Our Businesses

ExxonMobil operates our business to the highest industry standards in all respects. We call this operational excellence. To accomplish this, ExxonMobil has developed a wide range of proven management systems. These systems cover all aspects of our operations from business ethics, finance, project execution and reappraisal, to operating, security, safety, health, environmental and profit improvement initiatives, including efforts to increase reliability, lower costs, and enhance revenue. We have achieved strong results by focusing on operational excellence.

Developing and Employing Cutting-Edge Proprietary Technology

ExxonMobil has a long-standing tradition in technology development. Our industry-leading technology investments include research dedicated to the discovery and development of new technologies and their application to day-to-day operations. A significant portion of our research program is aimed at developing next-generation and breakthrough technologies that have the potential to provide a step-change to the Corporation’s competitive position and financial performance. During the past 10 years, ExxonMobil has received over 10 thousand patents in the U.S. and Europe.

Optimizing Financial Performance Through Geographic and Functional Portfolio Diversity and Integration

ExxonMobil’s size, geographic diversity, and the complementary nature of our businesses provide a natural hedge and mitigate the Corporation’s sensitivity to fluctuations in commodity prices, business cycles, and individual market conditions. In addition, by taking advantage of synergies among our various businesses, including physical integration of manufacturing facilities, ExxonMobil is able to optimize total company performance. For example, over 80 percent of our refining capacity is integrated with chemical and/or lubricant manufacturing operations. This integration provides competitive advantages through improved feedstock flexibility and lower site operating costs.

(BAR CHART)


ExxonMobil is well positioned in established markets
and is expanding in higher-growth regions.

Maintaining a Strong Financial Position to Allow for the Pursuit of All Profitable Opportunities

ExxonMobil’s financial strength provides a competitive advantage that enables us to pursue any and all profitable investment opportunities that achieve acceptable returns around the world. ExxonMobil is one of few U.S. companies with a triple-A credit rating, a rating that has been sustained for 85 years. Strong business results and our disciplined approach to financial management ensure we maintain this financial strength at any stage of the industry cycle.

We rely on our geographic and functional diversity to reduce our financial exposure. As a result, the company seldom uses derivatives to hedge corporate risk and never uses them to speculate.

(GRAPHS)

Exxon Mobil Corporation 7 Corporate

 


 

Business Strategies (continued)

Attracting and Retaining Exceptional Quality and Highly Motivated Workforce

ExxonMobil’s success is the result of a highly capable, diverse workforce focused on the right business priorities. Developing such a workforce requires leadership, action plans, accountability, stewardship, and constancy of purpose over the long-term.

                                         
(thousands of employees, year-end)
  2003
  2002
  2001
  2000
  1999
United States
    34       36       36       36       39  
Outside United States
    54       56       62       64       68  
 
   
 
     
 
     
 
     
 
     
 
 
Total regular employees(1)
    88       92       98       100       107  
 
   
 
     
 
     
 
     
 
     
 
 
CORS(2) employees not included above
    18       17       20       19       16  
 
   
 
     
 
     
 
     
 
     
 
 
(1)   Active executive, management, professional, technical and wage employees who work full-time or part-time for the company and are covered by the company’s benefit plans.
 
(2)   CORS employees are employees of company-operated retail sites.

Leveraging Efficiency Gains Through Our Global Functional Organization

ExxonMobil is organized to operate our functional business lines on a global basis. Through this functional organization, global opportunities are ranked and people are deployed to ever-changing business conditions. The functional organization also helps to promptly identify and prioritize high-impact technology needs, and it facilitates rapid sharing of ideas and best practices across our global organizations.

ExxonMobil’s functional approach continues to deliver savings to the bottom line through operating cost efficiencies and revenue enhancement opportunities. In 2003, ExxonMobil delivered more than $1.0 billion in before-tax operating cost efficiencies.

     


COMPETITIVE ADVANTAGES BUILD SHAREHOLDER VALUE

Strong Cash Flow Results from Business Approach

ExxonMobil generated $30.8 billion in cash flow from operations and asset sales in 2003. We distributed more than $11.5 billion to shareholders through dividend payments and share purchases. In addition, we invested $15.5 billion in capital and exploration expenditures. And finally, the company repaid debt obligations where it was economically attractive to do so, reducing debt outstanding to $9.5 billion by year-end 2003. Cash balances were over $10.6 billion at year-end 2003. Our strong financial position allows us to pursue any and all profitable investment opportunities that achieve acceptable returns.

ExxonMobil’s Approach Grows Shareholder Value

ExxonMobil’s core, fundamental objective is long-term growth in shareholder value. Our business strategies form the basis of ExxonMobil’s commitment to deliver superior shareholder value through growing dividends and long-term share price appreciation. Dividends paid per share have increased in each of the last 21 years, an unmatched record among international oil companies, reaching $0.98 per share in 2003. During 2003, we distributed more than $6.5 billion through dividend payments and increased share purchases to $5.0 billion (excluding spending to offset share issuance under benefit plans). The combination of dividends and share purchases represented a total yield of about 4.9 percent of the company’s equity market capitalization at the beginning of the year. During the last three years, $33 billion in dividends and share buybacks have been distributed to shareholders, representing 11 percent of ExxonMobil’s year-end 2000 market value.

Total shareholder return on ExxonMobil stock has consistently outpaced the S&P 500 index over the long-term. ExxonMobil shareholders have earned annualized returns of 13.3 percent and 16.2 percent during the last 10 and 20 years, respectively, compared with returns from the S&P 500 index of 11.1 percent and 13.0 percent in the same time periods.

The volatility of ExxonMobil’s stock price, a measure of the fluctuation of monthly returns around its average and one indicator of risk, equaled the volatility of the broadly diversified S&P 500 during the past 20 years, and has been well below that of our industry peers during that same time period.

(CHART)

Corporate 8 Exxon Mobil Corporation

 


 

DIVIDEND AND OTHER SHAREHOLDER INFORMATION

                                         
    2003
  2002
  2001
  2000
  1999
Net income per common share (dollars)
    3.24       1.69       2.23       2.55       1.14  
Net income per common share — assuming dilution (dollars)
    3.23       1.68       2.21       2.52       1.12  
Dividends per common share(1)(dollars)
                                       
First quarter
    0.23       0.23       0.22       0.22       0.208  
Second quarter
    0.25       0.23       0.23       0.22       0.208  
Third quarter
    0.25       0.23       0.23       0.22       0.208  
Fourth quarter
    0.25       0.23       0.23       0.22       0.220  
 
   
 
     
 
     
 
     
 
     
 
 
Total
    0.98       0.92       0.91       0.88       0.844  
 
   
 
     
 
     
 
     
 
     
 
 
Annual dividend growth (percent)
    6.5       1.1       3.4       4.3       1.3  
Number of common shares outstanding (millions)
                                       
Average
    6,634       6,753       6,868       6,953       6,906  
Average — assuming dilution
    6,662       6,803       6,941       7,033       7,036  
Year end
    6,568       6,700       6,809       6,930       6,955  
Number of registered shareholders at year end (thousands)
    659       678       699       719       779  
 
   
 
     
 
     
 
     
 
     
 
 
Annual total shareholder returns(2)(percent)
    20.5       (8.9 )     (7.6 )     10.2       12.5  
Market quotations for common stock(3)(dollars)
                                       
High
    41.13       44.58       45.84       47.72       43.63  
Low
    31.58       29.75       35.01       34.94       32.16  
Average daily close
    36.14       37.70       41.29       41.42       38.40  
Year-end close
    41.00       34.94       39.30       43.47       40.28  
 
   
 
     
 
     
 
     
 
     
 
 
Cash dividends paid on common stock (millions of dollars)
    6,515       6,217       6,254       6,123       5,836  
Cash dividends paid on preferred stock (millions of dollars)
                            36  
 
   
 
     
 
     
 
     
 
     
 
 
Total cash dividends paid (millions of dollars)
    6,515       6,217       6,254       6,123       5,872  
Cash dividends paid to net income (percent)
    30       54       41       35       74  
Cash dividends paid to cash flow(4)(percent)
    23       29       27       27       39  
 
   
 
     
 
     
 
     
 
     
 
 
(1)   Dividends per common share for 1999 reflect the sum of the dividends paid by Exxon and Mobil divided by the number of shares that would have been outstanding for the periods, after adjusting the Mobil shares for the exchange ratio of 1.32015 shares of ExxonMobil common stock.
 
(2)   Total shareholder returns are the appreciation of the stock price over a year plus the value of the dividends, with dividend reinvestment, and excluding trading commissions and taxes. See Frequently Used Terms.
 
(3)   Market quotations for common stock reflect Exxon share prices through November 30, 1999, the effective date of the merger, and ExxonMobil share prices thereafter.
 
(4)   Cash flow from operations.

     


DISCIPLINED MANAGEMENT OF ANNUITY PLANS

ExxonMobil and its affiliates manage more than 100 pension plans. The funding arrangement for each plan depends on the prevailing practices and regulations of the countries where the company operates. In countries where the prevailing practice is to fund most pension obligations through separate assets or insurance arrangements, such as in the United States, Canada, and the United Kingdom, our plans meet or exceed the required funding levels as measured by relevant actuarial and government standards at the mandated measurement dates. In addition, all defined benefit pension plans, regardless of funding status, are fully supported by the financial strength of the Corporation or the sponsoring affiliate.

Our approach to managing the financial assets associated with these plans is consistent with the core principles followed in all ExxonMobil businesses. Our fund management reflects careful assessment of risks of various asset classes, diversification to minimize the portfolio’s risk, and a long-term orientation.

ExxonMobil is a capital-intensive, rather than a labor-intensive business. Pension expense represented only 4 percent of total operating costs in 2003. Pension expense is calculated based on U.S. GAAP, which requires certain assumptions, such as discount rate and long-term expected earnings. Assumptions are developed conservatively, are reviewed by third-party actuaries and senior management, and are well within the range of peer practice and actual experience. The long-term earning rate assumption for 2004 is 9 percent for the U.S. pension plan, the same as in 2003. Returns over the past 10- and 20-year periods were 11 and 12 percent, respectively.

Exxon Mobil corporation 9 Corporate

 


 

FUNCTIONAL EARNINGS

                                                                         
    2003 Quarters
                   
(millions of dollars)
  First
  Second
  Third
  Fourth
  2003
  2002
  2001
  2000
  1999
Net Income (U.S. GAAP)
                                                                       
Upstream
                                                                       
United States
    1,259       907       883       856       3,905       2,524       3,933       4,542       1,873  
Non-U.S.
    4,434       1,931       1,819       2,413       10,597       7,074       6,803       8,143       4,371  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total
    5,693       2,838       2,702       3,269       14,502       9,598       10,736       12,685       6,244  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Downstream
                                                                       
United States
    174       419       371       384       1,348       693       1,924       1,561       577  
Non-U.S.
    549       727       540       352       2,168       607       2,303       1,857       650  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total
    723       1,146       911       736       3,516       1,300       4,227       3,418       1,227  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Chemical
                                                                       
United States
    16       128       25       212       381       384       298       644       738  
Non-U.S.
    271       311       205       264       1,051       446       409       517       616  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total
    287       439       230       476       1,432       830       707       1,161       1,354  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Corporate and financing
    (213 )     (253 )     (193 )     2,169       1,510       (442 )     (142 )     (538 )     (511 )
Merger expenses
                                  (275 )     (525 )     (920 )     (469 )
Discontinued operations
                                  449       102       184       65  
Extraordinary gain
                                        215       1,730        
Accounting change
    550                         550                          
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Net income (U.S. GAAP)
    7,040       4,170       3,650       6,650       21,510       11,460       15,320       17,720       7,910  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Net income per common share (dollars)
    1.05       0.63       0.55       1.01       3.24       1.69       2.23       2.55       1.14  
Net income per common share — assuming dilution (dollars)
    1.05       0.62       0.55       1.01       3.23       1.68       2.21       2.52       1.12  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Merger Effects, Discontinued Operations, Accounting Change, and Other Special Items        
Upstream
                                                                       
United States
                                                     
Non-U.S.
    1,700                         1,700       (215 )                 119  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total
    1,700                         1,700       (215 )                 119  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Downstream
                                                                       
United States
                                                     
Non-U.S.
                                                    (120 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total
                                                    (120 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Chemical
                                                                       
United States
                                                     
Non-U.S.
                                                     
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total
                                                     
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Corporate and financing
                      2,230       2,230                          
Merger expenses
                                  (275 )     (525 )     (920 )     (469 )
Discontinued operations
                                  449       102       184       65  
Extraordinary gain
                                        215       1,730        
Accounting change
    550                         550                          
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Corporate total
    2,250                   2,230       4,480       (41 )     (208 )     994       (405 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Earnings Excluding Merger Effects, Discontinued Operations, Accounting Change, and Other Special Items        
Upstream
                                                                       
United States
    1,259       907       883       856       3,905       2,524       3,933       4,542       1,873  
Non-U.S.
    2,734       1,931       1,819       2,413       8,897       7,289       6,803       8,143       4,252  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total
    3,993       2,838       2,702       3,269       12,802       9,813       10,736       12,685       6,125  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Downstream
                                                                       
United States
    174       419       371       384       1,348       693       1,924       1,561       577  
Non-U.S.
    549       727       540       352       2,168       607       2,303       1,857       770  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total
    723       1,146       911       736       3,516       1,300       4,227       3,418       1,347  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Chemical
                                                                       
United States
    16       128       25       212       381       384       298       644       738  
Non-U.S.
    271       311       205       264       1,051       446       409       517       616  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total
    287       439       230       476       1,432       830       707       1,161       1,354  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Corporate and financing
    (213 )     (253 )     (193 )     (61 )     (720 )     (442 )     (142 )     (538 )     (511 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Corporate total
    4,790       4,170       3,650       4,420       17,030       11,501       15,528       16,726       8,315  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Earnings per common share (dollars)
    0.71       0.63       0.55       0.68       2.57       1.70       2.27       2.40       1.20  
Earnings per common share — assuming dilution (dollars)
    0.71       0.62       0.55       0.68       2.56       1.69       2.25       2.37       1.18  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 

Exxon Mobil Corporation 10 Corporate

 


 

RETURN ON AVERAGE CAPITAL EMPLOYED(1) BY BUSINESS

                                         
(percent)
  2003
  2002
  2001
  2000
  1999
Upstream
                                       
United States
    28.9       19.0       30.4       35.3       14.7  
Non-U.S.
    31.0       23.7       25.1       28.7       15.4  
 
   
 
     
 
     
 
     
 
     
 
 
Total
    30.4       22.3       26.8       30.8       15.2  
 
   
 
     
 
     
 
     
 
     
 
 
Downstream
                                       
United States
    16.7       8.6       25.0       19.6       6.9  
Non-U.S.
    11.5       3.4       12.4       9.4       3.3  
 
   
 
     
 
     
 
     
 
     
 
 
Total
    13.0       5.0       16.1       12.3       4.4  
 
   
 
     
 
     
 
     
 
     
 
 
Chemical
                                       
United States
    7.3       7.3       7.2       11.4       13.5  
Non-U.S.
    11.8       5.3       5.8       6.3       8.8  
 
   
 
     
 
     
 
     
 
     
 
 
Total
    10.2       6.1       6.4       8.4       10.9  
 
   
 
     
 
     
 
     
 
     
 
 
Corporate and financing
                             
Discontinued operations
          63.2       7.2       12.3       4.0  
 
   
 
     
 
     
 
     
 
     
 
 
Corporate total
    20.9       13.5       17.8       20.6       10.3  
 
   
 
     
 
     
 
     
 
     
 
 


(1)   Capital employed consists of shareholders’ equity and debt, including ExxonMobil’s share of amounts applicable to equity companies. See Frequently Used Terms.
     

AVERAGE CAPITAL EMPLOYED(1) BY BUSINESS

                                         
(millions of dollars)
  2003
  2002
  2001
  2000
  1999
Upstream
                                       
United States
    13,508       13,264       12,952       12,864       12,728  
Non-U.S.
    34,164       29,800       27,077       28,354       28,383  
 
   
 
     
 
     
 
     
 
     
 
 
Total
    47,672       43,064       40,029       41,218       41,111  
 
   
 
     
 
     
 
     
 
     
 
 
Downstream
                                       
United States
    8,090       8,060       7,711       7,976       8,354  
Non-U.S.
    18,875       17,985       18,610       19,756       19,679  
 
   
 
     
 
     
 
     
 
     
 
 
Total
    26,965       26,045       26,321       27,732       28,033  
 
   
 
     
 
     
 
     
 
     
 
 
Chemical
                                       
United States
    5,194       5,235       5,506       5,644       5,471  
Non-U.S.
    8,905       8,410       8,333       8,170       6,991  
 
   
 
     
 
     
 
     
 
     
 
 
Total
    14,099       13,645       13,839       13,814       12,462  
 
   
 
     
 
     
 
     
 
     
 
 
Corporate and financing
    6,637       4,878       6,399       3,198       605  
Discontinued operations
          710       1,412       1,501       1,625  
 
   
 
     
 
     
 
     
 
     
 
 
Corporate total
    95,373       88,342       88,000       87,463       83,836  
 
   
 
     
 
     
 
     
 
     
 
 
Average capital employed applicable to equity companies included above
    15,587       14,001       13,902       15,330       14,694  
 
   
 
     
 
     
 
     
 
     
 
 


(1)   Average capital employed is the average of beginning- and end-of-year business segment capital employed. See Frequently Used Terms.

(PIE CHART)

Exxon Mobil Corporation 11 Corporate

 


 

NET INVESTMENT IN PROPERTY, PLANT, AND EQUIPMENT AT YEAR END

                                         
(millions of dollars)
  2003
  2002
  2001
  2000
  1999
Upstream
                                       
United States
    16,992       16,924       16,697       16,216       16,249  
Non-U.S.
    41,735       34,772       29,980       29,600       31,940  
 
   
 
     
 
     
 
     
 
     
 
 
Total
    58,727       51,696       46,677       45,816       48,189  
 
   
 
     
 
     
 
     
 
     
 
 
Downstream
                                       
United States
    9,714       9,238       9,012       9,048       9,443  
Non-U.S.
    19,852       17,682       16,548       17,682       19,531  
 
   
 
     
 
     
 
     
 
     
 
 
Total
    29,566       26,920       25,560       26,730       28,974  
 
   
 
     
 
     
 
     
 
     
 
 
Chemical
                                       
United States
    5,068       5,155       5,079       5,045       5,124  
Non-U.S.
    5,047       4,754       4,611       4,890       4,845  
 
   
 
     
 
     
 
     
 
     
 
 
Total
    10,115       9,909       9,690       9,935       9,969  
 
   
 
     
 
     
 
     
 
     
 
 
Other/Discontinued operations
    6,557       6,415       7,675       7,348       6,911  
 
   
 
     
 
     
 
     
 
     
 
 
Corporate total
    104,965       94,940       89,602       89,829       94,043  
 
   
 
     
 
     
 
     
 
     
 
 

     


DEPRECIATION AND DEPLETION EXPENSES

                                         
(millions of dollars)
  2003
  2002
  2001
  2000
  1999
Upstream
                                       
United States
    1,571       1,597       1,447       1,426       1,342  
Non-U.S.
    4,072       3,551       3,221       3,469       3,497  
 
   
 
     
 
     
 
     
 
     
 
 
Total
    5,643       5,148       4,668       4,895       4,839  
 
   
 
     
 
     
 
     
 
     
 
 
Downstream
                                       
United States
    601       583       598       594       697  
Non-U.S.
    1,548       1,399       1,476       1,489       1,670  
 
   
 
     
 
     
 
     
 
     
 
 
Total
    2,149       1,982       2,074       2,083       2,367  
 
   
 
     
 
     
 
     
 
     
 
 
Chemical
                                       
United States
    410       414       408       397       402  
Non-U.S.
    368       348       289       281       274  
 
   
 
     
 
     
 
     
 
     
 
 
Total
    778       762       697       678       676  
 
   
 
     
 
     
 
     
 
     
 
 
Other
    477       418       409       345       293  
 
   
 
     
 
     
 
     
 
     
 
 
Corporate total
    9,047       8,310       7,848       8,001       8,175  
 
   
 
     
 
     
 
     
 
     
 
 
     

OPERATING COSTS EXCLUDING MERGER EXPENSES AND DISCONTINUED OPERATIONS

                                         
(millions of dollars)
  2003
  2002
  2001
  2000
  1999
Production and manufacturing expenses
    21,260       17,831       17,743       17,600       16,264  
Selling, general, and administrative
    13,396       12,356       12,898       12,044       13,132  
Depreciation and depletion
    9,047       8,310       7,848       8,001       8,175  
Exploration
    1,010       920       1,175       936       1,246  
 
   
 
     
 
     
 
     
 
     
 
 
Subtotal
    44,713       39,417       39,664       38,581       38,817  
ExxonMobil’s share of equity company expenses
    3,937       3,800       3,832       4,355       4,835  
 
   
 
     
 
     
 
     
 
     
 
 
Total operating costs
    48,650       43,217       43,496       42,936       43,652  
 
   
 
     
 
     
 
     
 
     
 
 

Corporate 12 Exxon Mobil Corporation

 


 

CONSOLIDATED BALANCE SHEET AT YEAR END(1)

                                         
(millions of dollars)
  2003
  2002
  2001
  2000
  1999
Assets
                                       
Current assets
                                       
Cash and cash equivalents
    10,626       7,229       6,547       7,080       1,688  
Notes and accounts receivable, less estimated doubtful accounts
    24,309       21,163       19,549       22,996       19,155  
Inventories
                                       
Crude oil
    2,203       1,854       1,849       2,155       2,414  
Products and merchandise
    5,462       4,973       4,894       5,089       4,956  
Materials and supplies
    1,292       1,241       1,161       1,060       1,122  
Prepaid taxes and expenses
    2,068       1,831       1,681       2,019       1,806  
 
   
 
     
 
     
 
     
 
     
 
 
Total current assets
    45,960       38,291       35,681       40,399       31,141  
 
   
 
     
 
     
 
     
 
     
 
 
Investments and advances
    15,535       12,111       10,768       12,618       14,544  
Property, plant, and equipment, at cost, less accumulated depreciation and depletion
    104,965       94,940       89,602       89,829       94,043  
Other assets, including intangibles — net
    7,818       7,302       7,123       6,154       4,793  
 
   
 
     
 
     
 
     
 
     
 
 
Total assets
    174,278       152,644       143,174       149,000       144,521  
 
   
 
     
 
     
 
     
 
     
 
 
Liabilities
                                       
Current liabilities
                                       
Notes and loans payable
    4,789       4,093       3,703       6,161       10,570  
Accounts payable
    16,918       14,984       13,328       15,943       14,132  
Accrued liabilities
    11,527       10,202       9,534       10,812       11,360  
Income taxes payable
    5,152       3,896       3,549       5,275       2,671  
 
   
 
     
 
     
 
     
 
     
 
 
Total current liabilities
    38,386       33,175       30,114       38,191       38,733  
 
   
 
     
 
     
 
     
 
     
 
 
Long-term debt
    4,756       6,655       7,099       7,280       8,402  
Annuity reserves
    9,609       11,202       7,331       6,835       7,469  
Accrued liabilities
    5,283       5,252       5,144       5,099       5,433  
Deferred income tax liabilities
    20,118       16,484       16,359       16,442       16,251  
Deferred credits and other long-term obligations
    2,829       2,511       1,141       1,166       1,079  
Equity of minority and preferred shareholders in affiliated companies
    3,382       2,768       2,825       3,230       3,688  
 
   
 
     
 
     
 
     
 
     
 
 
Total liabilities
    84,363       78,047       70,013       78,243       81,055  
 
   
 
     
 
     
 
     
 
     
 
 
Shareholders’ Equity
                                       
Benefit-plan-related balances
    (634 )     (450 )     (159 )     (235 )     (298 )
Common stock
    4,468       4,217       3,789       3,661       3,403  
Earnings reinvested
    115,956       100,961       95,718       86,652       75,055  
Accumulated other non-owner changes in equity
                                       
Cumulative foreign exchange translation adjustment
    1,421       (3,015 )     (5,947 )     (4,862 )     (2,300 )
Minimum pension liability adjustment
    (2,446 )     (2,960 )     (535 )     (310 )     (299 )
Unrealized gains/(losses) on stock investments
    511       (79 )     (108 )     (17 )     31  
Common stock held in treasury
    (29,361 )     (24,077 )     (19,597 )     (14,132 )     (12,126 )
 
   
 
     
 
     
 
     
 
     
 
 
Total shareholders’ equity
    89,915       74,597       73,161       70,757       63,466  
 
   
 
     
 
     
 
     
 
     
 
 
Total liabilities and shareholders’ equity
    174,278       152,644       143,174       149,000       144,521  
 
   
 
     
 
     
 
     
 
     
 
 


(1)   The consolidated financial statements shown on pages 13 through 15 should be read in the context of the notes thereto provided in Appendix A of the Corporation’s 2004 Proxy Statement. The notes are an integral part of these statements.

Exxon Mobil Corporation 13 Corporate

 


 

CONSOLIDATED STATEMENT OF INCOME(3)

                                         
(millions of dollars)
  2003
  2002
  2001
  2000
  1999
Revenues and Other Income
                                       
Sales and other operating revenue
                                       
Petroleum and natural gas
                                       
Petroleum products, including excise taxes
    173,173       149,526       153,335       164,510       134,846  
Crude oil
    24,515       20,406       22,423       29,532       20,252  
Natural gas
    13,989       10,315       12,292       11,472       7,969  
Other
    5,164       4,269       4,702       4,558       4,843  
 
   
 
     
 
     
 
     
 
     
 
 
Total petroleum and natural gas
    216,841       184,516       192,752       210,072       167,910  
 
   
 
     
 
     
 
     
 
     
 
 
Chemical products(1)
    20,190       16,408       15,943       17,501       13,777  
Other
    23       25       20       23       72  
 
   
 
     
 
     
 
     
 
     
 
 
Sales and other operating revenue(2)
    237,054       200,949       208,715       227,596       181,759  
 
   
 
     
 
     
 
     
 
     
 
 
Income from equity affiliates
    4,373       2,066       2,174       2,434       1,646  
Other income
    5,311       1,491       1,896       1,816       1,348  
 
   
 
     
 
     
 
     
 
     
 
 
Total revenues and other income
    246,738       204,506       212,785       231,846       184,753  
 
   
 
     
 
     
 
     
 
     
 
 
Costs and Other Deductions
                                       
Crude oil and product purchases
    107,658       90,950       92,257       108,913       76,991  
Production and manufacturing expenses
    21,260       17,831       17,743       17,600       16,264  
Selling, general, and administrative expenses
    13,396       12,356       12,898       12,044       13,132  
Depreciation and depletion
    9,047       8,310       7,848       8,001       8,175  
Exploration expenses
    360       345       495       223       403  
Dry holes
    360       345       495       223       403  
Other
    650       575       680       713       843  
 
   
 
     
 
     
 
     
 
     
 
 
Total exploration expenses
    1,010       920       1,175       936       1,246  
Merger-related expenses
          410       748       1,406       625  
Interest expense
    207       398       293       589       694  
Excise taxes(2)
    23,855       22,040       21,907       22,356       21,646  
Other taxes and duties
    37,645       33,572       33,377       32,708       34,765  
Income applicable to minority and preferred interests
    694       209       569       412       145  
 
   
 
     
 
     
 
     
 
     
 
 
Total costs and other deductions
    214,772       186,996       188,815       204,965       173,683  
 
   
 
     
 
     
 
     
 
     
 
 
Income Before Income Taxes
    31,966       17,510       23,970       26,881       11,070  
Income taxes
                                       
U.S. federal
    2,589       1,048       2,532       3,132       608  
Other
    8,417       5,451       6,435       7,943       2,617  
 
   
 
     
 
     
 
     
 
     
 
 
Total income taxes
    11,006       6,499       8,967       11,075       3,225  
 
   
 
     
 
     
 
     
 
     
 
 
Income from continuing operations
    20,960       11,011       15,003       15,806       7,845  
 
   
 
     
 
     
 
     
 
     
 
 
Discontinued operations, net of income tax
          449       102       184       65  
Extraordinary gain, net of income tax
                215       1,730        
Cumulative effect of accounting change, net of income tax
    550                          
 
   
 
     
 
     
 
     
 
     
 
 
Net Income
    21,510       11,460       15,320       17,720       7,910  
 
   
 
     
 
     
 
     
 
     
 
 
Memo: effective income tax rate (percent)
    36.4       39.8       39.3       42.6       31.9  
 
   
 
     
 
     
 
     
 
     
 
 

                                   
(1) Chemical products supplied to petroleum subsidiaries not included above
    5,063       3,902       3,369       4,002       2,136  
(2) Excise taxes included in sales and other operating revenue
    23,855       22,040       21,907       22,356       21,646  

(3)   The consolidated financial statements shown on pages 13 through 15 should be read in the context of the notes thereto provided in Appendix A of the Corporation’s 2004 Proxy Statement. The notes are an integral part of these statements.

Corporate 14 Exxon Mobil Corporation

 


 

CONSOLIDATED STATEMENT OF CASH FLOWS(1)

                                         
(millions of dollars)
  2003
  2002
  2001
  2000
  1999
Cash Flows from Operating Activities
                                       
Net income
                                       
Accruing to ExxonMobil shareholders
    21,510       11,460       15,320       17,720       7,910  
Accruing to minority and preferred interests
    694       209       569       412       145  
Cumulative effect of accounting change, net of income tax
    (550 )                        
Adjustments for non-cash transactions
                                       
Depreciation and depletion
    9,047       8,310       7,848       8,001       8,175  
Deferred income tax charges/(credits)
    1,827       297       650       10       (1,439 )
Annuity provisions
    (1,489 )     (500 )     349       (425 )     28  
Accrued liability provisions
    264       (90 )     149       (237 )     384  
Dividends received greater than/(less than) equity in current earnings of equity companies
    (402 )     (170 )     78       (387 )     146  
Extraordinary gain, before income tax
                (194 )     (2,038 )      
Changes in operational working capital, excluding cash and debt
                                       
Reduction/(increase) — Notes and accounts receivable
    (1,286 )     (305 )     3,062       (4,832 )     (3,478 )
— Inventories
    (100 )     353       154       (297 )     50  
— Prepaid taxes and expenses
    42       32       118       (204 )     177  
Increase/(reduction) — Accounts and other payables
    1,130       365       (5,103 )     5,411       3,046  
Ruhrgas transaction
    (2,240 )     1,466                    
All other items — net
    51       (159 )     (111 )     (197 )     (131 )
 
   
 
     
 
     
 
     
 
     
 
 
Net cash provided by operating activities
    28,498       21,268       22,889       22,937       15,013  
 
   
 
     
 
     
 
     
 
     
 
 
Cash Flows from Investing Activities
                                       
Additions to property, plant, and equipment
    (12,859 )     (11,437 )     (9,989 )     (8,446 )     (10,849 )
Sales of subsidiaries, investments, and property, plant, and equipment
    2,290       2,793       1,078       5,770       972  
Additional investments and advances
    (809 )     (2,012 )     (1,035 )     (1,648 )     (1,476 )
Collection of advances
    536       898       1,735       985       387  
Additions to other marketable securities
                      (41 )     (61 )
Sales of other marketable securities
                      82       42  
 
   
 
     
 
     
 
     
 
     
 
 
Net cash used in investing activities
    (10,842 )     (9,758 )     (8,211 )     (3,298 )     (10,985 )
 
   
 
     
 
     
 
     
 
     
 
 
Cash Flows from Financing Activities
                                       
Additions to long-term debt
    127       396       547       238       454  
Reductions in long-term debt
    (914 )     (246 )     (506 )     (901 )     (341 )
Additions to short-term debt
    715       751       705       500       1,870  
Reductions in short-term debt
    (1,730 )     (927 )     (1,212 )     (2,413 )     (2,359 )
Additions/(reductions) in debt with less than 90-day maturity
    (322 )     (281 )     (2,306 )     (3,129 )     2,210  
Cash dividends to ExxonMobil shareholders
    (6,515 )     (6,217 )     (6,254 )     (6,123 )     (5,872 )
Cash dividends to minority interests
    (430 )     (169 )     (194 )     (251 )     (219 )
Changes in minority interests and sales/(purchases) of affiliate stock
    (247 )     (161 )     (401 )     (227 )     (200 )
Common stock acquired
    (5,881 )     (4,798 )     (5,721 )     (2,352 )     (670 )
Common stock sold
    434       299       301       493       348  
 
   
 
     
 
     
 
     
 
     
 
 
Net cash used in financing activities
    (14,763 )     (11,353 )     (15,041 )     (14,165 )     (4,779 )
 
   
 
     
 
     
 
     
 
     
 
 
Effects of exchange rate changes on cash
    504       525       (170 )     (82 )     53  
 
   
 
     
 
     
 
     
 
     
 
 
Increase/(decrease) in cash and cash equivalents
    3,397       682       (533 )     5,392       (698 )
Cash and cash equivalents at beginning of year
    7,229       6,547       7,080       1,688       2,386  
 
   
 
     
 
     
 
     
 
     
 
 
Cash and cash equivalents at end of year
    10,626       7,229       6,547       7,080       1,688  
 
   
 
     
 
     
 
     
 
     
 
 


(1)   The consolidated financial statements shown on pages 13 through 15 should be read in the context of the notes thereto provided in Appendix A of the Corporation’s 2004 Proxy Statement. The notes are an integral part of these statements.

Exxon Mobil Corporation 15 Corporate

 


 

CAPITAL AND EXPLORATION EXPENDITURES(1)

                                         
(millions of dollars)
  2003
  2002
  2001
  2000
  1999
Upstream
                                       
Exploration
                                       
United States
    275       295       471       285       271  
Non-U.S.
    940       1,015       1,188       1,222       1,631  
 
   
 
     
 
     
 
     
 
     
 
 
Total
    1,215       1,310       1,659       1,507       1,902  
 
   
 
     
 
     
 
     
 
     
 
 
Production(2)
                                       
United States
    1,842       2,057       1,947       1,574       1,458  
Non-U.S.
    8,758       6,949       5,157       3,818       5,030  
 
   
 
     
 
     
 
     
 
     
 
 
Total
    10,600       9,006       7,104       5,392       6,488  
 
   
 
     
 
     
 
     
 
     
 
 
Power and Coal
                                       
United States
    8       5       5       6       12  
Non-U.S.
    165       73       48       28       26  
 
   
 
     
 
     
 
     
 
     
 
 
Total
    173       78       53       34       38  
 
   
 
     
 
     
 
     
 
     
 
 
Total Upstream (Exploration, Production, Power and Coal)
    11,988       10,394       8,816       6,933       8,428  
 
   
 
     
 
     
 
     
 
     
 
 
Downstream
                                       
Refining
                                       
United States
    998       670       524       632       475  
Non-U.S.
    768       685       514       703       550  
 
   
 
     
 
     
 
     
 
     
 
 
Total
    1,766       1,355       1,038       1,335       1,025  
 
   
 
     
 
     
 
     
 
     
 
 
Marketing
                                       
United States
    216       255       370       372       347  
Non-U.S.
    739       761       836       808       921  
 
   
 
     
 
     
 
     
 
     
 
 
Total
    955       1,016       1,206       1,180       1,268  
 
   
 
     
 
     
 
     
 
     
 
 
Pipeline/Marine
                                       
United States
    30       55       67       73       83  
Non-U.S.
    30       24       11       30       25  
 
   
 
     
 
     
 
     
 
     
 
 
Total
    60       79       78       103       108  
 
   
 
     
 
     
 
     
 
     
 
 
Total Downstream (Refining, Marketing, and Pipeline/Marine)
    2,781       2,450       2,322       2,618       2,401  
 
   
 
     
 
     
 
     
 
     
 
 
Chemical
                                       
United States
    333       575       432       351       663  
Non-U.S.
    359       379       440       1,117       1,580  
 
   
 
     
 
     
 
     
 
     
 
 
Total Chemical
    692       954       872       1,468       2,243  
 
   
 
     
 
     
 
     
 
     
 
 


(1)   See Frequently Used Terms.
(2)   Including related transportation.

(BAR CHART)

Corporate 16 Exxon Mobil Corporation

 


 

Capital and Exploration Expenditures(1) (continued)

                                         
(millions of dollars)
  2003
  2002
  2001
  2000
  1999
Other Operations and Administrative
                                       
United States
    64       45       126       45       93  
Non-U.S.
          32       32       7       72  
 
   
 
     
 
     
 
     
 
     
 
 
Total other operations and administrative
    64       77       158       52       165  
 
   
 
     
 
     
 
     
 
     
 
 
Discontinued Operations
                                       
Non-U.S.
          80       143       97       70  
 
   
 
     
 
     
 
     
 
     
 
 
Grand total
    15,525       13,955       12,311       11,168       13,307  
 
   
 
     
 
     
 
     
 
     
 
 
Total Capital and Exploration Expenditures
                                       
United States
    3,766       3,957       3,942       3,338       3,402  
Canada
    1,601       1,513       1,262       1,004       1,204  
Latin America
    217       441       717       677       744  
Europe
    3,046       2,919       2,564       2,255       3,255  
Asia-Pacific
    1,410       1,470       1,496       2,250       2,498  
Other Eastern Hemisphere
    5,485       3,655       2,330       1,644       2,204  
 
   
 
     
 
     
 
     
 
     
 
 
Grand total
    15,525       13,955       12,311       11,168       13,307  
 
   
 
     
 
     
 
     
 
     
 
 


(1)   See Frequently Used Terms.

(BAR CHART)

     


DISTRIBUTION OF CAPITAL AND EXPLORATION EXPENDITURES

                                         
(millions of dollars)
  2003
  2002
  2001
  2000
  1999
Consolidated Companies’ Expenditures
                                       
Capital expenditures
    12,857       11,499       9,943       9,017       10,666  
 
   
 
     
 
     
 
     
 
     
 
 
Exploration costs charged to expense United States
    256       220       213       133       232  
Non-U.S.
    735       679       941       780       993  
Depreciation on support equipment(1)
    19       21       21       23       21  
 
   
 
     
 
     
 
     
 
     
 
 
Total exploration expenses
    1,010       920       1,175       936       1,246  
 
   
 
     
 
     
 
     
 
     
 
 
Total consolidated companies’ capital and exploration expenditures (excluding depreciation on support equipment)
    13,848       12,398       11,097       9,930       11,891  
ExxonMobil’s Share of Non-Consolidated Companies’ Expenditures
                                       
Capital expenditures
    1,651       1,518       1,203       1,216       1,384  
Exploration costs charged to expense
    26       39       11       22       32  
 
   
 
     
 
     
 
     
 
     
 
 
Total non-consolidated companies’ capital and exploration expenditures
    1,677       1,557       1,214       1,238       1,416  
 
   
 
     
 
     
 
     
 
     
 
 
Grand total
    15,525       13,955       12,311       11,168       13,307  
 
   
 
     
 
     
 
     
 
     
 
 


(1)   Not included as part of total Capital and Exploration Expenditures, but included as part of Exploration Expenses in the Consolidated Statement of Income, page 14.

 


 

(PHOTO)

Safety, Health & Environment 2003 HIGHLIGHTS • Record fewest safety incidents • Fewest environmental spills • Best energy efficiency performance in our refining business Guiding Principle ExxonMobil is committed to maintaining high standards of safety, health, and environmental care. We comply with all applicable environmental laws and regulations, and apply responsible standards where laws and regulations do not exist. Energy and chemicals are essential to society. ExxonMobil has shown that we can produce these valuable products while protecting the health and safety of people, and safeguarding the environment. Our goal is to drive injuries, illnesses, and operational incidents as close to zero as possible.

ExxonMobil is working to reduce greenhouse gas emissions by progressing breakthrough technology, such as in advanced fuels, fuel cells, and new combustion technology. Researchers utilize lasers to analyze the composition of a hydrocarbon flame to improve the efficiency and reduce the emissions from internal combustion engines.

Risk Management and Security

Risks are inherent in the energy and petrochemical businesses, including risks associated with safety, health, and the environment. ExxonMobil recognizes these risks and takes a systematic managed approach to mitigate their impact. In fact, the same rigor and discipline that underpins our investment program are also used in our approach to the management of our performance in safety, health, and the environment. ExxonMobil’s commitment is also supported by our investment in related science and technology, which will help improve our safety, health, and environmental performance.

Our Operations Integrity Management System (OIMS) is the primary tool that we use to conduct our operations and to assess and improve our safety, health, and environmental performance. OIMS enables us to measure our progress in these areas, plan future improvements and ensure management accountability for results. OIMS is designed to drive all operational incidents as close to zero as possible. OIMS also conforms with the International Standards Organization’s standard for environmental management systems (ISO 14001).

ExxonMobil has had a long-standing commitment to the protection of its people, facilities, information, and other assets. Security measures take into account perceived risk, cost and practicality, compliance with applicable laws, and recognition of social norms. To ensure that the Corporation’s expectations are met, security is being fully integrated into OIMS.

ExxonMobil’s technology helps improve our safety, health, and environmental performance.

(PIE CHART)

 


 

Safety and Health

ExxonMobil has long been an energy industry leader in safety performance. We are committed to the highest standards of safety, health, and environmental performance. We believe that providing a safe work environment for our employees contributes to and is indicative of superior performance in other aspects of our operations.

In 2003, we had the fewest number of safety incidents in ExxonMobil history. We remain committed to learn from all incidents to achieve our goal that “nobody gets hurt”.

(BAR CHART)

Environment

ExxonMobil is committed to continuously improving our environmental performance. We demonstrated a record fewest number of marine and total spill incidents in 2003. Our business units around the world develop detailed environmental business plans to identify and manage environmental risks and issues within local business plans and decisions.

We are taking a number of significant actions to improve our efficiency and reduce greenhouse gas emissions in our operations and in customer use of our products. For example, in the near-term, we are capturing significant energy efficiency improvements with our Global Energy Management System (GEMS) and cogeneration investments. In fact, we demonstrated a record-best energy efficiency performance in our refining business in 2003. ExxonMobil is an industry leader in the use of cogeneration, a much more efficient way to make steam and power than by conventional processes. We currently have interests in over 80 cogeneration facilities that produce nearly 2,900 megawatts of electricity. We are adding another $1 billion of investments that will increase our cogeneration capacity by another 30 percent by the end of 2005. We also worked with industry trade organizations to develop consistent greenhouse gas (GHG) measurement methodology and a transparent reporting format in order to report GHG emissions.

(BAR CHART)

We are actively preparing to meet GHG regulatory requirements that are coming into effect in Europe and to participate in emissions trading as needed to ensure compliance.

In the longer term, we are progressing technologies that will significantly reduce emissions from the use of our products by our customers. The majority of GHG emissions arise from consumer use of fuels (87 percent), with the remainder from petroleum industry operations (13 percent). We are working with automobile manufacturers, universities, and government agencies to develop advanced fuels, fuel cells, and new combustion technologies. We are committed to further develop breakthrough technology to reduce GHG emissions through research projects, including initiating the largest privately funded academic technology initiative in history — the Global Climate and Energy Project (G-CEP) led by Stanford University. For more information, refer to the web site http://gcep.stanford.edu/.

As a leading supplier of clean-burning natural gas, ExxonMobil is well positioned to contribute to efforts to address greenhouse gas emissions through fuel switching. Natural gas is both cleaner burning and emits less GHG than oil or coal. The substitution of natural gas for coal in electricity generation is one of the most significant opportunities to reduce greenhouse gas emissions economically.

(GRAPH)

More Information

For more information regarding our commitment to safety, health, and the environment, refer to the following documents available on our website at www.exxonmobil.com.

Corporate Citizenship Report (CCR)

Report on Energy Trends, Greenhouse Gas Emissions, and Alternative Energy

(EXXONMOBIL LOGO)

Exxon Mobil Corporation 19 Safety, Health & Environment

 


 

Technology

ExxonMobil’s unparalleled commitment to the development and application of industry-leading technologies provides the business with opportunities to discover, produce, refine, and market oil and gas resources not available to competitors. Our technology development efforts are matched to our business needs through a rigorous prioritization and stewardship process that ensures decisions are based on sound technical and economic evaluation. Our emphasis is on proprietary research. We balance our investment between technology extensions, which can be rapidly deployed to our existing operations, and breakthrough research that can have a significant and lasting impact on the Corporation and industry.

UPSTREAM TECHNOLOGY

Broadest Portfolio of Upstream Technologies

ExxonMobil maintains the industry’s largest proprietary upstream technology research and development effort, investing more than $200 million annually. These technologies support the full spectrum of upstream activities, from earliest exploration to enhanced recovery and field depletion and are applied to the full range of the world’s largest and most diverse upstream portfolio.

We maintain industry leadership in all of the fundamental technical elements of the upstream business such as basin analysis; seismic acquisition, processing and interpretation; reservoir modeling and simulation; drilling, and facilities design, and gas commercialization technologies through dedicated ongoing research efforts. Initiatives on promising new breakthrough technologies are pursued when ideas with extraordinary potential are identified.

(PHOTO OF SEDIMENT DEPOSITION TANK)

Sediment deposition tank at the Upstream Research Company. ExxonMobil pioneers technologies for integrating laboratory experiments, numerical models, and knowledge of modern environments. If successful, these innovative techniques could lead to more accurate predictions of the distribution of reservoir rock properties in the subsurface and lower the cost of finding and developing new fields.

Optimum Technology Deployment

ExxonMobil’s Upstream functional organization enables the most effective, lowest cost, and timely deployment of technology to all of our projects worldwide. Rigorous processes within the Upstream functional companies ensure that every project plan appropriately incorporates the latest technologies. Each company has active learning processes in place to rapidly gather and disseminate technical best practices to leverage ExxonMobil’s unparalleled experience.

Training on a continuous basis is a cornerstone of ExxonMobil’s commitment to the development and application of cutting-edge technologies. A new 100 thousand square foot Upstream Training Center in Houston, Texas, is scheduled for completion in mid-2004. This new, state-of-the-art facility will help ensure that our employees are equipped to effectively apply the latest technology to ExxonMobil assets worldwide.

(3 DIMENSIONAL BASIN)

Gas versus liquids prediction. Developing a three-dimensional understanding of a basin, including hydrocarbon sources, migration pathways, trapping elements, and reservoirs provides focus and efficiency to exploration efforts and has long been a key component of ExxonMobil’s Upstream research. ExxonMobil’s proprietary Stellar basin-modeling software has been combined with other technologies to generate a process for more accurately predicting the types of hydrocarbons that might be present in a prospect. This capability has influenced drilling programs in west Africa and elsewhere, helping reduce the overall risk of drilling an uneconomic well.

 


 

(PHOTO OF EARLY PRODUCTION SYSTEM)

Early Production System (EPS) at Xikomba in Angola Block 15.ExxonMobil is an industry leader in the use of an EPS.EPS’s are used by ExxonMobil to accelerate production from new discoveries months or years ahead of more traditional, full field installations.ExxonMobil’s unique functional organization recognized the opportunity, identified the technology elements, and efficiently deployed EPS’s at three fields in west Africa during late 2002 and 2003.

New Opportunities Through Upstream Technology

Superior technology, applied across each of the company’s business functions, has created profitable new opportunities. Capabilities, such as those that enable the recognition of new prospects, the ability to drill and produce in ever deeper and more hostile environments, and those that improve the recovery of unconventional resources are creating entirely new business opportunities worldwide. New technology developments that reduce cost and development cycle time not only improve overall profitability, but make previously high-cost resources competitive. ExxonMobil’s broad portfolio of upstream technology is a critical advantage in competing for upstream opportunities in resource-rich countries.

(PHOTOS OF EQUIPMENT AND OPERATIONS)

Tight gas stimulation research. ExxonMobil has developed and patented new techniques to rapidly stimulate large vertical intervals (several thousand feet) in wellbores to reduce the cost of producing gas from low permeability reservoirs. ExxonMobil has also successfully applied and further optimized the technology of employing multiple fracture treatments in deep horizontal wells.It has been proven as a feasible technique to develop extremely tight and deep gas formations where vertical wells with massive hydraulic fractures are not economic.Continued success in the development and refinement of these techniques could enable the profitable production of significant volumes of natural gas in the western United States and elsewhere. Large membrane LNG carrier. ExxonMobil has pioneered LNG production and transportation capabilities that will reduce the unit cost of LNG by over 30 percent relative to current technology.These cost reductions have been a result of larger (+60 percent), more efficient manufacturing trains and larger ships (+40 percent). To fully capture the cost advantage of these large ships, ExxonMobil performed state-of-the-art testing and analytical work to validate the feasibility of membrane tanks that are larger than those presently used by industry.As a result of cost efficiencies, the Corporation is expanding the profitable range of LNG deliveries from Qatar, where ExxonMobil has been working with Qatar Petroleum to develop the North Field, the world’s largest non-associated gas field. Sakhalin drilling operations. The ability to operate cost effectively in harsh arctic environments will be increasingly important in the future.More than 25 years of arctic technology development and experience supports the profitable development of resources in remote areas such as offshore Sakhalin Island, Russia.ExxonMobil technology contributed to the design of an ice-resistant offshore platform. In addition, proprietary tools enabled the design of extended-reach wells that are developing oil and gas reserves over five miles offshore from onshore drill sites.

Exxon Mobil Corporation 21 Technology

 


 

DOWNSTREAM & CHEMICAL TECHNOLOGY

Collaboration with Engine Manufacturers Leads to Development of Products that Reduce Emissions

ExxonMobil’s competitive leadership in advanced lubricants and fuels research is recognized by many of the world’s leading engine manufacturers. We are collaborating with several companies on research into how to significantly reduce emissions, particularly nitrogen oxide (NOx) and particulate matter (PM), while at the same time improving engine efficiency — a critical technical challenge for both of our industries. Advancements in this area are critical. By 2007 to 2008, many markets around the world will require up to a 90 percent reduction from today’s levels of automotive emissions.

(PHOTOS REFINERY EQUIPMENT)

Reducing emissions. ExxonMobil is working with Original Equipment Manufacturers to investigate a range of technologies that will reduce NOx emissions.The effort combines the expertise of the companies in the areas of combustion science, computer modeling, exhaust catalysis and engine control.We have modified the ignition quality tester, a critical device for testing engine performance, to better study the interaction of fuel molecules with new strategies that could reduce NOx from engine exhaust.We are also working on new catalyst materials for use in further reducing NOx emissions that come from the engine tailpipe.Successfully combining these technologies will speed the development and commercialization of new high efficiency diesel engine systems. High-quality basestocks. The new Synesstic Alkylated Naphthalene (AN) basestocks product line, designed to enhance the performance of synthetic lubricants, is now being offered to our customers.When used as blendstock with other synthetic fluids such as polyalphaolefins, Synesstic AN products enhance the stability and performance of many industrial and automotive lubricants. By combining our extensive expertise in refinery processes with proprietary catalysts developed in our research facilities, we have developed cutting-edge, cost-effective solvent and catalytic process lube technologies.This new proprietary catalyst technology was recently installed in an existing reactor at our Fawley, United Kingdom, refinery.In June, the refinery began producing Visom, a very high-quality lubricant base oil, designed to meet the new stringent requirements of European high-performance engine oils.

Leveraging Technology to Meet Market Needs

ExxonMobil has a long history of developing new technologies in refining and chemical manufacturing, to both improve efficiency and provide new solutions to meet market needs.

In refining, ExxonMobil’s SCANfining technology has been selected for over 30 ExxonMobil and licensee units to enable production of low sulfur gasoline. Once these units are operational, nearly 1 million barrels per day of low sulfur gasoline will be produced using this technology. The SCANfining process can help achieve gasoline pool sulfur specifications as low as 10 parts per million, while maintaining octane levels.

More than 20 aromatics producers throughout the world have licensed ExxonMobil’s xylene isomerization catalyst. Our new XyMax-2 is a proprietary zeolite shape-selective catalyst that improves xylene isomerization for aromatics manufacture. When installed in existing conventional xylene isomerization units, XyMax-2 technology can increase paraxylene capacity up to 40 percent with minimal hardware modification.

Technology 22 Exxon Mobil Corporation

 


 

(PHOTO OF VISTAMAX)

New products with enhanced properties. ExxonMobil launched the new family of Vistamaxx specialty elastomers, a revolutionary new platform that combines the company’s strengths in catalyst technology, product design and process development to deliver new levels of performance across a broad range of customer applications.The new polymers are derived from ExxonMobil’s proprietary Exxpol metallocene catalyst technology and polymerization reactor processes. Vistamaxx products can improve the elasticity, softness, adhesion, strength and durability of our customers’products.The new products give ExxonMobil one of the broadest portfolios of ethylene elastomers in the world. ExxonMobil pioneered the use of metallocene catalysts for polyethylene and polypropylene in 1995.As we continue to innovate and build our Exxpol catalyst platform, we introduced second-generation Exceed and Achieve polyolefins. These new polymers with improved mechanical properties and processability benefit customers in many markets, including the designers and creators of packaging and non-woven fabrics.

Strengthening Research and Development Capability

ExxonMobil’s research laboratories are developing new technologies that will significantly enhance our ability to develop new materials and lead to faster-paced development of new chemicals, lubricants and fuels products.

(PHOTOS OF ROBOTICS AND TECHNOLOGY CENTERS)

High Throughput Experimentation (HTE) is a combination of technologies in experimental design, materials synthesis and testing, combined with advanced data analysis and visualization tools that have delivered exciting results in the development of new chemical catalysts.ExxonMobil and Symyx Technologies have formed an alliance that leverages the in-house technical strengths of each company and will lead to the application of this technology across our entire Downstream and Chemical portfolio.HTE uses micro-reactors and robotics to generate hundreds of unique materials at a time and test them automatically.This approach delivers results much faster than traditional research at a fraction of the cost, greatly enhancing the company’s competitive advantage. Technology centers. ExxonMobil Chemical scientists and researchers are located in a network of technology centers where they develop products and processes to meet the needs of the market.Working in partnership with customers, and using our multi-layer blown-film lines, they recently developed enhanced film structures.These new films combine lower cost, outstanding toughness, and exceptional optical properties. Technology marketing capability. Badger Licensing LLC, a joint venture to develop, market, and license ethylbenzene (EB) and cumene technologies, was formed by ExxonMobil Chemical and Stone & Webster, Inc.These licensed processes are based on ExxonMobil’s proprietary zeolite catalysts.The joint venture combines ExxonMobil catalyst and process expertise with Badger development capabilities to enhance technology in the field of EB, cumene, and derivative chemical products.Almost half of the world’s chemical-grade benzene supply is processed using these technologies from Badger Licensing LLC.

Exxon Mobil Corporation 23 Technology

 


 

(PHOTO MAP)

ExxonMobil has Upstream activities in nearly 40 countries an is leading producer bother onshore and offshore. Drilling operations using the world’s largest onshore drilling rig began on Sakhalin Island, Russia, during 2003. Record extended-reach wells of over 5 miles offshore helped improve profitability by minimizing the need for offshore installations. Construction and planning activities are underway for seven additional LNG trains with start-ups from 2004-2011. Larger and more efficient LNG trains, combined with larger ships, have increased the global reach of Qatar LNG.


 

Exploration, Development, Production, and Gas and Power Marketing

Upstream Strategies

Although business conditions and opportunities change from year to year, ExxonMobil employs a set of long-term fundamental strategies in its worldwide exploration, development, production, and gas and power marketing businesses. These strategies are supported by an unparalleled commitment to technology. Superior execution of these strategies through our global functional organization across what we believe is the best Upstream asset portfolio in the industry distinguishes ExxonMobil from competition. These key strategies are:

  Maximize profitability of existing oil and gas production
 
  Identify and pursue all attractive exploration opportunities
 
  Invest in projects that deliver superior returns
 
  Capitalize on growing natural gas and power markets

Industry Conditions

  World oil demand increased by about 1.4 million barrels per day in 2003. World natural gas consumption increased by about 6 billion cubic feet per day in 2003.
 
  Brent oil prices averaged almost $29 per barrel in 2003, up about $4 per barrel versus 2002.
 
  Natural gas prices in the United States were volatile, but on average were 74 percent higher versus 2002. In Europe, natural gas prices were up 23 percent versus 2002 and up 7 percent excluding foreign exchange effects.

     2003 HIGHLIGHTS

Earnings were $14.5 billion, up 51 percent and an all-time record, primarily due to higher oil and natural gas prices throughout the year and the gain on the transfer of shares in Ruhrgas AG.

Return on average capital employed was 30.4 percent in 2003, averaging 25 percent over the past five years.

Profit per oil-equivalent barrel was $9.25, excluding income from Upstream power and coal activities.

Total liquids and gas production available for sale remained at 4.2 million oil-equivalent barrels per day, exceeding all competitors.

Proved oil and gas reserve additions totaled 1.7 billion oil-equivalent barrels, replacing 105 percent of reserves produced, including asset sales (107 percent with sales excluded). This is the 10th year in a row that ExxonMobil has more than replaced reserves produced.

At 22.0 billion oil-equivalent barrels, ExxonMobil’s proved reserves are the highest in the industry.

Resource base additions totaled 2.1 billion oil-equivalent barrels in 2003, with key contributions from Qatar, Angola, Canada, Nigeria, Brazil, Kazakhstan, and the U.S.

Finding costs were $0.58 per oil-equivalent barrel.

Major projects expected to develop up to 25 billion net oil-equivalent barrels of resources are underway, providing a solid basis for future profitable production growth.

(2003 OPERATING AREA CONTRIBUTIONS)

                                         
Statistical Recap
  2003
  2002
  2001
  2000
  1999
Earnings (millions of dollars)
    14,502       9,598       10,736       12,685       6,244  
Liquids production (thousands of barrels per day)
    2,516       2,496       2,542       2,553       2,517  
Natural gas production available for sale (millions of cubic feet per day)
    10,119       10,452       10,279       10,343       10,308  
Oil-equivalent production (thousands of barrels per day)
    4,203       4,238       4,255       4,277       4,235  
Proved reserves replacement, excluding sales (percent)
    107       118       111       112       106  
New field resource additions (millions of oil-equivalent barrels)
    2,110       2,150       2,490       2,120       1,530  
Average capital employed (millions of dollars)
    47,672       43,064       40,029       41,218       41,111  
Return on average capital employed (percent)
    30.4       22.3       26.8       30.8       15.2  
 
   
 
     
 
     
 
     
 
     
 
 
Capital and exploration expenditures (millions of dollars)
    11,988       10,394       8,816       6,933       8,428  

Exxon Mobil Corporation 25 Upstream

 


 

UPSTREAM COMPETITIVE ADVANTAGES

ExxonMobil’s industry-leading, world-class and geographically diverse Upstream portfolio spans nearly 40 countries. It includes a resource base totaling 72 billion oil-equivalent barrels, 4.2 million oil-equivalent barrels per day of production in 25 countries, in excess of 100 major production and development projects, nearly 13,300 megawatts of electrical generation capacity, and global gas and power marketing activities.

Strong Diverse Production Base

Large, highly profitable, and established oil and gas operations in North America, Europe, Asia-Pacific, west Africa, and the Caspian form the strong foundation of our portfolio. These areas include long-life producing fields that have significant near-term potential for discovering and developing new near-field opportunities using existing infrastructure. Our existing asset base includes over 60 thousand productive wells from 8,300 reservoirs and nearly 600 offshore platforms. We invest in active work programs to maintain this profitable base. ExxonMobil’s production portfolio includes a wide variety of producing assets, and this diversity of experience provides a foundation for efficient incorporation of new production.

(2003 PRODUCTION BY REGION)

Wide Range of Profitable Growth Opportunities

ExxonMobil maintains the largest portfolio of development and exploration opportunities in the industry, which enables the selectivity required to optimize total profitability and mitigate overall political and technical risks in the Upstream segment.

As future development projects bring new resources on-line, we expect a shift in the geographic mix of production volumes between now and 2010. For example, ExxonMobil holds a strong position and is investing in resource-rich regions including west Africa, the Caspian, the Middle East, and Russia.

In addition to a changing geographic mix, we also expect a change in the type of opportunities from which volumes are produced. Production from non-conventional sources using arctic technology, deepwater drilling and production systems, heavy oil recovery processes, and LNG is expected to grow from 20 percent to 40 percent of our output between now and 2010.

Exploration acreage totals 51 million acres in 30 countries. In addition, initiatives are underway worldwide to participate in emerging, high potential but previously inaccessible regions offering the potential for future growth opportunities.

Upstream 26 Exxon Mobil Corporation

 


 

Commitment to Technology

ExxonMobil’s long-standing commitment to the development and application of leading-edge Upstream technology is unmatched in the industry and provides a sustainable competitive advantage. Technology is the lifeblood of our business. It allows us to maximize value by increasing recoverable resources, reducing costs, and creating new markets for our products. We manage technology development and application with the same disciplined approach we use in making all of our business decisions. Our approach to technology and our track record of developing new industry-leading technology serve us well in countries where we have an established business presence, and in emerging areas where we are positioned to be the partner of choice. Technology is, and will continue to be, fundamental to our business success.

(PORTFOLIO BY OPPORTUNITY TYPE)

Unique Global Functional Organization

ExxonMobil has an experienced, dedicated and diverse workforce of exceptional quality. We are well organized to execute our strategies. Our functional organization, structured around the life cycle of an asset, provides a significant competitive advantage. This allows us to establish priorities on a global basis, effectively leverage the transfer of technology and best practices across our vast worldwide portfolio, focus on operational excellence in all aspects of our business and efficiently deploy experienced people with the right skills. This approach yields significant advantages in both cost efficiencies and our ability to recognize and respond to the changing business environment.

Financial Strength and Disciplined Approach

ExxonMobil’s financial strength and access to capital is a competitive advantage that allows us to pursue all attractive projects that achieve acceptable returns. We continually invest in our existing asset base to increase resource recovery, maximize profitability and extend economic life. Potential projects are tested over a wide range of economic scenarios to ensure resiliency in expected returns. They are evaluated for strategic fit and long-term advantage versus competition, and they undergo a rigorous reappraisal process to ensure relevant lessons are learned and improvements are incorporated into future decisions. This disciplined approach to making investments and managing assets clearly distinguishes us from competition.

We devote the same discipline to managing our operations around the world every day and maintain a relentless focus on operational excellence, efficiency, and productivity gains.

(PHOTO LNG SHIPS)

Exxon Mobil Corporation 27 Upstream

 


 

RESOURCES AND PROVED RESERVES

Resource Base

The size, quality and breadth of ExxonMobil’s total inventory of discovered oil and gas resources are major strengths of the company. ExxonMobil’s discovered resource base now stands at 72 billion oil-equivalent barrels (31 percent proved). It has grown by over 25 percent, or over 15 billion oil-equivalent barrels, during the last 10 years.

The resource base is updated annually to add new discoveries and resource acquisitions and to reflect any changes in estimates of existing resources. ExxonMobil refers to new discoveries and acquisitions of discovered, but undeveloped, resources as new field resource additions. The company includes only those resources it believes are likely to be produced in the future. Adjustments to existing field resources reflect changes in recovery expectations resulting from new technologies and any other revisions (positive or negative) resulting from field drilling and ongoing evaluation. During the update process, volumes produced or sold during the year are removed from the resource base.

Resources are classified as either proved or non-proved. Non-proved resources are moved to proved reserves once technical and commercial confidence support a development decision.

(UPSTREAM ADVANTAGES)

Resource base, resources, recoverable oil, recoverable hydrocarbons, recoverable resources: include quantities of oil and gas that may not yet be classified as proved reserves, but are likely to be moved to proved reserves and produced in the future.

Proved oil and gas reserves: estimated quantities of crude oil, natural gas, and natural gas liquids that geologic and engineering data show will be recoverable with reasonable certainty given existing economic and operating conditions (i.e., prices and costs at the date of the estimate). ExxonMobil records proved reserves in conjunction with significant funding commitments made toward the development of the reserves.

  Includes 100 percent of majority-owned affiliates’ proved reserves.
 
  Includes ExxonMobil’s percentage ownership of equity company proved reserves.
 
  Condensate is included in crude oil reserves.
 
  Can only consider price changes provided for by existing contracts.
 
  Can assume substantial new investment will be required.

In this report, we include proven reserves from Syncrude tar sands operations in Canada as part of our total proved reserves. Syncrude reserves are reported separately as a mining operation in SEC filings.

Reserve bookings for certain deepwater fields may be made prior to conducting flow tests due to safety and cost implications of such tests. In those situations, other industry-accepted analyses are used.

Proved developed reserves: volumes recoverable through existing wells with existing equipment and operating methods.

Proved undeveloped reserves: volumes expected to be recovered as a result of future investments.

Upstream 28 Exxon Mobil Corporation

 


 

Proved Reserves

At year-end 2003, the resource base included 22 billion oil-equivalent barrels of proved oil and gas reserves. ExxonMobil added 1.7 billion oil-equivalent barrels to proved reserves in 2003, while producing 1.6 billion oil-equivalent barrels, and replacing 107 percent of reserves produced, excluding sales. Including sales and Syncrude production, we replaced 105 percent of reserves produced. This is the 10th consecutive year that the company’s reserves replacement has exceeded 100 percent.

(NEW FIELD RESOURCE ADDITIONS)

Excluding sales, the company has added 19 billion oil-equivalent barrels to proved reserves over the last 10 years (18 billion oil-equivalent barrels including sales), more than replacing production. Over the last five years, reserves have been added at an average replacement cost of $4.77 per oil-equivalent barrel.

(FINDING COSTS DELCINE)

ExxonMobil has consistently made net upward revisions to estimates of proved reserves in existing fields. These revisions have averaged 662 million oil-equivalent barrels per year over the last five years, and have resulted from effective reservoir management and the application of new technology. In 2003, upward revisions were made at fields such as Zafiro in Equatorial Guinea, Guntong in Malaysia, Yoho in Nigeria, and Groningen in the Netherlands.

Development drilling in 2003 within existing fields is expected to add 603 million oil-equivalent barrels of reserves at a cost of less than $3.15 per oil-equivalent barrel.

(NEW FIELD RESOURCE ADDITIONS)

The development of new fields discovered through exploration and extensions of existing fields has added 1 billion oil-equivalent barrels per year to proved reserves over the past five years. These include proved additions in 2003 in the United Kingdom, Norway, Kazakhstan, Qatar, Russia, Angola, and Azerbaijan.

ExxonMobil’s proved reserve base of 22 billion oil-equivalent barrels equates to a reserve life at current production rates of nearly 14 years.

Resource Base Changes

                 
            5-Year
(billions of oil-equivalent barrels)
  2003
  Average
New field resource additions/acquisitions
    2.1       2.1  
Existing fields
    0.1       0.3  
Production
    (1.6 )     (1.6 )
Sales
    (0.3 )     (0.1 )
 
   
 
     
 
 
Net change
    0.3       0.7  

Proved Reserves Additions

                 
            5-Year
(millions of oil-equivalent barrels)
  2003
  Average
Revisions
    619       662  
Discoveries/extensions
    961       990  
Improved recovery
    116       127  
Purchases
    2       1  
 
   
 
     
 
 
Total
    1,698       1,780  
Production
    1,587       1,607  
Reserve replacement (percent)
    107       111  

Exxon Mobil Corporation 29 Upstream

 


 

MAJOR DEVELOPMENT PROJECTS

                             
    Target Peak        
    Production (Gross)
  ExxonMobil
Working
   
Project Start-Ups
  Liquids
  Gas
  Interest
   
    (kBD)   (MCFD)   (%)    
2003
                           
Angola — Jasmim
    50             20     l
Angola — Xikomba
    90             40     n
Canada — Aurora Phase 2
    90             25     l
Canada — Sable Offshore Energy Tier 2
    15       365       60     n
Chad — Doba
    225             40     n
Equatorial Guinea — Zafiro Southern Expansion EPS
    110             71     n
Malaysia — Angsi Phase 3
    30       15       50     n
Malaysia — Bintang
    5       305       50     n
Nigeria — Amenam/Kpono
    115             10     l
Norway — Fram West
    60       70       25     l
Norway — Grane
    220             26     l
Norway — Mikkel
    25       175       33     l
Norway — Ringhorne
    90       35       100     n
U.K. — Carrack
    5       160       49     l
U.K. — Penguins
    40       70       50     l
U.S. — Princess Phase I
    55       110       16     l
2004 (Projected)
                           
Angola — Kizomba A
    250             40     n
Nigeria — Bonga
    200       150       20     l
Norway — Sleipner West Alpha North
    15       195       32     l
Norway — Sleipner West Compression
    20       110       32     l
Qatar — RasGas Train 3
    30       725       29     t
U.K. — Goldeneye
    30       260       39     l
U.K. — Scoter
    5       100       44     l
2005 (Projected)
                           
Azerbaijan — Azeri-Chirag-Gunashli (ACG)
    1,000             8     l
Nigeria — Etim/Asasa B PM
    25             40     n
Qatar — Al Khaleej Gas
    40       740       100     n
Qatar — RasGas Train 4
    45       740       30     t
Russia — Sakhalin I (Chayvo)
    250       1,000       30     n
U.K. — Arthur
          120       70     n
U.S. — Orion
    55             36     l
U.S. — Princess Phase II
    35       120       16     l
U.S. — Thunder Horse
    250       200       25     l
                             
    Target Peak        
    Production (Gross)
  ExxonMobil
Working
   
Project Start-Ups
  Liquids
  Gas
  Interest
   
    (kBD)   (MCFD)   (%)    
2006 (Projected)
                           
Angola — Dalia
    225             20     l
Angola — Kizomba B
    250             40     n
Canada — Cold Lake CEO
    20             100     n
Canada — Syncrude — SW Quad
    90             25     l
Indonesia — Banyu Urip
    165       20       *     n
Kazakhstan — Tengiz Expansions
    440       100       25     l
Malaysia — Guntong Hub
    55       715       50     n
Netherlands — Groningen Clusters
          1,840       30     l
Nigeria — Bosi Oil
    50             56     n
Nigeria — East Area Additional Recovery
    145             40     n
Nigeria — Erha
    150             56     n
Nigeria — Usan
    115             30     l
Norway — Kristin
    140       500       11     l
Norway — Statfjord Late Life
    70       370       21     l
U.S. — Ursa Pressure Maintenance
    45       55       16     l
2007+ (Projected)
                           
Angola — Kizomba C
    250             40     n
Angola — LNG
    50       800       14     l
Angola — Rosa Area
    100             20     l
Australia — Kipper/Tuna
    25       270       32     n
Canada — Kearl Lake
    180             *     n
Canada — Mackenzie Gas Project
    15       800       44     n
Italy — Tempa Rossa
    50       10       25     l
Kazakhstan — Kashagan
    1,200             17     l
Nigeria — Bonga SW
    145       110       20     l
Nigeria — East Area Natural Gas Liquids
    40             51     n
Nigeria — Satellite Projects
    45             40     n
Nigeria — Usari D & E
    30             40     n
Nigeria — Usari WIP
    30             40     n
Norway — Ormen Lange
    30       2,100       7     l
Norway — Tyrihans
    70       235       9     l
Qatar — Al Khaleej Gas (Future Phases)
    120       925       100     t
Qatar — Qatargas II
    160       2,500       15-30     t
Qatar — RasGas Train 5
    45       740       30     t
Qatar — RasGas Trains 6 & 7
    160       2,500       30     t
U.S. — Alaska Gas Pipeline
          4,500       36     **
U.S. — Point Thomson
    75             36     n

Operatorship:

n = ExxonMobil Operated
 
t = Joint Operation
 
l = Operated by Others
 
*   Under negotiation.
 
**   Not yet determined.

(WORLDWIDE PRODUCTION PORTFOLIO)

Upstream 30 Exxon Mobil Corporation

 


 

UPSTREAM OVERVIEW

Global Gas and Power Marketing

To capitalize on growing gas markets, ExxonMobil’s Gas and Power Marketing Company has a global focus and clear mandate to add value from the gas source through to the customer.

The objectives are to:

  Identify, develop, and capture markets to support the growth of equity natural gas volumes
 
  Maximize the value of natural gas, natural gas liquids, helium, CO2, power sales, and assets
 
  Minimize delivered cost of natural gas, natural gas liquids, and power

Leveraging Global Expertise to Maximize Value

ExxonMobil is the world’s largest nongovernment marketer of equity (own production) gas. Sales of equity production in 2003 exceeded 10 billion cubic feet per day, and total gas sales were almost 16 billion cubic feet per day. Our steps to focus on selling equity production gas have resulted in lower total gas sales, since we reduced our purchase and resale volumes, which historically occurred through participation in Ruhrgas AG and other activities. Sales were made in over 25 countries and across five continents, in every major gas market in the world. The company participated in LNG joint ventures with a combined gross capacity of 22 million metric tons per year, nearly 20 percent of global industry capacity, making ExxonMobil one of the largest LNG suppliers in the world.

(LNG MARKETS GROWING)

ExxonMobil has access to a broad portfolio of both established gas resources, which are close to existing gas markets, and new gas field developments that will be commercialized to meet growing demand in both mature and emerging markets. The total resource base is 182 trillion cubic feet of net discovered resources (including 55 trillion cubic feet of proved reserves), which provides a solid foundation for profitable growth.

The company has leading-edge LNG, gas-to-liquids, gas pipeline, and power generation technologies. In addition, the company is pursuing industry-first technology aimed at expanding opportunities for commercializing natural gas. Our expertise in integrating these advanced technologies with global market requirements, strong financial position, and our understanding of transportation networks, project economics, and regulatory structures provides a substantial competitive advantage. The ability to participate effectively in nearly all sectors of the gas business around the world is essential to optimizing a substantial base business and commercializing our large remote resources in an ever-changing market.

ExxonMobil has significant holdings in the electric power business, with interests in nearly 13,300 megawatts of generation capacity, including 2,900 megawatts of cogeneration. In addition, more than 800 megawatts of cogeneration are currently under construction. We also have created a power Center of Expertise to efficiently manage our spending on energy, evaluate new opportunities for generation, especially cogeneration, and assist in gas monetization initiatives.

(CHARTS AND GRAPHS)

Exxon Mobil Corporation 31 Upstream

 


 

NORTH AMERICA

ExxonMobil has the industry’s largest portfolio of proved reserves and production in North America. North American operations contributed about 36 percent of ExxonMobil’s 2003 worldwide production on an oil-equivalent basis and 37 percent of Upstream earnings.

(NORTH AMERICAN HIGHLIGHTS)

United States

ExxonMobil is one of the largest oil and gas producers and reserve holders in the United States. The company’s well-established portfolio is geographically diverse with significant positions in all major producing regions including Alaska, onshore Gulf Coast, shelf and deepwater areas of the Gulf of Mexico, onshore and offshore California, and the mid-continent region. U.S. properties contributed 23 percent of the company’s net oil and gas production in 2003 and accounted for 23 percent of proved reserves at year end.

The U.S. Upstream continues to provide a significant contribution to ExxonMobil profitability through a sizable but selective drilling program, investments in the existing base, as well as in attractive new projects, and continued operational efficiency improvements. Technology and quality reservoir management enhance the long-term performance of each field. Base production decline is mitigated through active workover and development drilling programs. In 2003, this program included the drilling of nearly 1,300 wells (gross). We continue to focus on divesting mature, higher-cost properties to prioritize our resources on the highest-value opportunities.

In 2003, further operational efficiencies were realized through the consolidation of the company’s United States production activities into one organization.

(GRAPHIC)

Development of this deepwater discovery (water depth 6,300 feet) in the central Gulf of Mexico will include a semi-submersible floating production, drilling, and quarters unit with up to 20 direct access subsea wells plus additional subsea wells connected from locations nearby. Oil exports will occur via the joint-venture Proteus and Endymion pipeline systems to southern Louisiana. Drilling and construction activities are underway, with start-up projected for 2005. Thunder Horse High-pressure acid gas injection will replace existing sulfur recovery units at the Shute Creek Treating Facility in La Barge, Wyoming. Currently under construction, the project includes two injection wells and a 110 megawatt power cogeneration unit. The project will increase the existing plant capacity from 650 to 720 million cubic feet per day. Start-up of the first cogeneration turbine is planned for early 2004, with acid gas injection commencing later in the year. Expected Production Rate (gross) Target Acid Gas Injection Rate

Upstream 32 Exxon Mobil Corporation

 


 

In the western United States, ExxonMobil operates a multi-well tight gas exploration and production program in the Piceance Basin of northwestern Colorado. Exploration drilling will continue through 2004 to assess the gas resources on the company’s extensive acreage holdings. Ongoing development drilling and production activities are advancing commercialization of these resources through the application of new multi-stage fracturing technology.

In Alaska, ExxonMobil is the largest resource owner in the Prudhoe Bay field (ExxonMobil interest, 36.4 percent). The ExxonMobil-operated Point Thomson gas-injection project (ExxonMobil interest, 36 percent) is designed to produce condensate in advance of major gas sales from the North Slope. Engineering design has progressed and additional efforts are underway to advance commercialization of this resource.

Deepwater Gulf of Mexico

ExxonMobil has one of the leading deepwater acreage positions with interests in 593 deepwater blocks (about 3.4 million gross acres). With producing fields contributing 361 thousand oil-equivalent barrels per day of gross production, development projects underway, participation in high-potential discoveries, and a strong inventory of prospects, ExxonMobil is well positioned for future growth.

(MAP)

Exploration drilling on the St. Malo prospect (ExxonMobil interest, 3.8 percent) in Walker Ridge resulted in a significant discovery. Additional drilling is planned on several prospects that have been delineated within the 86 nearby ExxonMobil interest blocks. ExxonMobil acquired interest in 30 deepwater and 12 shallow-water leases in 2003, further strengthening our position in high-potential areas of the Gulf of Mexico.

In 2003, initial production began from the first phase of the Princess subsea development (ExxonMobil interest, 16 percent) located in 3,800 feet of water. This initial development is tied back to the Ursa tension leg platform and consists of three subsea wells that will develop over 100 million oil-equivalent barrels (gross) and is targeted to produce at a peak rate of 55 thousand barrels of oil and 110 million cubic feet of gas per day. Further development is planned that is expected to raise the total gross ultimate recovery to over 175 million oil-equivalent barrels.

Construction of the world’s largest semi-submersible production and drilling vessel continues for the Thunder Horse development (ExxonMobil interest, 25 percent).

Canada

ExxonMobil is the largest crude oil producer in Canada, a leading natural gas producer, and holds the largest resource position through its wholly-owned affiliate ExxonMobil Canada and its majority-owned affiliate Imperial Oil (ExxonMobil interest, 69.6 percent). The company has a significant presence in major development projects offshore eastern Canada and a well-established production base with expansion opportunities in western Canada.

Exxon Mobil Corporation 33 Upstream

 


 

North America (continued)

Conventional Oil and Gas

The ExxonMobil-operated Sable Offshore Energy Project (SOEP) (ExxonMobil interest, 51 percent; Imperial Oil interest, 9 percent) consists of six fields that are estimated to contain recoverable hydrocarbons of approximately 2.1 trillion cubic feet of natural gas and over 90 million barrels of natural gas liquids (gross). Production in 2003 was over 430 million cubic feet per day of natural gas (gross) and 16 thousand barrels per day of liquids (gross) from the initial three-field development.

Natural gas from SOEP is transported to markets in the Canadian Maritime Provinces and the northeastern United States via the Maritimes and Northeast Pipeline (ExxonMobil interest, 12.5 percent).

(GRAPHIC)

Sable Offshore Energy Project Tier 2

         
Expected Production Rate (gross) Liquids
    15 kBD  
Natural Gas
    365 MCFD  
Total Project Investment
    $2.4 billion  
ExxonMobil Working Interest
    60%  
Scheduled Start-Up
    2003-2006  

Located 125 miles off Nova Scotia in 70-250 feet of water, the Sable Tier 2 project will add satellite platforms, interconnecting pipelines, compression facilities and satellite processing upgrades to the existing Tier 1 development. Alma, the first of the Tier 2 developments, is connected to the host platform, Thebaud, via a 32 mile flowline and is designed to produce 120 million cubic feet of gas per day and 3 thousand barrels of associated liquids per day. First production from Alma occurred in November 2003.

The Alma design is being utilized in the second Tier 2 development, South Venture, which is expected to add 140 million cubic feet of gas production per day. Start-up of South Venture is expected in 2005.

The Terra Nova development (ExxonMobil interest, 22 percent) located 200 miles southeast of St. John’s, Newfoundland, is producing 134 thousand barrels of oil per day (gross). Located in 300 feet of water, Terra Nova consists of a unique, harsh-environment-equipped Floating Production, Storage, and Offloading (FPSO) vessel and 24 subsea wells that are expected to recover 380 million oil-equivalent barrels (gross).

The company also operates and holds a 33.1 percent interest in the Hibernia oil field. Hibernia, located 195 miles southeast of St. John’s, Newfoundland, holds an estimated 670 million barrels (gross) of remaining recoverable oil. Optimization and debottlenecking efforts increased production capacity from 180 thousand barrels per day to 215 thousand barrels per day (gross). Also offshore Newfoundland, commercialization studies continue on the Hebron oil discovery (ExxonMobil interest, 38 percent).

ExxonMobil Canada and Imperial Oil successfully participated in a tender for eight high-potential frontier deepwater exploration blocks in the Orphan Basin located offshore Newfoundland (ExxonMobil interest, 25 percent; Imperial Oil interest, 25 percent). Blocks were awarded in January 2004.

(PHOTO)

Heavy Oil and Tar Sands Development

The Cold Lake field (Imperial Oil interest, 100 percent) and the Syncrude tar sands operation (Imperial Oil interest, 25 percent) in Alberta account for the majority of Imperial’s oil production in western Canada.

At Cold Lake, steam is injected into the formation, which increases the mobility of the heavy oil in the reservoir, permitting it to be produced to the surface. The injection-production cycle is repeated many times to maximize economic recovery. The application of leading-edge technologies providing enhanced resource description, identification of reservoir segments not yet contacted by steam, and improved recovery prediction have increased reserves recovery potential and improved economics at Cold Lake.

Upstream 34 Exxon Mobil Corporation

 


 

The Syncrude operation involves three main processes: open pit mining, extraction of crude bitumen, and upgrading to produce high-quality crude oil. Syncrude Sweet Blend, the final product of the operation, is a 32 degree API gravity crude that has a market value approximately equal to West Texas Intermediate crude. Since its start-up more than 20 years ago, the Syncrude tar sand facility has become the largest in the world, producing more than 210 thousand barrels of crude oil per day (gross) in 2003. Net interest proved reserves total about 780 million barrels, providing a reserve life of about 40 years at current production rates. Staged expansion is underway to further develop reserves in the area and expand the upgrading facilities. This expansion is planned to increase production to over 350 thousand barrels of upgraded crude oil per day (gross). The next expansion phase is scheduled to start up in 2006.

ExxonMobil holds interests in three large Kearl Lake oil sands mining leases through its interest in Imperial Oil as well as through its wholly-owned affiliate. A 200 well delineation program is underway on the Imperial Oil leases to further define the resource and support the conceptual design for the project. In 2003, activity was initiated on environmental, public consultation and regulatory work to support a development plan application.

North American Gas Market

In North America, ExxonMobil is a leading producer and marketer of equity gas with production volumes totaling 3.2 billion cubic feet per day. ExxonMobil sells gas to a broad range of customers, including local distribution companies, public utilities, major industrial consumers, and power producers.

ExxonMobil is well positioned to meet gas demand growth with supplies in major producing basins, and exploration and development activities near key markets. This includes a leading position in the gas resources in the Mackenzie Delta region of northern Canada and on the North Slope of Alaska. Led by Imperial Oil, the Mackenzie Delta Producers Group and the Aboriginal Pipeline Group are working together to pursue economic and timely development of a Mackenzie Valley pipeline, with start-up planned before the end of the decade. Progress was made in 2003 on key regulatory milestones and funding elements. Efforts also continue towards commercialization of gas from the Alaskan North Slope.

LNG is forecast to play an increasingly important role in future North American gas supply. A Heads of Agreement was signed with Qatar to supply approximately 15.6 million tons per year, or 2 billion cubic feet per day of gas (ExxonMobil interest, 30 percent) to the U.S. beginning in 2009. In 2003, ExxonMobil acquired options to purchase land for LNG offloading and regasification terminals at three locations on the U.S. Gulf Coast (Sabine and Corpus Christi, Texas, and Mobile, Alabama). The process to obtain regulatory approvals has already been initiated for the Sabine and Corpus Christi sites.

ExxonMobil has a significant presence in the North American natural gas liquids business, managing over 600 thousand barrels per day. The company is active in all aspects of the business from gas production through processing, transportation, storage, fractionation, refining and chemical feedstocks, and propane marketing. ExxonMobil holds interests in 85 gas plants with net processing capability of 4.2 billion cubic feet of gas per day.

Additionally, ExxonMobil is the largest wholesale marketer of helium in the world. The company’s U.S. operations produce nearly 4 million cubic feet per day of helium.

(MACKENZIE DELTA)

The Mackenzie Gas Project targets development of approximately 6 trillion cubic feet of gas from three onshore arctic fields including the Imperial Oil-operated Taglu field (Imperial Oil interest, 100 percent) and Parsons field (ExxonMobil interest, 25 percent). In addition to drilling and facility installations, the project plans call for construction of a 100 mile gathering system, two 300 mile transmission lines (gas and gas liquids) to Norman Wells, and a 500 mile gas pipeline to link with the existing gas transmission network in Alberta, Canada. Currently in the design stage, project start-up is anticipated in 2009.

Exxon Mobil Corporation 35 Upstream

 


 

EUROPE

ExxonMobil is the largest net producer of hydrocarbons in Europe with daily net production of about 580 thousand barrels of liquids and 4.5 billion cubic feet of gas. The company has exploration and/or production operations in France, Germany, Italy, the Netherlands, Norway, and the United Kingdom. Extensive North Sea oil and natural gas production operations and significant onshore natural gas production are among the company’s key assets. ExxonMobil’s operations in Europe accounted for almost one-third of the company’s 2003 net oil and gas production and 36 percent of Upstream earnings.

(MAP)

United Kingdom and Norway Developments

ExxonMobil has an interest in more than 100 producing fields in the U.K. and Norwegian sectors of the North Sea.

In the Norwegian sector of the North Sea, the ExxonMobil-operated Ringhorne platform (ExxonMobil interest, 100 percent) started production in February 2003. The 24-slot production, drilling, and quarters platform is tied back to the Balder Floating Production Unit for final processing and export. The Balder/Ringhorne area oil production will be accelerated through installation of two 15 mile pipelines to transfer Ringhorne Jurassic production to the existing Jotun A FPSO where processing, storage, and export will occur. Peak production from the platform is expected to be 90 thousand barrels per day of oil and 35 million cubic feet per day of natural gas.

The Grane project (ExxonMobil interest, 25.6 percent) is expected to develop 780 million barrels of oil (gross) utilizing an integrated production, drilling, and quarters platform. The first of 12 pre-drilled Grane wells was tied back to the platform in September 2003, resulting in first production of 30 thousand barrels of oil per day (gross). Production from the field is expected to peak at over 220 thousand barrels of oil per day (gross).

The Fram West project (ExxonMobil interest, 25 percent) is expected to develop 120 million oil-equivalent barrels (gross) using subsea wells tied back to an existing platform. First production from Fram West occurred in October 2003 with anticipated peak volumes of 60 thousand barrels of oil per day and 70 million cubic feet of gas per day (gross).

Two Norwegian deepwater new field development projects are underway at Kristin (ExxonMobil interest, 10.5 percent) and Ormen Lange (ExxonMobil interest, 7 percent). These new developments are projected to start up in 2006 and 2007, respectively.

The Statfjord Late Life project (ExxonMobil interest, 21 percent) is a capacity enhancement project to transition Statfjord operations from reservoir pressure maintenance to reservoir depressurization for enhanced oil and gas recovery. Incremental recovery is expected to be over 400 million oil-equivalent barrels (gross). Start-up is targeted for late 2006.

In the U.K. North Sea, the Penguins project (ExxonMobil interest, 50 percent) started production in January 2003. The project is expected to recover 79 million oil-equivalent barrels (gross).

The Goleneye project, located in the central North Sea, is one of nine major ExxonMobil-interest European developments to start up over the next several years.

(PHOTO)

(BAR CHART)

Upstream 36 Exxon Mobil Corporation

 


 

(MAP)

Exxon Mobil Corporation 37 Upstream

 


 

Europe (continued)

In November 2003, production began from the Carrack project (ExxonMobil interest, 49 percent). This phased, six well development in the southern North Sea area is anticipated to produce about 50 million oil-equivalent barrels (gross). The project optimized the use of existing infrastructure by utilizing a normally unmanned 10-slot wellhead platform that is tied back via an 82 kilometer pipeline to the Clipper platform.

Three projects in the U.K. North Sea are scheduled to commence production in 2004 and 2005. The Goldeneye project (ExxonMobil interest, 39 percent), is located in the central North Sea. In December 2003, two wells from the Scoter project (ExxonMobil interest, 44 percent) produced at a gross combined rate exceeding 200 million cubic feet of gas per day. These wells utilize existing infrastructure in the Shearwater platform area. The Arthur project (ExxonMobil interest, 70 percent), is progressing through the front-end engineering and design phase, following the successful outcome of the Camelot East near-field wildcat discovery in 2003. The field is located in the southern North Sea and operated by ExxonMobil. The project is intended to recover over 130 billion cubic feet (gross) of gas reserves with up to three wells. Project funding is planned for early 2004, with start of production targeted for early 2005.

(CHART)

The Kristin project is designed to develop high-pressure, high-temperature hydrocarbon resources estimated at over 450 million oil-equivalent barrels (gross). The project includes multiple subsea templates tied back to a semi-submersible production vessel in approximately 1,200 feet of water. Plans call for produced gas to flow to the Aasgard 42 inch gas export line and for condensate to be exported via a 150 mile pipeline to Aasgard C. Start-up is scheduled for early 2006. Located 120 miles offshore Norway in 2,300-3,600 feet of water, the Ormen Lange project is designed to develop over 13 trillion cubic feet of gas (gross) from the Ormen Lange field. Technically challenging due to uneven seabed terrain and cold water flow concerns, the project scope includes subsea wells flowing to a new onshore gas processing plant at Nyhamna, Norway. Plans call for a 390 mile, 42 inch trunkline to connect the plant to the offshore Sleipner Norwegian Continental Shelf hub and a new 340 mile, 44 inch trunkline to connect Sleipner to the U.K. at Easington. Start-up is targeted for late 2007. The Goldeneye project is expected to develop 135 million oil-equivalent barrels (gross) using an unmanned wellhead platform with the full wellstream moved to shore via a 20 inch flowline. The project consists of five wells in 400 feet of water and production will be sent to the existing St. Fergus gas plant for separation.

Upstream 38 Exxon Mobil Corporation


 

Other European Activities

ExxonMobil has significant gas holdings onshore in the Netherlands and Germany, and is the largest gas producer in both countries. Capacity is being optimized to meet market demand and peak-day needs. A multi-year upgrade of the Groningen facilities, along with additional compression for future deliverability, is progressing in the Netherlands. In Germany, ExxonMobil is enhancing capacity by progressing plans for a 205 square kilometer 3D seismic survey, as well as near-field wildcat and appraisal well drilling.

Offshore the Netherlands, the K/15-FK project (ExxonMobil interest, 23 percent) began production in August 2003. The project is anticipated to recover 22 million oil-equivalent barrels (gross). K/15-FG-North also began production in December 2003, and is expected to recover 5 million oil-equivalent barrels (gross).

The Tempa Rossa field (ExxonMobil interest, 25 percent) in the Italian Southern Apennines contains an estimated ultimate recovery of 200 million barrels of heavy oil (gross). Front-end engineering and design are progressing for a centralized oil and gas processing facility. Plans are to expand production via an existing pipeline to storage and loading facilities at Taranto, Italy. Start-up is anticipated in 2007.

European Gas Market

ExxonMobil is the largest nongovernment marketer of equity gas in Europe and holds a substantial asset base. ExxonMobil’s gas sales position in Europe is supported by an experienced marketing organization, extensive marketing infrastructure, and ownership interests in 27 thousand miles of onshore gas pipelines, 300 billion cubic feet of gas storage capacity, 650 megawatts of cogeneration power facilities and 12 gas processing plants. In addition, ExxonMobil manages natural gas liquids volumes of over 320 thousand barrels per day.

ExxonMobil’s broad portfolio of gas production, treating, transmission, storage, and marketing assets, as well as our commercial experience in the region, position us well in the changing European market.

Several significant commercial restructuring activities are progressing to further position ExxonMobil to compete effectively in the future European gas market. These changes anticipate the impact of the European Gas Directives and enable ExxonMobil to directly market significantly more of its equity gas production.

Effective January 2003, unitization of the offshore and onshore Norwegian gas pipelines was implemented. ExxonMobil’s ownership share in the unitized grid is 9.8 percent and our ownership rights were extended to 2028. ExxonMobil now independently markets all of its Norwegian equity gas production following the dissolution of the Norwegian government-mandated Gas Sales Committee.

ExxonMobil and Shell have agreed to transfer the gas marketing activities from their 50/50 German joint venture, BEB Erdgas und Erdsl GmbH (BEB) into separate ExxonMobil and Shell companies, which will independently market gas to customers. BEB is presently active in sales and purchases as well as transportation and storage of natural gas in Germany. ExxonMobil is the operator of BEB’s production assets. The split of BEB’s gas marketing business is expected to be effective in 2004.

ExxonMobil continues to optimize its holdings in Europe. The company’s shareholding in Ruhrgas AG was transferred to E.ON AG, which resulted in a $1.7 billion net earnings benefit to ExxonMobil. During the first half of 2003, ExxonMobil sold its U.K. industrial and commercial gas marketing business.

With the second European Gas Directive, discussions were held throughout 2003 with the Dutch government to determine the appropriate restructuring of Gasunie, the large Dutch gas transmission and marketing company (ExxonMobil interest, 25 percent). The restructuring discussions are now focused on the legal separation of Gasunie’s transmission system from its marketing activities by mid-2004.

LNG is forecast to play an increasingly important role in European gas supply and ExxonMobil is active in developing terminals to facilitate the rapid growth of LNG demand. In the U.K., ExxonMobil and Qatar Petroleum are developing the South Hook LNG receiving terminal at ExxonMobil’s former refinery site in Milford Haven, Wales. This terminal is the likely access point for the 15.6 million tons per year Qatargas II LNG project (ExxonMobil share, up to 30 percent). Key permits were received during 2003 for this development. In Italy, Qatar Petroleum and ExxonMobil acquired a 90 percent interest in the offshore Adriatic Liquefied Natural Gas Terminal (ExxonMobil interest, 45 percent) to regassify 6.0 million tons per year of LNG. Also in southern Europe, ExxonMobil is assessing potential terminal development opportunities at its refinery sites in Fos (France) and Augusta (Italy).

Exxon Mobil Corporation 39 Upstream

 


 

AFRICA

ExxonMobil has a substantial and profitable production base, as well as significant growth potential in west Africa with Upstream activities in Angola, Cameroon, Chad, Equatorial Guinea, Niger, Nigeria, and the Republic of Congo. Active areas include production in Nigeria, Equatorial Guinea, Chad, Angola, and Cameroon; major new developments underway in Angola, Chad, and Nigeria; and a world-class acreage position in the high-potential deepwater provinces of west Africa.

In deepwater areas offshore west Africa, ExxonMobil holds interests in 16 blocks totaling nearly 11 million gross acres. Seventeen deepwater exploration wells were completed off west Africa during 2003, adding 480 million barrels (net) to ExxonMobil’s resource base.

(MAP)

Angola

ExxonMobil has interests in five deepwater blocks that cover 4.5 million gross acres. The company and its co-venturers have announced 36 discoveries in Angola, which represent world-class development opportunities with recoverable resource potential of 11.5 billion oil-equivalent barrels (gross).

(MAP)

On ExxonMobil-operated Block 15 (ExxonMobil interest, 40 percent), first production was achieved in November 2003 at the Xikomba development. Xikomba production is through an Early Production System (EPS) designed to produce 90 thousand barrels of oil per day (gross) that will ultimately develop approximately 100 million barrels of oil (gross). Three additional major development projects are being progressed on Block 15, Kizomba A, B, and C. These developments are intended collectively to develop over 2.5 billion barrels of oil at a total investment of around 10 billion dollars (gross).

(MAP)

On Block 17 (ExxonMobil interest, 20 percent), production from the Girassol field continued at over 200 thousand barrels of oil per day (gross). Girassol produces to an FPSO in 4,500 feet of water. Jasmim, a subsea tieback to the Girassol FPSO, began production in November 2003. Expected peak production is up to 50 thousand barrels per day (gross). Design work on the Rosa development, which will also produce to the Girassol FPSO, continued in 2003. Engineering and design for the Dalia project, which will be the next development on Block 17, is nearing completion.

(MAP)

n ExxonMobil Interests

Δ Announced Deepwater Discovery Wells

l Development Projects
    (Not to Scale)

(PHOTO)

The Tension Leg Platform installed in Angola Block 15 is part of the worldclass Kizomba A project.

Upstream 40 Exxon Mobil Corporation

 


 

ExxonMobil is working with our joint-venture partners to develop Angola’s first LNG project with a planned capacity of 5 million tons per year (ExxonMobil interest, 13.6 percent), which includes use of associated gas from Angola’s deepwater oil operations.

In 2003, ExxonMobil maintained an aggressive deepwater exploration program in Angola with discoveries at Bavuca, Clochas, Kakocha, and Tchihumba in Block 15; Acacia and Hortensia in Block 17; Marte and Saturno in Block 31 (ExxonMobil interest, 25 percent); and Gindungo in Block 32 (ExxonMobil interest, 15 percent). These nine discoveries represent a success rate of about 80 percent and resource additions of nearly 390 million net oil-equivalent barrels.

(CHART)

The offshore Angola Block 15 Kizomba A project will develop the Hungo and Chocalho fields in water depths of 3,300-4,200 feet. The development includes a new 2.2 million barrel Floating Production, Storage, and Offloading (FPSO) vessel that receives production from a 36-slot Tension Leg Platform (TLP). The TLP was successfully installed in November 2003, and fabrication of the FPSO is complete. Estimated recovery from the project is 1 billion barrels of oil (gross), with first oil projected in late 2004 following installation of the FPSO.

Utilizing a design similar to Kizomba A in order to achieve reduced costs and cycle time, the Kizomba B project is designed to develop 1 billion barrels of oil (gross) from two additional offshore Angola Block 15 fields (Kissanje and Dikanza). Start-up of Kizomba B is expected in 2006.

Kizomba C project will be the third offshore production hub in Angola Block 15. This project is planned to develop about 600 million barrels of oil (gross) from the Mondo, Saxi, and Batuque discoveries. Development planning is underway and first oil is expected in 2007.

The Dalia project will utilize a FPSO to recover 940 million barrels of oil (gross) from the offshore Angola Block 17 structure. Subsea templates at a water depth of 4,400 feet will handle production and injection for 37 oil producers, 33 water injectors, and three gas injectors. Detailed engineering is ongoing with FPSO construction commencing in early 2004. Start-up is anticipated in 2006.

Exxon Mobil Corporation 41 Upstream

 


 

Africa (continued)

Equatorial Guinea

ExxonMobil is the largest producer in Equatorial Guinea, and operates two blocks (ExxonMobil interest, 71 percent), which cover about 1 million gross acres. In 2003, total field production increased to over 200 thousand barrels per day (gross).

(MAP)

Construction activities were completed and first oil was achieved in July 2003, ahead of schedule, from the ExxonMobil-operated Southern Expansion Area of the Zafiro field. The Zafiro field is located on Block B, approximately 40 miles northwest of Malabo in water depths of 1,400-2,800 feet. Eleven of the 14 planned subsea wells are currently producing over 100 thousand barrels of oil per day (gross) to an FPSO that was deployed as an EPS. Estimated ultimate recovery from the project is in excess of 150 million barrels of oil-equivalent (gross).

(PHOTO)

(SYMBOLS)

The Serpentina Floating Production, Storage, and Offloading vessel in the Zafiro Field in Equatorial Guinea is one of the Early Production Systems deployed by ExxonMobil offshore west Africa.

Nigeria

ExxonMobil participates in a joint venture (ExxonMobil interest, 40 percent for crude and condensate; 51 percent for natural gas liquids) with the Nigerian National Petroleum Corporation, for which it operates five leases covering over 800 thousand acres in shallow water offshore southeastern Nigeria.

(MAP)

In 2003, ExxonMobil operations offshore Nigeria produced an average of 570 thousand barrels of oil per day (gross). This is about 10 percent above 2002 volumes, mostly due to the Yoho project. The ExxonMobil-operated Yoho project began producing in late 2002, two years ahead of full field start-up.

Other activities are in progress to increase future production capacity in the joint-venture areas. This production growth will be a result of satellite field developments, enhanced recovery projects, and a series of platform upgrades, which will enhance facility integrity and production capacity, and optimally develop additional resources on the joint-venture acreage. Two major projects, the East Area Additional Oil Recovery project and the East Area Natural Gas Liquids project, are underway.

(MAP)

Upstream 42 Exxon Mobil Corporation

 


 

(CHART)

Yoho Yoho full field development is underway offshore Nigeria. The $1.2 billion project, with ExxonMobil estimated recoverable reserves of 350 million barrels of oil, will develop discoveries in the Yoho and Awawa fields in water depths of 200-300 feet. With first full field production in early 2005, the development Wellhead will consist of production and quarters platforms, Platform a Floating Storage and Offloading (FSO) vessel, multiple wellhead platforms and an oil export system. The East Area Additional Oil Recovery project is being implemented to increase recovery and to minimize gas flaring from six joint-venture East Area producing fields. Facilities consist of gas gathering and re-injection pipelines and additional gas compression. The project is expected to recover 500 million oil-equivalent barrels (gross). Equipment procurement and detailed engineering are in progress, with start-up anticipated in 2006. The addition of gas processing platforms and an expansion of the Bonny River terminal facilities are planned to extract 300 million oil-equivalent barrels (gross) of natural gas liquids from East Area joint-venture fields. Contracting is underway and project start-up is anticipated in 2008. Bonga holds the distinction of being industry’s first deepwater (3,300 feet) development offshore Nigeria. Starting up in 2004, the project is designed to recover 200 thousand barrels of oil per day (gross) from 21 subsea wells tied back to a newly constructed Floating, Production, Storage, and Offloading (FPSO) vessel. Estimated ultimate recovery from the development is 560 million oil-equivalent barrels (gross). Construction and fabrication of the Erha FPSO is underway in South Korea. The FPSO will be moored in 3,400 feet of water offshore Nigeria to handle production and injection associated with 26 subsea wells. This development is expected to recover 500 million barrels of oil (gross), with first production in 2006.

Exxon Mobil Corporation 43 Upstream


 

Africa (continued)

The Amenam/Kpono project (ExxonMobil interest, 10 percent) was successfully started during the third quarter of 2003, yielding an additional 2 thousand barrels of oil per day (net).

In the deepwater areas off the Niger Delta, ExxonMobil is participating in two projects that are expected to develop over 1 billion barrels of oil (gross) on a combined basis. Bonga (ExxonMobil interest, 20 percent), the first deepwater development offshore Nigeria is anticipated to commence production in 2004 and the ExxonMobil-operated Erha project (ExxonMobil interest, 56 percent) is projected to start up in 2006.

Deepwater drilling continues with successful exploratory wells at Usan-3 and Usan-4 on Block 222 (ExxonMobil interest, 30 percent). We are working with co-venturers to progress Usan development in the near future.

ExxonMobil continues to progress discussions with the government and the Nigerian National Petroleum Corporation on commercial terms for its share of Nigeria’s extensive gas resources on both shallow and deepwater acreage. Technical studies have confirmed the availability of sufficient gas for LNG development.

Chad

ExxonMobil operates the 1 billion barrel Doba development project (ExxonMobil interest, 40 percent) as well as over 10 million gross acres in the Doba, Doseo, and Lake Chad basins. First oil production was achieved in June 2003 with full field start-up in early 2004. Exploration efforts continued in Chad with the successful completion of the Moundouli-2 wildcat and the Mangara-2 appraisal wells.

(MAP)

(PHOTO)

Chad-Doba

         
Expected Production Rate (gross)
   
Liquids
  225 kBD
Total Project Investment
  $3.7 billion
ExxonMobil Working Interest
    40%
Scheduled Start-Up
      2003/2004

This world-class development project encompassed construction and installation of a 650 mile pipeline and a Floating Storage and Offloading vessel located seven miles offshore of Kribi, Cameroon. Early oil production from the Miandoum field was achieved in June 2003 and full field production (including Kome field) is scheduled to occur in 2004. Achievements in the construction and operational phases of the project include completion of pipeline construction and pipeline fill operations one year ahead of schedule and completion of field facilities one year ahead of schedule. Production from the Bolobo and satellite fields (Nya and Moundouli) is planned to extend the pipeline production plateau. First production from the Bolobo field is expected to come on-line in 2005. As much as 1 billion barrels of oil (gross) is expected to be recovered from Miandoum, Kome, and the satellite fields.

Other African Interests

Cameroon — ExxonMobil holds interests in three blocks offshore Cameroon: Moudi, Ebome, and Ebodje. Net production in 2003 was 4 thousand barrels of oil per day.

Niger — ExxonMobil participates in the 7 million acre Agadem permit (ExxonMobil interest, 50 percent) in eastern Niger. Nearly 350 million recoverable oil-equivalent barrels (gross) have been discovered to date on this acreage.

Republic of Congo — ExxonMobil holds an interest in the Mer Tres Profonde Sud deepwater block (ExxonMobil interest, 30 percent), which covers over 1 million gross acres. Commercialization studies are ongoing on a prior year discovery at the Andromede prospect.

Upstream 44 Exxon Mobil Corporation

 


 

THE MIDDLE EAST

ExxonMobil has a substantial production base and significant growth potential in the resource-rich Middle East region.

(MAP)

Qatar

ExxonMobil is making significant progress working with Qatar Petroleum and other joint-venture partners to further develop the giant North Field, the largest non-associated gas field in the world. Gross resources to be developed through existing and planned LNG trains and pipeline projects exceed 22 billion barrels of oil-equivalent. Gas resources from the North Field are well positioned and competitive for supplying Liquefied Natural Gas (LNG) to all markets in the Asia-Pacific region, Europe, and the United States.

(MAP)

(MAP)

In 2003, three existing LNG trains at the Qatargas joint venture (ExxonMobil interest, 10 percent) produced 8.2 million tons (377 billion cubic feet), sold mainly to customers in Japan and Spain. Further optimization of the three existing LNG trains at Qatargas is underway. Work is progressing on the Qatargas II project (ExxonMobil interest, 15-30 percent) that is currently in the front-end engineering and development phase. The project will be the largest LNG import into the European market and includes two LNG trains each with a capacity of 7.8 million tons per year. Shipping will involve a fleet of LNG carriers that are larger than the largest LNG ships now in service. In addition, land use permits have been received for a 15.6 million ton per year LNG receiving terminal at ExxonMobil’s former refinery site in Milford Haven, Wales.

RasGas LNG facilities (ExxonMobil interest, 25 percent) produced 6.5 million tons (299 billion cubic feet), sold mainly to Korea Gas, with the bulk of the remainder going into markets in the U.S. and Spain. Construction of RasGas Trains 3 and 4 and the associated marketing arrangements are expected to develop 2.9 billion oil-equivalent barrels (gross). The Train 4 LNG project also includes natural gas liquids extraction facilities designed to provide 15 thousand barrels per day of liquids. In addition, plans are underway for a fifth train of 4.7 million tons per year capacity with sales agreements under development.

On October 16, 2003, ExxonMobil signed a Heads of Agreement with Qatar Petroleum to produce and deliver 15.6 million tons per year of LNG to the U.S. This project will be the largest LNG import project for supply of gas to the U.S. and will make a significant contribution to meeting its future gas demand. Two LNG trains of 7.8 million tons per year each and ships are planned to be developed as part of RasGas Trains 6 and 7. Deliveries of LNG are targeted for 2009. The trains and ships for both the Qatargas II project and for the RasGas Trains 6 and 7 project will use the same design.

In November, 2003, Qatar Petroleum and ExxonMobil acquired an interest in the offshore Adriatic Liquefied Natural Gas Terminal project (ExxonMobil interest, 45 percent) in Italy. This state-of-the-art receiving and regasification terminal is anticipated to start up in 2007. Under the amended contracts signed with Edison Gas S.p.A., RasGas will supply up to 4.7 million tons of LNG per year to Edison Gas and other customers in Italy through this terminal.

Qatar Existing and Planned LNG Trains

                                         
Joint           Capacity   Working           Scheduled
Venture
  Train
  MTA
  Interest
  Market
  Completion
Qatargas
    1       3.0       10 %   Japan/Spain   Complete
Qatargas
    2       3.2       10 %   Japan/Europe   Complete
Qatargas
    3       2.7       10 %   Japan/Europe   Complete
Qatargas II
    4       7.8       30 %   U.K./Europe       2008
Qatargas II
    5       7.8       15-30 %   U.K./Europe       2010
RasGas
    1       3.3       25 %   Korea   Complete
RasGas
    2       3.3       25 %   Korea   Complete
RasGas
    3       4.7       29 %   India       2004
RasGas
    4       4.7       30 %   Europe       2005
RasGas
    5       4.7       30 %   Europe/Asia/U.S.       2007
RasGas
    6       7.8       30 %   United States       2009
RasGas
    7       7.8       30 %   United States       2011
 
           
 
                         
Total
            60.8                          

Exxon Mobil Corporation 45 Upstream

 


 

The Middle East (continued)

The Al Khaleej Gas (formerly Enhanced Gas Utilization) Development and Production Sharing Agreement (ExxonMobil interest, 100 percent) calls for further development of gas from the Qatar North Field for domestic and regional pipeline sales as well as associated natural gas liquids. Gas sales and purchase agreements for the first phase of production were concluded in early 2003 with the construction contract awarded in March. Startup is targeted for 2005. Discussions are progressing with other domestic and regional customers for additional sales from future phases of Al Khaleej Gas.

Taking advantage of synergies with existing and future LNG expansion projects at Ras Laffan, the Qatar Helium project will extract raw helium from the North Field gas and produce approximately 630 million cubic feet of refined helium per year. The Engineering, Procurement and Construction contract together with the Sale and Purchase Agreements for this project were signed in May 2003 and start-up is targeted for 2005.

Following the completion of a commercial and technical feasibility study, ExxonMobil is also discussing construction of a potential world-scale gas-to-liquids project with Qatar Petroleum.

(CHART PHOTO)

A joint project between Qatar Petroleum and ExxonMobil, the Qatargas II project is planned to further develop Qatar’s North Field through the addition of the world’s largest LNG liquefaction trains. Each train is targeted to produce 7.8 million tons per year (MTA) of LNG. Each project will encompass production, liquefaction, shipping, and regasifica-tion facilities. The United Kingdom and northern Europe are likely market destinations for project production. Start-up of the first train is expected in 2008. RasGas LNG Trains 3 and 4 will develop 2.9 billion oil-equivalent barrels (gross) through an expansion of North Field production. The projects include installation of two world-class LNG trains with combined capacity of over 9 MTAof LNG. Construction is underway on both trains with first deliveries scheduled for 2004 and 2005. Train 3 will supply LNG to India (Dahej Terminal) via an agreement between RasGas and Petronet, and Train 4 will supply LNG to Italy through the North Adriatic Terminal. A Heads of Agreement (HOA) was signed in October 2003 to supply LNG from Qatar to the U.S. for an expected period of 25 years. The HOAcovers the development of two additional large LNG trains with combined capacity of 15.6 million tons per year. Delivery of LNG to the U.S. is projected to begin in 2009. Several possible receiving terminal locations are under evaluation. The multi-phase Al Khaleej Gas project is intended to develop natural gas from Qatar’s giant North Field for domestic and export customers. Construction is in progress on Phase 1, which is targeted to supply 740 million cubic feet of gas per day to domestic industrial customers. We expect that future phases of the project will fulfill additional long-term domestic or export gas demand.

Upstream 46 Exxon Mobil Corporation


 

United Arab Emirates

ExxonMobil had net production of 110 thousand barrels of oil per day in Abu Dhabi during 2003, which was associated with the highest annual gross production rate since first oil exports from the onshore concession began 40 years ago. The company has a 9.5 percent interest in the concession operated by the Abu Dhabi Company for Onshore Oil Operations (ADCO). During 2003, ADCO awarded major engineering, procurement, and construction contracts for field development projects to increase sustainable production capacity by more than 15 percent to 1.4 million barrels per day (gross).

ExxonMobil is pursuing other investment opportunities in Abu Dhabi, focusing on areas where ExxonMobil’s industry-leading technology and capabilities can contribute to increased recovery of oil and gas, and enhanced training and development for UAE nationals.

Yemen

ExxonMobil holds interests of 37 and 15 percent, respectively, in Yemen’s Marib and Jannah Production Sharing Agreements. Total net oil production was 22 thousand barrels per day in 2003.

Kuwait

ExxonMobil has formed and leads a consortium (ExxonMobil interest, 37.5 percent) to compete for Kuwait’s tendering of an Operating Services Agreement covering four fields in the northern part of the country. The consortium has submitted development plans for consideration by Kuwait Oil Company.

RUSSIA

Sakhalin Island

ExxonMobil operates and holds a 30 percent interest in the Sakhalin I blocks offshore mainland Russia. Drilling and construction activities are underway with the first extended-reach well completed in 2003. Record extended-reach wells of over 5 miles offshore helped improve profitability by minimizing the need for offshore installations. Gas marketing activities included discussions with potential purchasers in the region including Japan, China, and Russia.

Exploration activities on the Sakhalin III blocks are pending award of Exploration and Production Licenses by the Russian government.

(MAP)

Sakhalin I

         
Expected Production Rate (gross)
   
Liquids
  250 kBD
Natural Gas
  1,000 MCFD
Total Project Investment
  $12+ billion
ExxonMobil Working Interest
    30%
Scheduled Start-Up
      2005

More than 5 billion oil-equivalent barrels (gross) are expected to be produced from the multi-phase Sakhalin I development in the arctic region offshore eastern Russia. The initial phase of the project is designed to produce 250 thousand barrels of oil per day from the Chayvo field utilizing onshore and offshore extended-reach drilling technologies. Oil production will be processed in an onshore facility and exported via pipeline to a new terminal facility on the Russian mainland. Phase 1 construction and drilling activities are underway with first oil expected in 2005. Future phases are planned to develop remaining Chayvo oil and gas reserves, as well as Odoptu and Arkutun-Dagi reserves.

Exxon Mobil Corporation 47 Upstream

 


 

CASPIAN REGION

In the Caspian region, ExxonMobil holds the unique position of participating in the development of three of the largest fields in the world: Kashagan and Tengiz in Kazakhstan, and Azeri-Chirag-Gunashli in Azerbaijan.

(MAP)

Kazakhstan

Development planning activities are underway to initiate production from the giant Kashagan field, located in the offshore Caspian Sea and part of the North Caspian Production Sharing Agreement (NCPSA). In addition to the Kashagan field, the NCPSA includes additional exploration acreage where ExxonMobil participated in the successful drilling and discovery of hydrocarbons at the Aktote and Kashagan Southwest prospects in 2003. Work is underway to determine commerciality. ExxonMobil also participated in the drilling of a third wildcat prospect that was suspended for the winter season with plans to resume drilling operations in 2004.

During 2003, ExxonMobil exercised its preferential right to purchase its share of BG equity in the NCPSA. Upon close of the equity purchase, anticipated in 2004, ExxonMobil will increase its interest in the NCPSA from 16.7 percent to 20.4 percent.

ExxonMobil participates in the Tengizchevroil (TCO) joint venture (ExxonMobil interest, 25 percent), which includes a production license area of 380 thousand gross acres encompassing the Tengiz field, an associated processing plant complex, and the adjacent Korolev field. TCO also holds a prospective exploration license that covers over 600 thousand gross acres surrounding the production license.

(PHOTO)

Tengiz Expansions

         
Expected Production Rate (gross)
   
Liquids
  440 kBD
Natural Gas
  100 MCFD
Total Project Investment
  $15 billion
ExxonMobil Working Interest
    25%
Scheduled Start-Up
      2006

Recently completed projects have increased Tengiz production capacity to nearly 300 thousand barrels per day (gross) and increased oil resources to over 3 billion barrels (gross). Two more major expansions are planned to add oil capacity of 440 thousand barrels per day (gross) and incremental resources of 3.3 billion barrels. The first expansion project is designed to integrate a 7 million metric ton per year (MTA) treating facility with a 3 MTA sour gas injection project for incremental production of 220 thousand barrels of oil per day (gross). Construction is underway with initial oil production targeted for 2006.

Kashagan

         
Expected Production Rate (gross)
   
Liquids
  1,200 kBD
Total Project Investment
  $40+ billion
ExxonMobil Working Interest
    17%
Scheduled Start-Up
      2008+

Development planning activities are underway to initiate production from the Kashagan field located in the northern Caspian Sea offshore Kazakhstan. The first phase of development is expected to recover 5.2 billion barrels of oil (gross) at a rate of 450 thousand barrels of oil per day. Phase 1 will include offshore facilities for processing, drilling, and sour gas injection, and onshore treating facilities. Future development of this world-class resource is anticipated to increase recovery to 13 billion barrels of oil (gross) at a producing rate of 1.2 million barrels of oil per day.

Upstream 48 Exxon Mobil Corporation

 


 

Tengiz, located on the eastern shore of the Caspian Sea, is one of the world’s largest oil fields, with recoverable resources estimated to be in excess of 7 billion barrels of oil. Gross production at Tengiz increased to about 300 thousand barrels per day in 2003.

ExxonMobil is an equity owner of the Caspian Pipeline Consortium (CPC) pipeline (ExxonMobil interest, 7.5 percent). The pipeline transports Tengiz oil to the Russian port of Novorossiysk on the Black Sea. The CPC pipeline reduces crude oil transportation costs and will facilitate future expansions of Tengiz production.

Azerbaijan

Production from the Azeri-Chirag-Gunashli (ACG) development (ExxonMobil interest, 8 percent) in the south Caspian Sea totaled 130 thousand barrels of oil per day (gross) in 2003. With estimated recoverable resources of over 6 billion barrels of oil and 6 trillion cubic feet of natural gas (gross), multiple phases of expansion are planned.

ExxonMobil participates in three other Production Sharing Agreements that cover 570 thousand gross acres in the Azeri sector of the Caspian Sea: Nakhchivan (ExxonMobil-operated, 50 percent interest); Zafar Mashal (ExxonMobil-operated, 30 percent interest); and Araz-Alov-Sharg (ExxonMobil interest, 15 percent). The first exploration well on the Zafar Mashal prospect commenced drilling in the fourth quarter of 2003; drilling operations will continue in 2004.

(MAP)

(CHART)

The three-phase ACG expansion project is underway in the south Caspian Sea offshore Azerbaijan. Phase 1 of the project is designed to develop the Central Azeri field, installing capacity for 400 thousand barrels of oil per day (gross) along with supporting gas compression and water injection. The project scope for Phase 1 includes construction and installation of a 48-slot drilling, living quarters, and production platform in 420 feet of water; a platform for gas compression and water injection facilities; and 110 miles of subsea oil and gas pipelines. In addition, an onshore oil terminal will be expanded. Estimated ultimate recovery from Phase 1 is over 1 billion barrels of oil (gross) and first oil is anticipated in 2005. Phase 2 of the ACG project is intended to develop the east and west portions of the Azeri field using an integrated Phase 1 and 2 depletion plan. Plans call for the addition of two platforms to accommodate drilling and living quarters, expansion of the Phase 1 injection platform, and an additional expansion of the onshore oil terminal. Phase 2 is expected to develop 1.7 billion barrels of oil (gross) with start-up in 2006. The final phase of the project will target development of the deepwater Gunashli field with estimated ultimate recovery of 1 billion barrels of oil. Start-up is expected in 2008.

Exxon Mobil Corporation 49 Upstream


 

ASIA-PACIFIC

ExxonMobil has an established large-scale and profitable production base throughout the Asia-Pacific region. Net daily production of 237 thousand barrels of liquids and 1.8 billion cubic feet of gas represented 13 percent of ExxonMobil’s worldwide production in 2003.

(MAP)

Malaysia

ExxonMobil is the largest oil producer in Malaysia and the largest supplier of natural gas to Peninsular Malaysia. Net production in 2003 was 105 thousand barrels of liquids per day and 563 million cubic feet of gas per day. The company participates in six Production Sharing Contracts offshore Peninsular Malaysia, operates 39 platforms in 17 fields, and has plans to install three new platforms over the next few years. In total, ExxonMobil holds an interest in 500 thousand net acres offshore.

First gas was produced from the Bintang field (ExxonMobil interest, 50 percent) in February 2003, with estimated peak production of 305 million cubic feet of gas per day (gross). Two new platforms at the Angsi field, Angsi C and E (ExxonMobil interest, 50 percent), started up late in 2003.

Additional capacity will be provided by the Guntong Hub development (ExxonMobil interest, 50 percent) consisting of compression and other infrastructure with estimated peak production of 55 thousand barrels of oil and 716 million cubic feet of gas per day (gross). The Guntong E compression project, the first development of the Guntong Hub, is scheduled to start up in 2006.

(MAP)

Indonesia

ExxonMobil operates Indonesia’s Arun natural gas field (ExxonMobil interest, 100 percent), which supplies gas to the P.T. Arun LNG plant. In 2003, production from the Arun and satellite fields in Pase/South Lhok Sukon and the North Sumatra Offshore field totaled 745 million cubic feet of gas per day (net).

ExxonMobil is continuing negotiations with Pertamina on behalf of the government of Indonesia to extend the term of the Cepu Contract. Once agreement is reached, plans are to begin development of the Banyu Urip oil field. In addition, analysis of the large 3D survey over the block will guide future exploratory and development programs.

(CHART PHOTO)

Engineering and design are underway in the Banyu Urip field located onshore in east Java. The development plans include construction of an initial oil production facility followed by a central processing facility. A62 mile pipeline will transport the processed oil to a Floating Storage and Offloading vessel moored off the nearby Tuban coast. Estimated ultimate recovery from the field is over 250 million barrels of oil (gross).

Upstream 50 Exxon Mobil Corporation

 


 

Discussion with prospective buyers on potential gas supply from the Natuna gas field (ExxonMobil interest, 76 percent) to neighboring countries is continuing in cooperation with Pertamina as a partner. ExxonMobil also continues to actively develop potential domestic markets for discovered resources at the Madura BD gas field (ExxonMobil interest, 69 percent).

Australia

Daily net production in Australia was 111 thousand barrels of liquids and 450 million cubic feet of natural gas. The company operates 23 offshore producing facilities in the Bass Strait and the Northwest Shelf along with one crude stabilization plant, three gas processing plants, and one fractionation plant. The Bass Strait contains significant gas resources and supplies most of Victoria’s natural gas requirements. Gas sales from the ExxonMobil-operated Gippsland Basin fields to Tasmania commenced in 2002 and grew in 2003.

(MAP)

(MAP)

In the Gippsland Basin, the initial processing of the 3,900 square kilometer Northern Fields 3D seismic survey was completed. Interpretation of the seismic data has identified new exploration opportunities, as well as potential for infill development wells in currently producing fields. In addition, the 1,100 square kilometer Tuskfish 3D seismic survey was completed in the Blackback area of the Gippsland Basin.

Efforts to delineate and commercialize large gas resources on Australia’s Northwest Shelf continued in 2003. The Western Australian government gave conditional approval to the Gorgon project (ExxonMobil interest, 14 percent) for the development of an LNG plant. An HOA was signed with the China National Offshore Oil Company for a 25 year supply of LNG from the plant. In addition, ExxonMobil drilled the Jansz-3 appraisal well on Australia’s Northwest Shelf to further delineate the large Jansz-Io gas discovery (ExxonMobil interest, 25 and 50 percent). The well confirmed the significant gas resources in place and the presence of a high-quality reservoir, demonstrated by a production test that flowed at a rate of 72 million cubic feet of gas per day. LNG development options are currently being evaluated.

(MAP)

Papua New Guinea

Daily net production in Papua New Guinea was 9 thousand barrels of oil per day during 2003.

In total, ExxonMobil holds interests in approximately 2.1 million gross acres in Papua New Guinea containing several oil and gas discoveries. ExxonMobil became operator of the new Highlands Gas project (ExxonMobil interest, 26 percent) which provides for the commercial development of the Kutubu, Gobe, Moran, and Hides fields. Marketing efforts continued to obtain additional gas sales agreements with potential customers. In 2003, ExxonMobil participated in the NW Moran-1 wildcat (ExxonMobil interest, 18.7 percent), which encountered oil in the Moran field reservoirs and extended the field limit two kilometers to the northwest.

Exxon Mobil Corporation 51 Upstream

 


 

SOUTH AMERICA

ExxonMobil has producing interests in Venezuela and Argentina. In addition, the company holds exploration rights onshore in Bolivia and Venezuela, and has an exploration portfolio along the deepwater margins of South America in Brazil, Guyana, and Trinidad and Tobago.

(MAP)

Venezuela

ExxonMobil operates the Cerro Negro field (ExxonMobil interest, 41.7 percent) in Venezuela. The 120 thousand barrels of extra-heavy crude produced daily (gross) is refined through an upgrader into a higher quality product.

ExxonMobil also has a 25 percent interest in the Quiamare La Ceiba block in eastern Venezuela and a 50 percent interest in the 122 thousand acre La Ceiba block on the southeastern shore of Lake Maracaibo. Work began on the La Ceiba commercialization evaluation plan that includes extended production testing expected to begin in late 2004.

(PHOTO)

Argentina

ExxonMobil holds a 51 percent interest in the Chihuidos block, which contains the Sierra Chata gas field, located in the Neuquen Basin in central Argentina. The company also holds a 23 percent interest in the Aguarague concession in northwest Argentina. Net daily gas production of 96 million cubic feet is sold into markets in Argentina and central and northern Chile.

Brazil

ExxonMobil holds interests in two blocks offshore Brazil located in the prolific Campos Basin deepwater play. In Campos Basin Block BC-10 (ExxonMobil interest, 30 percent), two appraisal wells confirmed 2002 discoveries, and provided the confidence to progress to the initial stages of development planning. Additional potential on Block BC-10 will be tested in 2004.

Trinidad and Tobago

ExxonMobil signed an agreement with the Republic of Trinidad and Tobago on the funding of a three year work program in the Soldado area, offshore western Trinidad. ExxonMobil will fund geotechnical studies, seismic, wells, and training for employees of PetroTrin, the Trinidad and Tobago national oil company. The agreement includes a working interest option for resultant discoveries on the acreage.

Upstream 52 Exxon Mobil Corporation

 


 

POWER OVERVIEW

  28 percent increase in cogeneration capacity currently under construction (over 800 megawatts)
 
  Refurbishment of the Castle Peak coal-fired plant ongoing and construction of Black Point units 7 and 8 underway
 
  Continued improvement in operating performance

Hong Kong

ExxonMobil has a 60 percent interest in three power stations in Hong Kong totaling almost 6,300 megawatts of electricity generation capacity and a 51 percent interest in an additional 600 megawatts of capacity in southern China. Completion of units 7 and 8 at Black Point Power Station will add 625 megawatts of gas-fired generation capacity in 2005-2006. These stations supply electricity to China Light & Power, which serves Hong Kong. Surplus power is sold to neighboring Guangdong. While power demand in Hong Kong has been growing slowly, demand in Guangdong is growing rapidly, which accounts for most of the increase in 2003 sales.

The Black Point gas-fired power station. Construction of two additional gas-fired turbines (units 7 and 8) is currently underway.

(PHOTO)

Black Point Power Station

         
Expected Production Rate (gross)
       
Current Capacity
  1,875 MW
Units 7 & 8
  625 MW
Total Capacity
  2,500 MW
Total Project Investment
  $688 million
ExxonMobil Working Interest
    60%
Scheduled Start-Up
      2005-2006

Delivery of equipment has begun for the addition of units 7 and 8 at the Black Point Power Station in Hong Kong’s New Territories. The combined cycle gas turbine units have more than 300 megawatts capacity each and include gas and steam turbines, electrical generators, and heat recovery/steam generators. Completion of the units is scheduled for 2005-2006.

                                         
Power — Statistical Recap(1)
  2003
  2002
  2001
  2000
  1999
Earnings (millions of dollars)
    311       299       306       319       327  
Electricity sales(2) (gigawatt hours)
    31,043       29,888       28,529       27,485       25,778  
Average capital employed (millions of dollars)
    1,956       1,978       2,040       2,119       2,180  
Capital expenditures (millions of dollars)
    165       73       48       28       26  


(1)   ExxonMobil share of power affiliate results, except electricity sales, which are stated at 100 percent.
 
(2)   China Light & Power sales to consumers in China.

COAL

ExxonMobil continues to operate the Monterey coal mine in the U.S. (Illinois) with production of 2.7 million metric tons in 2003. The coal is supplied to local power generation and cement processing industries.

Exxon Mobil Corporation 53 Upstream

 


 

NET LIQUIDS PRODUCTION(1)
Including Tar Sands and Non-Consolidated Operations

                                         
(thousands of barrels per day)
  2003
  2002
  2001
  2000
  1999
United States
                                       
Alaska
    188       197       210       232       215  
Lower 48
    422       484       502       501       514  
 
   
 
     
 
     
 
     
 
     
 
 
Total United States
    610       681       712       733       729  
 
   
 
     
 
     
 
     
 
     
 
 
Canada
    363       349       331       304       315  
 
   
 
     
 
     
 
     
 
     
 
 
Total North America
    973       1,030       1,043       1,037       1,044  
 
   
 
     
 
     
 
     
 
     
 
 
Europe
                                       
United Kingdom
    278       305       320       355       392  
Norway
    280       263       307       320       227  
Other
    21       24       26       29       31  
 
   
 
     
 
     
 
     
 
     
 
 
Total Europe
    579       592       653       704       650  
 
   
 
     
 
     
 
     
 
     
 
 
Asia-Pacific
                                       
Australia
    111       122       131       140       162  
Malaysia
    105       115       98       90       109  
Other
    21       23       18       23       36  
 
   
 
     
 
     
 
     
 
     
 
 
Total Asia-Pacific
    237       260       247       253       307  
 
   
 
     
 
     
 
     
 
     
 
 
Africa
                                       
Nigeria
    260       213       249       253       265  
Equatorial Guinea
    124       98       89       67       58  
Other
    58       38       4       3       3  
 
   
 
     
 
     
 
     
 
     
 
 
Total Africa
    442       349       342       323       326  
 
   
 
     
 
     
 
     
 
     
 
 
Middle East
    149       127       135       137       114  
 
   
 
     
 
     
 
     
 
     
 
 
Other Areas
    136       138       122       99       76  
 
   
 
     
 
     
 
     
 
     
 
 
Total worldwide
    2,516       2,496       2,542       2,553       2,517  
 
   
 
     
 
     
 
     
 
     
 
 
Gas Plant Liquids Included Above
                                       
United States
    90       111       120       120       127  
Non-U.S.
    166       178       185       180       183  
 
   
 
     
 
     
 
     
 
     
 
 
Total worldwide
    256       289       305       300       310  
 
   
 
     
 
     
 
     
 
     
 
 
Tar Sands and Non-Consolidated Volumes Included Above
                                       
United States
    106       106       109       115       120  
Canada
    52       57       52       42       55  
Europe
    9       9       10       13       13  
Middle East
    127       102       108       107       88  
Other
    71       74       70       57       53  
 
   
 
     
 
     
 
     
 
     
 
 
Total worldwide
    365       348       349       334       329  
 
   
 
     
 
     
 
     
 
     
 
 


(1)   Net liquids production quantities are the volumes of crude oil and natural gas liquids withdrawn from ExxonMobil’s oil and gas reserves, excluding royalties and quantities due to others when produced, and are based on the volumes delivered from the lease or at the point measured for royalty and/or severance tax purposes. Volumes include 100 percent of the production of majority-owned affiliates, including liquids production from tar sands operations in Canada, and ExxonMobil’s ownership of the production by companies owned 50 percent or less.

(BAR CHART)

Upstream 54 Exxon Mobil Corporation

 


 

NET NATURAL GAS PRODUCTION AVAILABLE FOR SALE(1)
Including Non-Consolidated Operations

                                         
(millions of cubic feet per day)
  2003
  2002
  2001
  2000
  1999
United States
    2,246       2,375       2,598       2,856       2,871  
 
   
 
     
 
     
 
     
 
     
 
 
Canada
    943       1,024       1,006       844       683  
 
   
 
     
 
     
 
     
 
     
 
 
Total North America
    3,189       3,399       3,604       3,700       3,554  
 
   
 
     
 
     
 
     
 
     
 
 
Europe
                                       
Netherlands
    1,591       1,601       1,637       1,519       1,591  
United Kingdom
    1,234       1,417       1,547       1,506       1,386  
Norway
    667       503       445       451       420  
Germany
    1,006       942       966       987       1,041  
Other
                             
 
   
 
     
 
     
 
     
 
     
 
 
Total Europe
    4,498       4,463       4,595       4,463       4,438  
 
   
 
     
 
     
 
     
 
     
 
 
Asia-Pacific
                                       
Australia
    450       453       449       346       325  
Malaysia
    563       690       645       649       609  
Indonesia
    745       825       401       701       1,020  
Other
    45       51       52       59       73  
 
   
 
     
 
     
 
     
 
     
 
 
Total Asia-Pacific
    1,803       2,019       1,547       1,755       2,027  
 
   
 
     
 
     
 
     
 
     
 
 
Middle East
    455       408       354       278       138  
 
   
 
     
 
     
 
     
 
     
 
 
Other Areas
    174       163       179       147       151  
 
   
 
     
 
     
 
     
 
     
 
 
Total worldwide
    10,119       10,452       10,279       10,343       10,308  
 
   
 
     
 
     
 
     
 
     
 
 
Non-Consolidated Natural Gas Volumes Included Above
                                       
United States
    2       2       13       15       12  
Europe
    1,531       1,539       1,556       1,433       1,496  
Middle East
    455       408       354       278       138  
Other
    73       77       65       38       31  
 
   
 
     
 
     
 
     
 
     
 
 
Total worldwide
    2,061       2,026       1,988       1,764       1,677  
 
   
 
     
 
     
 
     
 
     
 
 


(1)   Net natural gas available for sale quantities are the volumes withdrawn from ExxonMobil’s natural gas reserves, excluding royalties and volumes due to others when produced, and excluding gas purchased from others, gas consumed in producing operations, field processing plant losses, volumes used for gas lift, gas injection and cycling operations, quantities flared, and volume shrinkage due to the removal of condensate or natural gas liquids fractions.

(BAR CHART)

NATURAL GAS SALES(1)

                                         
(millions of cubic feet per day)
  2003
  2002
  2001
  2000
  1999
United States
    4,793       6,939       5,925       5,829       5,533  
Canada
    1,919       2,051       2,305       2,324       1,942  
Europe
    6,610       7,544       7,570       7,213       7,430  
Asia-Pacific
    1,708       1,907       1,472       1,683       1,903  
Middle East
    384       334       308       235       103  
Other
    181       188       205       160       152  
 
   
 
     
 
     
 
     
 
     
 
 
Total worldwide
    15,595       18,963       17,785       17,444       17,063  
 
   
 
     
 
     
 
     
 
     
 
 


(1)   Natural gas sales include 100 percent of the sales of ExxonMobil and majority-owned affiliates and ExxonMobil’s ownership of sales by companies owned 50 percent or less. Numbers include sales of gas purchased from third parties.

Exxon Mobil Corporation 55 Upstream

 


 

NUMBER OF NET WELLS DRILLED ANNUALLY(1)

                                                                                                                         
    Productive
  Dry
  Total
(net wells drilled)
  2003
  2002
  2001
  2000
  1999
  2003
  2002
  2001
  2000
  1999
  2003
  2002
  2001
  2000
  1999
Exploratory(2)
    38       46       51       62       40       28       23       41       26       31       66       69       92       88       71  
Development
    1,060       1,287       1,313       934       867       34       29       24       13       31       1,094       1,316       1,337       947       898  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total
    1,098       1,333       1,364       996       907       62       52       65       39       62       1,160       1,385       1,429       1,035       969  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 

NET ACREAGE AT YEAR END(3)

                                                                                 
    Undeveloped
  Developed
(thousands of net acres)
  2003
  2002
  2001
  2000
  1999
  2003
  2002
  2001
  2000
  1999
United States
    7,353       7,309       7,669       7,399       7,780       5,655       5,695       5,714       5,993       5,894  
Canada(4)
    5,204       8,851       9,708       9,775       11,488       2,457       2,382       2,426       2,402       2,470  
Europe
    2,611       2,687       4,624       6,244       8,268       4,746       4,874       4,819       4,816       5,190  
Asia-Pacific
    8,769       12,163       14,161       19,641       33,955       1,723       1,692       1,640       1,528       1,487  
Africa
    11,447       12,205       15,736       20,111       29,089       462       685       630       387       354  
Latin America
    15,141       17,459       19,205       25,122       30,761       388       387       388       363       356  
Other
    526       553       1,251       1,241       1,297       1,459       1,458       1,458       1,458       1,488  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total worldwide
    51,051       61,227       72,354       89,533       122,638       16,890       17,173       17,075       16,947       17,239  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 

NET CAPITALIZED COSTS AT YEAR END(3)

                                         
(millions of dollars)
  2003
  2002
  2001
  2000
  1999
United States
    16,711       15,739       15,408       14,887       14,767  
Canada(4)
    8,114       6,114       5,772       5,827       6,266  
Europe
    15,830       12,872       10,704       11,361       13,271  
Asia-Pacific
    6,888       5,702       5,207       5,274       5,793  
Africa
    8,606       5,755       4,355       3,711       3,701  
Other
    5,397       4,577       4,016       3,862       3,649  
 
   
 
     
 
     
 
     
 
     
 
 
Total worldwide
    61,546       50,759       45,462       44,922       47,447  
 
   
 
     
 
     
 
     
 
     
 
 

COSTS INCURRED IN PROPERTY ACQUISITION, EXPLORATION, AND DEVELOPMENT ACTIVITIES(3)

                                                         
(millions of dollars)
  United States
  Canada(4)
  Europe
  Asia-Pacific
  Africa
  Other
  Worldwide
During 2003(5)
                                                       
Property acquisition costs
    17       7       4             17             45  
Exploration costs
    253       102       171       138       264       253       1,181  
Development costs
    1,780       1,079       1,968       929       3,117       983       9,856  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total
    2,050       1,188       2,143       1,067       3,398       1,236       11,082  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
During 2002
                                                       
Property acquisition costs
    32       20                   10       125       187  
Exploration costs
    281       109       160       95       301       217       1,163  
Development costs
    1,843       949       1,975       936       1,708       690       8,101  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total
    2,156       1,078       2,135       1,031       2,019       1,032       9,451  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
During 2001
                                                       
Property acquisition costs
    95       17       1       (1 )     2       10       124  
Exploration costs
    356       141       165       148       281       469       1,560  
Development costs
    1,816       798       1,619       666       995       359       6,253  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total
    2,267       956       1,785       813       1,278       838       7,937  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
During 2000
                                                       
Property acquisition costs
    73       16       4       97       2       49       241  
Exploration costs
    219       145       203       145       272       304       1,288  
Development costs
    1,390       610       1,343       502       402       372       4,619  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total
    1,682       771       1,550       744       676       725       6,148  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 


(1)   A regional breakout of this data is included on page 10 of ExxonMobil’s 2003 Form 10-K.
 
(2)   These include near-field and appraisal wells classified as exploratory for SEC reporting.
 
(3)   Includes non-consolidated interests and Syncrude tar sands operations and is not directly comparable to data on page A49 of ExxonMobil’s 2004 Proxy Statement, and page 4 of ExxonMobil’s 2003 Form 10-K, which due to financial reporting requirements, treat Syncrude as a mining operation.
 
(4)   Syncrude data included above: net acreage of 26 thousand developed acres and 149 thousand undeveloped acres at year-end 2003, net capitalized cost of about $1.7 billion at year-end 2003, and development costs of $296 million incurred during 2003.
 
(5)   Per FAS 143, development costs beginning in 2003 also include new asset retirement obligations established in the current year, as well as increases or decreases to the asset retirement obligation resulting from changes in cost estimates or abandonment date.

Upstream 56 Exxon Mobil Corporation

 


 

PROVED OIL AND GAS RESERVES

                                         
    2003
  2002
  2001
  2000
  1999
Liquids, Including Tar Sands and Non-Consolidated Reserves
(millions of barrels at year end)
                                       
Net proved developed and undeveloped reserves
                                       
United States
    3,218       3,352       3,494       3,480       3,285  
Canada(1)
    1,975       2,085       2,098       1,940       1,932  
Europe
    1,204       1,359       1,503       1,591       1,797  
Asia-Pacific
    684       691       622       690       715  
Africa
    2,742       2,626       2,461       2,384       2,024  
Other
    3,033       2,510       2,134       2,086       2,084  
 
   
 
     
 
     
 
     
 
     
 
 
Total worldwide
    12,856       12,623       12,312       12,171       11,837  
 
   
 
     
 
     
 
     
 
     
 
 
Proportional interest in tar sands and
non-consolidated reserves included above
                                       
United States
    426       444       466       494       536  
Canada (tar sands)(1)
    781       800       821       610       577  
Europe
    20       26       27       33       36  
Other
    1,789       1,728       1,446       1,384       1,384  
Net proved developed reserves included above
                                       
United States
    2,711       2,835       2,957       3,042       2,745  
Canada(1)
    1,301       1,255       1,184       1,240       995  
Europe
    821       817       900       999       1,110  
Asia-Pacific
    473       487       477       504       615  
Africa
    1,107       1,057       1,022       989       1,048  
Other
    1,310       1,320       1,263       1,174       1,133  
 
   
 
     
 
     
 
     
 
     
 
 
Total worldwide
    7,723       7,771       7,803       7,948       7,646  
 
   
 
     
 
     
 
     
 
     
 
 
Natural Gas, Including Non-Consolidated Reserves
(billions of cubic feet at year end)
                                       
Net proved developed and undeveloped reserves
                                       
United States
    11,424       12,239       12,924       13,296       13,227  
Canada
    2,341       2,882       3,183       3,516       3,387  
Europe
    23,849       24,336       25,252       26,017       26,454  
Asia-Pacific
    7,285       7,958       8,301       8,546       9,358  
Africa
    583       436       379       375       171  
Other
    9,287       7,867       5,907       4,116       4,199  
 
   
 
     
 
     
 
     
 
     
 
 
Total worldwide
    54,769       55,718       55,946       55,866       56,796  
 
   
 
     
 
     
 
     
 
     
 
 
Proportional interest in non-consolidated reserves included above
                                       
United States
    152       177       192       251       226  
Europe
    13,703       13,828       14,321       14,847       15,226  
Other
    8,364       7,132       5,179       3,449       3,591  
Net proved developed reserves included above
                                       
United States
    9,637       10,128       10,511       11,118       10,926  
Canada
    1,962       2,294       2,517       2,850       2,475  
Europe
    14,966       12,928       13,641       14,325       14,221  
Asia-Pacific
    5,764       5,887       6,005       6,300       6,471  
Africa
    155       112       122       125       2  
Other
    3,750       3,394       3,226       3,299       2,506  
 
   
 
     
 
     
 
     
 
     
 
 
Total worldwide
    36,234       34,743       36,022       38,017       36,601  
 
   
 
     
 
     
 
     
 
     
 
 


(1)   Includes proven reserves from Syncrude tar sands operations in Canada and, therefore, is not directly comparable to data shown on pages A50 and A51 of ExxonMobil’s 2004 Proxy Statement, which due to financial reporting requirements, treat Syncrude as a mining operation. A description of the Syncrude operation is provided on page 34 of this report.

(PIE CHART)

(PIE CHART)

Exxon Mobil Corporation 57 Upstream

 


 

PROVED OIL AND GAS RESERVES REPLACEMENT

The data shown below and on the facing page include reserves, production, and costs from Syncrude tar sands operations in Canada. This is a more complete summary of ExxonMobil’s exploration and production operations than the data on pages A50 and A51 of ExxonMobil’s 2004 Proxy Statement, which due to financial reporting requirements, treat Syncrude as a mining operation.

                                                 
                                            5-Year
                                            Average
    2003
  2002
  2001
  2000
  1999
  1999-2003
Liquids (millions of barrels)
                                               
Revisions
    375       355       264       628       393       403  
Improved recovery
    111       94       121       123       98       109  
Extensions/discoveries
    674       777       683       517       720       675  
Purchases
    1                                
Sales
    (16 )     (13 )     (9 )     (6 )     (12 )     (11 )
Total additions
    1,145       1,213       1,059       1,262       1,199       1,176  
Production
    912       902       918       928       912       914  
Replacement ratio (percent)
    126       134       115       136       131       129  
Replacement ratio, excluding sales (percent)
    127       136       116       137       133       130  
Natural Gas (billions of cubic feet)
                                               
Revisions
    1,462       1,447       836       2,207       1,807       1,552  
Improved recovery
    25       4       39       166       282       103  
Extensions/discoveries
    1,719       2,597       3,431       873       873       1,898  
Purchases
    10       2       1       10             5  
Sales
    (120 )     (43 )     (69 )     (8 )     (19 )     (52 )
Total additions
    3,096       4,007       4,238       3,248       2,943       3,506  
Production
    4,045       4,235       4,158       4,178       4,153       4,154  
Replacement ratio (percent)
    77       95       102       78       71       84  
Replacement ratio, excluding sales (percent)
    80       96       104       78       71       86  
Oil-Equivalent (millions of barrels)
                                               
Revisions
    619       597       403       996       694       662  
Improved recovery
    116       95       127       151       145       127  
Extensions/discoveries
    961       1,210       1,255       662       866       990  
Purchases
    2                   2             1  
Sales
    (36 )     (21 )     (20 )     (8 )     (15 )     (20 )
Total additions
    1,662       1,881       1,765       1,803       1,690       1,760  
Production
    1,587       1,608       1,611       1,624       1,604       1,607  
Replacement ratio (percent)
    105       117       110       111       105       110  
Replacement ratio, excluding sales (percent)
    107       118       111       112       106       111  

2003 Reserves Changes by Region

                                                                                                                 
    Crude Oil and Natural Gas Liquids (millions of barrels)
  Natural Gas (billions of cubic feet)
    United                   Asia-                           United                   Asia-            
    States
  Canada
  Europe
  Pacific
  Africa
  Other
  Total
  States
  Canada
  Europe
  Pacific
  Africa
  Other
  Total
Revisions
    27       14       47       67       176       44       375       95       (199 )     861       23       157       525       1,462  
Improved recovery
    41       3       1             66             111       24       1                               25  
Extensions/discoveries
    27       6       10       12       36       583       674       157       45       346       22       1       1,148       1,719  
Purchases
    1                                     1       10                                     10  
Sales
    (14 )           (2 )                       (16 )     (90 )           (30 )                       (120 )
 
   
     
     
     
     
     
     
     
     
     
     
     
     
     
 
Total additions
    82       23       56       79       278       627       1,145       196       (153 )     1,177       45       158       1,673       3,096  
Production
    217       133       211       86       162       103       912       1,011       388       1,665       718       11       252       4,045  
 
   
     
     
     
     
     
     
     
     
     
     
     
     
     
 
Net change
    (135 )     (110 )     (155 )     (7 )     116       524       233       (815 )     (541 )     (488 )     (673 )     147       1,421       (949 )
Replacement ratio (percent)
    38       17       27       92       172       609       126       19             71       6       1,436       664       77  
Replacement ratio, excluding sales (percent)
    44       17       27       92       172       609       127       28             72       6       1,436       664       80  

Upstream 58 Exxon Mobil Corporation

 


 

PROVED OIL AND GAS RESERVES REPLACEMENT
Units are million barrels of oil or billion cubic feet of gas unless specified otherwise

                                                 
                                            5-Year
                                            Average
    2003
  2002
  2001
  2000
  1999
  1999-2003
Non-U.S.
                                               
E&P costs (millions of dollars)
    9,032       7,295       5,670       4,466       6,274       6,547  
Oil reserves additions
    1,063       1,116       795       805       1,036       963  
Oil production
    695       663       668       666       653       669  
Gas reserves additions
    2,900       3,635       3,477       2,004       1,797       2,762  
Gas production
    3,034       3,177       3,026       3,003       3,011       3,050  
Oil-equivalent reserves additions
    1,547       1,722       1,374       1,139       1,336       1,423  
Oil-equivalent reserves additions, excluding sales
    1,554       1,722       1,375       1,145       1,336       1,426  
Oil-equivalent production
    1,201       1,193       1,172       1,166       1,155       1,178  
Reserves replacement ratio (percent)
    129       144       117       98       116       121  
Reserves replacement ratio, excluding sales (percent)
    129       144       117       98       116       121  
Reserves replacement costs(1) (dollars per barrel)
    5.81       4.24       4.12       3.90       4.70       4.59  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
United States
                                               
E&P costs (millions of dollars)
    2,050       2,156       2,267       1,682       1,609       1,953  
Oil reserves additions
    82       97       264       457       163       213  
Oil production
    217       239       250       262       259       245  
Gas reserves additions
    196       372       761       1,244       1,146       744  
Gas production
    1,011       1,058       1,132       1,175       1,142       1,104  
Oil-equivalent reserves additions
    115       159       391       664       354       337  
Oil-equivalent reserves additions, excluding sales
    144       180       410       666       369       354  
Oil-equivalent production
    386       415       439       458       449       429  
Reserves replacement ratio (percent)
    30       38       89       145       79       78  
Reserves replacement ratio, excluding sales (percent)
    37       43       93       145       82       82  
Reserves replacement costs(1) (dollars per barrel)
    14.24       11.98       5.53       2.53       4.36       5.52  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Worldwide
                                               
E&P costs (millions of dollars)
    11,082       9,451       7,937       6,148       7,883       8,500  
Oil reserves additions
    1,145       1,213       1,059       1,262       1,199       1,176  
Oil production
    912       902       918       928       912       914  
Gas reserves additions
    3,096       4,007       4,238       3,248       2,943       3,506  
Gas production
    4,045       4,235       4,158       4,178       4,153       4,154  
Oil-equivalent reserves additions
    1,662       1,881       1,765       1,803       1,690       1,760  
Oil-equivalent reserves additions, excluding sales
    1,698       1,902       1,785       1,811       1,705       1,780  
Oil-equivalent production
    1,587       1,608       1,611       1,624       1,604       1,607  
Reserves replacement ratio (percent)
    105       117       110       111       105       110  
Reserves replacement ratio, excluding sales (percent)
    107       118       111       112       106       111  
Reserves replacement costs(1) (dollars per barrel)
    6.53       4.97       4.45       3.39       4.62       4.77  
 
   
 
     
 
     
 
     
 
     
 
     
 
 


(1)   Calculation based on exploration and production costs divided by oil-equivalent reserves additions. All values exclude the impact of asset sales; i.e., reserves sold and proceeds received.

Exxon Mobil Corporation 59 Upstream

 


 

OIL AND GAS EXPLORATION AND PRODUCTION EARNINGS

The revenue, cost, and earnings data are shown both on a total dollar and unit basis, and are inclusive of non-consolidated and Syncrude tar sands operations. They are not directly comparable to the data on page A48 of ExxonMobil’s 2004 Proxy Statement, which due to financial reporting requirements, treat Syncrude as a mining operation. The data displayed here provide a more complete summary of ExxonMobil’s exploration and production operations.

                                                                                         
    Total Revenues and Costs, Including Non-Consolidated Interests and Tar Sands
  Revenues and Costs per Unit of Sales or Production(1)
    United                   Asia-                           United           Outside North    
    States
  Canada
  Europe
  Pacific
  Africa
  Other
  Total
  States
  Canada
  America
  Worldwide
2003   (millions of dollars)
  (dollars per unit of sales)
Revenue
                                                                                       
Crude oil and NGL
    5,785       3,307       5,683       2,484       4,499       2,611       24,369       26.00       24.80       27.47       26.72  
Natural gas
    4,152       1,587       6,720       1,869             527       14,855       5.07       4.61       3.60       4.02  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
                                 
(dollars per barrel of net oil-equivalent production)
Total revenue
    9,937       4,894       12,403       4,353       4,499       3,138       39,224       27.67       25.75       24.77       25.57  
Less costs:
                                                                                       
Production costs excluding taxes
    1,780       1,372       1,951       558       564       311       6,536       4.96       7.22       3.44       4.26  
Depreciation and depletion
    1,574       821       1,997       727       459       224       5,802       4.37       4.32       3.46       3.78  
Exploration expenses
    257       92       166       146       217       155       1,033       0.72       0.48       0.69       0.67  
Taxes other than income
    554       42       1,594       447       528       751       3,916       1.54       0.22       3.37       2.55  
Related income tax
    2,017       808       3,420       1,046       1,496       795       9,582       5.62       4.25       6.86       6.25  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Results of producing activities
    3,755       1,759       3,275       1,429       1,235       902       12,355       10.46       9.26       6.95       8.06  
Other earnings(2)
    149       (246 )     1,977       2       14       (61 )     1,835       0.41       (1.30 )     1.96       1.19  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total earnings, excluding power and coal
    3,904       1,513       5,252       1,431       1,249       841       14,190       10.87       7.96       8.91       9.25  
Power and coal
    1                   311                   312                                  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
                                 
Total earnings
    3,905       1,513       5,252       1,742       1,249       841       14,502                                  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
                                 
2002   (millions of dollars)
  (dollars per unit of sales)
Revenue
                                                                                       
Crude oil and NGL
    5,203       2,715       4,979       2,352       3,064       2,012       20,325       20.95       21.56       23.15       22.33  
Natural gas
    2,320       876       5,304       1,664             385       10,549       2.68       2.34       2.86       2.77  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
                                 
(dollars per barrel of net oil-equivalent production)
Total revenue
    7,523       3,591       10,283       4,016       3,064       2,397       30,874       19.14       18.94       20.49       19.96  
Less costs:
                                                                                       
Production costs excluding taxes
    1,675       1,010       1,674       592       455       302       5,708       4.26       5.33       3.13       3.69  
Depreciation and depletion
    1,644       716       1,869       651       354       235       5,469       4.19       3.77       3.22       3.54  
Exploration expenses
    222       66       133       101       177       258       957       0.56       0.35       0.69       0.62  
Taxes other than income
    477       33       1,007       403       345       518       2,783       1.21       0.17       2.36       1.80  
Related income tax
    1,153       566       2,828       939       972       367       6,825       2.93       2.99       5.30       4.41  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Results of producing activities
    2,352       1,200       2,772       1,330       761       717       9,132       5.99       6.33       5.79       5.90  
Other earnings(2)
    165       (202 )     228       (32 )     76       (75 )     160       0.41       (1.07 )     0.20       0.10  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total earnings, excluding power and coal
    2,517       998       3,000       1,298       837       642       9,292       6.40       5.26       5.99       6.00  
Power and coal
    7                   307             (8 )     306                                  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
                                 
Total earnings
    2,524       998       3,000       1,605       837       634       9,598                                  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
                                 


(1)   The per unit data is divided into two separate sections: (a) revenue per unit of sales from ExxonMobil’s own production; and (b) operating costs and earnings per unit of net oil-equivalent production. Units for crude oil and natural gas liquids (NGL) are barrels, while units for natural gas are thousands of cubic feet. The volumes of crude oil and natural gas liquids production and net natural gas production available for sale used in this calculation are shown on pages 54 and 55 of this document. The volumes of natural gas were converted to oil-equivalent barrels based on a conversion factor of 6 thousand cubic feet per barrel.
 
(2)   Includes earnings related to transportation operations, LNG operations, sale of third-party purchases, technical services agreements, other non-operating activities, and adjustments for minority interests.
 
(3)   Other revenue includes carbon dioxide, helium, and sulfur. Revenue from these products has been included in “other earnings” beginning 2002.

Upstream 60 Exxon Mobil Corporation

 


 

Oil and Gas Exploration and Production Earnings (continued)

                                                                                         
    Total Revenues and Costs, Including Non-Consolidated Interests and Tar Sands
  Revenues and Costs per Unit of Sales or Production(1)
    United                   Asia-                           United           Outside North    
    States
  Canada
  Europe
  Pacific
  Africa
  Other
  Total
  States
  Canada
  America
  Worldwide
2001   (millions of dollars)
  (dollars per unit of sales)
Revenue
                                                                                       
Crude oil and NGL
    5,124       2,095       5,372       2,167       2,911       1,812       19,481       19.70       17.43       22.74       21.19  
Natural gas
    4,126       1,364       5,790       1,019             421       12,720       4.35       3.71       2.97       3.39  
Other(3)
    90       7       23                   2       122                                  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
                                 
(dollars per barrel of net oil-equivalent production)
Total revenue
    9,340       3,466       11,185       3,186       2,911       2,235       32,323       22.35       19.05       20.47       20.81  
Less costs:
                                                                                       
Production costs excluding taxes
    1,650       884       1,613       549       414       341       5,451       3.95       4.86       3.06       3.51  
Depreciation and depletion
    1,522       602       1,781       557       318       235       5,015       3.64       3.31       3.03       3.22  
Exploration expenses
    216       109       128       103       217       418       1,191       0.52       0.60       0.91       0.77  
Taxes other than income
    567       56       1,178       410       375       449       3,035       1.36       0.31       2.53       1.96  
Related income tax
    1,957       603       3,079       622       1,023       427       7,711       4.68       3.31       5.40       4.96  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Results of producing activities
    3,428       1,212       3,406       945       564       365       9,920       8.20       6.66       5.54       6.39  
Other earnings(2)
    504       (151 )     224       (27 )     32       (73 )     509       1.21       (0.83 )     0.16       0.32  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total earnings, excluding power and coal
    3,932       1,061       3,630       918       596       292       10,429       9.41       5.83       5.70       6.71  
Power and coal
    1                   314             (8 )     307                                  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
                                 
Total earnings
    3,933       1,061       3,630       1,232       596       284       10,736                                  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
                                 
2000   (millions of dollars)
  (dollars per unit of sales)
Revenue
                                                                                       
Crude oil and NGL
    6,438       2,542       6,985       2,636       3,232       2,074       23,907       23.99       22.75       27.06       25.66  
Natural gas
    4,026       1,105       4,687       1,661             336       11,815       3.85       3.58       2.75       3.12  
Other(3)
    59       8       30                         97                                  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
                                 
(dollars per barrel of net oil-equivalent production)
Total revenue
    10,523       3,655       11,702       4,297       3,232       2,410       35,819       23.78       22.46       22.54       22.88  
Less costs:
                                                                                       
Production costs excluding taxes
    1,526       818       1,829       543       400       305       5,421       3.45       5.03       3.20       3.46  
Depreciation and depletion
    1,545       616       2,060       556       340       214       5,331       3.49       3.78       3.30       3.41  
Exploration expenses
    145       81       156       164       196       212       954       0.33       0.50       0.76       0.61  
Taxes other than income
    655       35       841       506       446       500       2,983       1.48       0.21       2.39       1.90  
Related income tax
    2,419       820       3,662       1,005       1,093       684       9,683       5.47       5.04       6.71       6.19  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Results of producing activities
    4,233       1,285       3,154       1,523       757       495       11,447       9.56       7.90       6.18       7.31  
Other earnings(2)
    312       (155 )     630       148       30       (43 )     922       0.71       (0.96 )     0.79       0.59  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total earnings, excluding power and coal
    4,545       1,130       3,784       1,671       787       452       12,369       10.27       6.94       6.97       7.90  
Power and coal
    (3 )                 323             (4 )     316                                  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
                                 
Total earnings
    4,542       1,130       3,784       1,994       787       448       12,685                                  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
                                 
1999   (millions of dollars)
  (dollars per unit of sales)
Revenue
                                                                                       
Crude oil and NGL
    3,932       1,745       3,881       2,020       1,999       1,089       14,666       14.76       15.22       16.84       16.03  
Natural gas
    2,345       401       3,820       1,390             116       8,072       2.24       1.61       2.16       2.15  
Other(3)
    64       2       33                         99                                  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
                                 
(dollars per barrel of net oil-equivalent production)
Total revenue
    6,341       2,148       7,734       3,410       1,999       1,205       22,837       14.38       13.73       15.13       14.77  
Less costs:
                                                                                       
Production costs excluding taxes
    1,660       676       1,710       566       394       250       5,256       3.77       4.32       3.08       3.40  
Depreciation and depletion
    1,451       520       2,107       678       318       250       5,324       3.28       3.33       3.53       3.45  
Exploration expenses
    232       93       307       144       236       263       1,275       0.53       0.59       1.00       0.82  
Taxes other than income
    445       35       576       288       309       243       1,896       1.00       0.22       1.50       1.22  
Related income tax
    893       311       1,206       521       534       264       3,729       2.03       1.99       2.66       2.41  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Results of producing activities
    1,660       513       1,828       1,213       208       (65 )     5,357       3.77       3.28       3.36       3.47  
Other earnings(2)
    182       (64 )     473       6       14       (82 )     529       0.41       (0.41 )     0.43       0.34  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Total earnings, excluding power and coal
    1,842       449       2,301       1,219       222       (147 )     5,886       4.18       2.87       3.79       3.81  
Power and coal
    31                   330             (3 )     358                                  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
                                 
Total earnings
    1,873       449       2,301       1,549       222       (150 )     6,244                                  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
                                 

Exxon Mobil Corporation 61 Upstream

 


 

(GRAPHIC)

      ExxonMobil has refining operations in 25 countries, nearly 40 thousand retail sites in more than 100 countries, and lubricants marketing in almost 200 countries and territories. The rollout of Mobil 1 motor oil with SuperSyn additive in more than 30 markets outside the United States contributed to another year of strong growth. ExxonMobil’s Baytown, Texas, refinery processes 557 thousand barrels per day of crude oil into products including low-sulfur motor gasoline, lubes, and chemical feedstocks.

 


 

Refining and Supply, Fuels Marketing, and Lubricants and Specialties

Downstream Strategies

ExxonMobil’s Downstream strategies position the company to be the industry leader, capable of outperforming the competition under a variety of market conditions. These key strategies are:

  Maintain best-in-class operations, in all respects
 
  Provide quality, valued products and services to our customers
 
  Lead industry in efficiency and effectiveness
 
  Capitalize on integration with other ExxonMobil businesses
 
  Selectively invest for resilient, advantaged returns
 
  Maximize value from leading-edge technology

Industry Conditions

  Across the Downstream business, the industry continues to experience significant volatility in margins. While margins recovered in 2003 versus 2002, we continue to see a downward long-term trend. Productivity gains derived from advancements in technology and operational efficiencies continue to take costs out of running the business, maintaining the downward pressure on industry margins.
 
  2003 industry refining margins throughout the world improved versus 2002 and were particularly strong during the first half of 2003. The stronger margins reflected many crude oil and finished product market factors, including stronger product demand in the United States and elsewhere.
 
  Fuels Marketing margins were stronger in all regions, primarily due to the lag effect related to lower crude prices early in the year.
 
  Worldwide lube basestock margins were higher in 2003, reflecting tighter supply and demand fundamentals.

(GRAPHS)

2003 HIGHLIGHTS

Leadership in safety continues, with further improvement in employee and contractor safety performance.

Earnings nearly tripled versus 2002 to $3.5 billion.

More than $1.5 billion of pre-tax operating cost efficiencies and revenue enhancements were achieved. Further initiatives continue to be aggressively executed, leveraging proprietary technology, global scale, and the benefits of our global functional organization.

Downstream capital expenditures were $2.8 billion in 2003, up 14 percent versus 2002, reflecting increased investment required to meet low-sulfur fuel requirements. With these investments, more than 90 percent of our motor gasoline production capacity in the U.S. and Canada is low sulfur.

Return on capital employed was 13 percent, up from 5 percent in 2002.

Refinery throughput, at 5.5 million barrels a day, was up slightly versus 2002, with increased runs in Europe and Asia-Pacific reflecting improved industry economics.

Petroleum product sales were up 3 percent in 2003, largely due to stronger industry demand.

                                         
Statistical Recap
  2003
  2002
  2001
  2000
  1999
Earnings (millions of dollars)
    3,516       1,300       4,227       3,418       1,227  
Refinery throughput (thousands of barrels per day)
    5,510       5,443       5,542       5,642       5,977  
Petroleum product sales (thousands of barrels per day)
    7,957       7,757       7,971       7,993       8,887  
Average capital employed (millions of dollars)
    26,965       26,045       26,321       27,732       28,033  
Return on average capital employed (percent)
    13.0       5.0       16.1       12.3       4.4  
Capital expenditures (millions of dollars)
    2,781       2,450       2,322       2,618       2,401  

Exxon Mobil Corporation 63 Downstream

 


 

DOWNSTREAM COMPETITIVE ADVANTAGES

ExxonMobil’s Downstream business is a large, diversified and profitable portfolio, with marketing presence and refining complexes the world over. In pursuing the Downstream strategies, the businesses have achieved competitive advantage in a number of areas:

    The Exxon, Mobil, and Esso brands are well recognized and respected throughout the world and are valued by customers for superior quality, performance, and reliability.
 
    Our global functional organization enables better prioritization and more rapid deployment of new technologies, while fully leveraging best practices and cost efficiencies across the Downstream businesses.
 
    The development and application of proprietary technology are key to ExxonMobil’s sustained competitive advantage. The competitive strength resulting from our in-house technical capability is enhanced through close cooperation between the techn