SEC Filing | Exxon Mobil Corporation

View:

Download DOC

Download PDF

Download XLS

Download XBRL

xom-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________to__________

Commission File Number 1-2256

Exxon Mobil Corporation

(Exact name of registrant as specified in its charter)


New Jersey						13-5409005
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

5959 Las Colinas Boulevard, Irving, Texas 75039-2298

(Address of principal executive offices) (Zip Code)

(972) 940-6000

(Registrant's telephone number, including area code)

_______________________

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common Stock, without par value

XOM

New York Stock Exchange

0.142% Notes due 2024

XOM24B

New York Stock Exchange

0.524% Notes due 2028

XOM28

New York Stock Exchange

0.835% Notes due 2032

XOM32

New York Stock Exchange

1.408% Notes due 2039

XOM39A

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☑	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.


Class						Outstanding as of March 31, 2023
Common stock, without par value						4,042,984,946

EXXON MOBIL CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2023

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Statement of Income - Three months ended March 31, 2023 and 2022			3

Condensed Consolidated Statement of Comprehensive Income - Three months ended March 31, 2023 and 2022			4

Condensed Consolidated Balance Sheet - As of March 31, 2023 and December 31, 2022			5

Condensed Consolidated Statement of Cash Flows - Three months ended March 31, 2023 and 2022			6



Condensed Consolidated Statement of Changes in Equity - Three months ended March 31, 2023 and 2022			7



Notes to Condensed Consolidated Financial Statements			8

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			17

Item 3. Quantitative and Qualitative Disclosures About Market Risk			29

Item 4. Controls and Procedures			29


PART II. OTHER INFORMATION

Item 1. Legal Proceedings			30



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			30

Item 6. Exhibits			30

Index to Exhibits			31

Signature			32

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS



CONDENSED CONSOLIDATED STATEMENT OF INCOME


(millions of dollars, unless noted)	Three Months Ended March 31,
	2023	2022
Revenues and other income
Sales and other operating revenue	83,644	87,734
Income from equity affiliates	2,381	2,538
Other income	539	228
Total revenues and other income	86,564	90,500
Costs and other deductions
Crude oil and product purchases	46,003	52,388
Production and manufacturing expenses	9,436	10,241
Selling, general and administrative expenses	2,390	2,409
Depreciation and depletion (includes impairments)	4,244	8,883
Exploration expenses, including dry holes	141	173
Non-service pension and postretirement benefit expense	167	108
Interest expense	159	188
Other taxes and duties	7,221	7,554
Total costs and other deductions	69,761	81,944
Income (loss) before income taxes	16,803	8,556
Income tax expense (benefit)	4,960	2,806
Net income (loss) including noncontrolling interests	11,843	5,750
Net income (loss) attributable to noncontrolling interests	413	270
Net income (loss) attributable to ExxonMobil	11,430	5,480

Earnings (loss) per common share (dollars)	2.79	1.28

Earnings (loss) per common share - assuming dilution (dollars)	2.79	1.28

The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.



CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


(millions of dollars)	Three Months Ended March 31,
	2023	2022
Net income (loss) including noncontrolling interests	11,843	5,750

Other comprehensive income (loss) (net of income taxes)
Foreign exchange translation adjustment	173	741

Postretirement benefits reserves adjustment (excluding amortization)	19	105
Amortization and settlement of postretirement benefits reserves adjustment included in net periodic benefit costs	6	93
Total other comprehensive income (loss)	198	939
Comprehensive income (loss) including noncontrolling interests	12,041	6,689
Comprehensive income (loss) attributable to noncontrolling interests	436	359
Comprehensive income (loss) attributable to ExxonMobil	11,605	6,330

The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.



CONDENSED CONSOLIDATED BALANCE SHEET


(millions of dollars, unless noted)	March 31, 2023	December 31, 2022

ASSETS
Current assets
Cash and cash equivalents	32,651	29,640
Cash and cash equivalents – restricted	25	25
Notes and accounts receivable – net	38,808	41,749
Inventories
Crude oil, products and merchandise	19,458	20,434
Materials and supplies	4,184	4,001
Other current assets	2,098	1,782
Total current assets	97,224	97,631
Investments, advances and long-term receivables	49,044	49,793
Property, plant and equipment – net	206,023	204,692
Other assets, including intangibles – net	17,080	16,951
Total Assets	369,371	369,067

LIABILITIES
Current liabilities
Notes and loans payable	2,296	634
Accounts payable and accrued liabilities	59,935	63,197
Income taxes payable	4,435	5,214
Total current liabilities	66,666	69,045
Long-term debt	39,150	40,559
Postretirement benefits reserves	10,183	10,045
Deferred income tax liabilities	23,195	22,874
Long-term obligations to equity companies	2,376	2,338
Other long-term obligations	21,387	21,733
Total Liabilities	162,957	166,594

Commitments and contingencies (Note 3)

EQUITY
Common stock without par value (9,000 million shares authorized, 8,019 million shares issued)	15,904	15,752
Earnings reinvested	440,552	432,860
Accumulated other comprehensive income	(13,095)	(13,270)
Common stock held in treasury (3,976 million shares at March 31, 2023 and 3,937 million shares at December 31, 2022)	(244,676)	(240,293)
ExxonMobil share of equity	198,685	195,049
Noncontrolling interests	7,729	7,424
Total Equity	206,414	202,473
Total Liabilities and Equity	369,371	369,067

The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.



CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS


(millions of dollars)	Three Months Ended March 31,
	2023	2022

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) including noncontrolling interests	11,843	5,750
Depreciation and depletion (includes impairments)	4,244	8,883

Changes in operational working capital, excluding cash and debt	(302)	1,086
All other items – net	556	(931)
Net cash provided by operating activities	16,341	14,788

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment	(5,412)	(3,911)
Proceeds from asset sales and returns of investments	854	293
Additional investments and advances	(445)	(417)
Other investing activities including collection of advances	78	90
Net cash used in investing activities	(4,925)	(3,945)

CASH FLOWS FROM FINANCING ACTIVITIES
Additions to long-term debt	20	—


Reductions in short-term debt	(126)	(2,098)
Additions/(reductions) in debt with three months or less maturity	(192)	1,366

Cash dividends to ExxonMobil shareholders	(3,738)	(3,760)
Cash dividends to noncontrolling interests	(115)	(60)
Changes in noncontrolling interests	(16)	(94)
Common stock acquired	(4,340)	(2,067)
Net cash used in financing activities	(8,507)	(6,713)

Effects of exchange rate changes on cash	102	142
Increase/(decrease) in cash and cash equivalents	3,011	4,272
Cash and cash equivalents at beginning of period	29,665	6,802
Cash and cash equivalents at end of period	32,676	11,074

SUPPLEMENTAL DISCLOSURES
Income taxes paid	4,404	1,798
Cash interest paid
Included in cash flows from operating activities	256	319
Capitalized, included in cash flows from investing activities	291	187
Total cash interest paid	547	506


Noncash right of use assets recorded in exchange for lease liabilities
Operating leases	393	240
Finance leases	438	656

The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.



CONDENSED CONSOLIDATED STATEMENT OF CHANGE IN EQUITY


	ExxonMobil Share of Equity

(millions of dollars, unless noted)	Common Stock	Earnings Reinvested	Accumulated Other Comprehensive Income	Common Stock Held in Treasury	ExxonMobil Share of Equity	Non-controlling Interests	Total Equity

Balance as of December 31, 2021	15,746	392,059	(13,764)	(225,464)	168,577	7,106	175,683
Amortization of stock-based awards	138	—	—	—	138	—	138
Other	(5)	—	—	—	(5)	14	9
Net income (loss) for the period	—	5,480	—	—	5,480	270	5,750
Dividends - common shares	—	(3,760)	—	—	(3,760)	(60)	(3,820)

Other comprehensive income (loss)	—	—	850	—	850	89	939
Acquisitions, at cost	—	—	—	(2,067)	(2,067)	(108)	(2,175)
Dispositions	—	—	—	2	2	—	2
Balance as of March 31, 2022	15,879	393,779	(12,914)	(227,529)	169,215	7,311	176,526

Balance as of December 31, 2022	15,752	432,860	(13,270)	(240,293)	195,049	7,424	202,473
Amortization of stock-based awards	158	—	—	—	158	—	158
Other	(6)	—	—	—	(6)	(16)	(22)
Net income (loss) for the period	—	11,430	—	—	11,430	413	11,843
Dividends - common shares	—	(3,738)	—	—	(3,738)	(115)	(3,853)

Other comprehensive income (loss)	—	—	175	—	175	23	198
Acquisitions, at cost	—	—	—	(4,385)	(4,385)	—	(4,385)
Dispositions	—	—	—	2	2	—	2
Balance as of March 31, 2023	15,904	440,552	(13,095)	(244,676)	198,685	7,729	206,414


	Three Months Ended March 31, 2023			Three Months Ended March 31, 2022

Common Stock Share Activity (millions of shares)	Issued	Held in Treasury	Outstanding	Issued	Held in Treasury	Outstanding
Balance as of December 31	8,019	(3,937)	4,082	8,019	(3,780)	4,239
Acquisitions	—	(39)	(39)	—	(26)	(26)
Dispositions	—	—	—	—	—	—
Balance as of March 31	8,019	(3,976)	4,043	8,019	(3,806)	4,213

The information in the Notes to Condensed Consolidated Financial Statements is an integral part of these statements.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Basis of Financial Statement Preparation

These unaudited condensed consolidated financial statements should be read in the context of the consolidated financial statements and notes thereto filed with the Securities and Exchange Commission in the Corporation's 2022 Annual Report on Form 10-K. In the opinion of the Corporation, the information furnished herein reflects all known accruals and adjustments necessary for a fair statement of the results for the periods reported herein. All such adjustments are of a normal recurring nature. Prior data has been reclassified in certain cases to conform to the current presentation basis.

The Corporation's exploration and production activities are accounted for under the "successful efforts" method.

Note 2. Russia

In response to Russia’s military action in Ukraine, the Corporation announced in early 2022 that it planned to discontinue operations on the Sakhalin-1 project (“Sakhalin”) and develop steps to exit the venture. In light of this, an impairment assessment was conducted, and management determined that the carrying value of the asset group was not recoverable. As a result, the Corporation’s first-quarter 2022 earnings included after-tax charges of $3.4 billion largely representing the full impairment of its operations related to Sakhalin. On a before-tax basis, the charges amounted to $4.6 billion, substantially all of which is reflected in the line captioned “Depreciation and depletion (includes impairments)” on the Condensed Consolidated Statement of Income. Effective October 14, 2022 the Russian government unilaterally terminated the Corporation’s interests in Sakhalin, transferring operations to a Russian operator. The Corporation’s fourth-quarter 2022 results included an after-tax benefit of $1.1 billion largely reflecting the impact of the expropriation on the company’s various obligations related to Sakhalin. The Corporation's exit from the project resulted in approximately 150 million oil-equivalent barrels no longer qualifying as proved reserves at year-end 2022.

Note 3. Litigation and Other Contingencies

Litigation

A variety of claims have been made against ExxonMobil and certain of its consolidated subsidiaries in a number of pending lawsuits. Management has regular litigation reviews, including updates from corporate and outside counsel, to assess the need for accounting recognition or disclosure of these contingencies. The Corporation accrues an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. The Corporation does not record liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote. For contingencies where an unfavorable outcome is reasonably possible and which are significant, the Corporation discloses the nature of the contingency and, where feasible, an estimate of the possible loss. For purposes of our contingency disclosures, “significant” includes material matters, as well as other matters which management believes should be disclosed. ExxonMobil will continue to defend itself vigorously in these matters. Based on a consideration of all relevant facts and circumstances, the Corporation does not believe the ultimate outcome of any currently pending lawsuit against ExxonMobil will have a material adverse effect upon the Corporation's operations, financial condition, or financial statements taken as a whole.

Other Contingencies

The Corporation and certain of its consolidated subsidiaries were contingently liable at March 31, 2023, for guarantees relating to notes, loans and performance under contracts. Where guarantees for environmental remediation and other similar matters do not include a stated cap, the amounts reflect management’s estimate of the maximum potential exposure. Where it is not possible to make a reasonable estimation of the maximum potential amount of future payments, future performance is expected to be either immaterial or have only a remote chance of occurrence. These guarantees are not reasonably likely to have a material effect on the Corporation’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.


	March 31, 2023

(millions of dollars)	Equity Company Obligations (1)	Other Third-Party Obligations	Total
Guarantees
Debt-related	1,229	155	1,384
Other	739	5,385	6,124
Total	1,968	5,540	7,508

(1) ExxonMobil share

Additionally, the Corporation and its affiliates have numerous long-term sales and purchase commitments in their various business activities, all of which are expected to be fulfilled with no adverse consequences material to the Corporation’s operations or financial condition. In the first quarter and early April 2023, the Corporation entered into two long-term purchase agreements with an estimated total obligation of approximately $4.6 billion. As of March 31, undiscounted commitments for leases not yet commenced totaled $4.1 billion for operating leases and $2.3 billion for finance leases.

The operations and earnings of the Corporation and its affiliates throughout the world have been, and may in the future be, affected from time to time in varying degree by political developments and laws and regulations, such as forced divestiture of assets; restrictions on production, imports and exports; price controls; tax increases and retroactive tax claims; expropriation of property; cancellation of contract rights; sanctions and environmental regulations. Both the likelihood of such occurrences and their overall effect upon the Corporation vary greatly from country to country and are not predictable.

Note 4. Other Comprehensive Income Information


ExxonMobil Share of Accumulated Other Comprehensive Income (millions of dollars)	Cumulative Foreign Exchange Translation Adjustment	Postretirement Benefits Reserves Adjustment	Total
Balance as of December 31, 2021	(11,499)	(2,265)	(13,764)
Current period change excluding amounts reclassified from accumulated other comprehensive income (1)	661	102	763
Amounts reclassified from accumulated other comprehensive income	—	87	87
Total change in accumulated other comprehensive income	661	189	850
Balance as of March 31, 2022	(10,838)	(2,076)	(12,914)

Balance as of December 31, 2022	(14,591)	1,321	(13,270)
Current period change excluding amounts reclassified from accumulated other comprehensive income (1)	157	14	171
Amounts reclassified from accumulated other comprehensive income	—	4	4
Total change in accumulated other comprehensive income	157	18	175
Balance as of March 31, 2023	(14,434)	1,339	(13,095)

(1) Cumulative Foreign Exchange Translation Adjustment includes net investment hedge gain/(loss) net of taxes of $(74) million and $79 million in 2023 and 2022, respectively.


Amounts Reclassified Out of Accumulated Other Comprehensive Income - Before-tax Income/(Expense) (millions of dollars)	Three Months Ended March 31,
		2023	2022

Amortization and settlement of postretirement benefits reserves adjustment included in net periodic benefit costs
(Statement of Income line: Non-service pension and postretirement benefit expense)		(8)	(120)


Income Tax (Expense)/Credit For Components of Other Comprehensive Income (millions of dollars)	Three Months Ended March 31,
		2023	2022

Foreign exchange translation adjustment		48	(22)
Postretirement benefits reserves adjustment (excluding amortization)		11	(40)
Amortization and settlement of postretirement benefits reserves adjustment included in net periodic benefit costs		(2)	(27)
Total		57	(89)

Note 5. Earnings Per Share


Earnings per common share	Three Months Ended March 31,
	2023	2022
Net income (loss) attributable to ExxonMobil (millions of dollars)	11,430	5,480
Weighted-average number of common shares outstanding (millions of shares)	4,102	4,266
Earnings (loss) per common share (dollars) (1)	2.79	1.28
Dividends paid per common share (dollars)	0.91	0.88

(1) The calculation of earnings (loss) per common share and earnings (loss) per common share – assuming dilution are the same in each period shown.

Note 6. Pension and Other Postretirement Benefits


(millions of dollars)	Three Months Ended March 31,
	2023	2022
Components of net benefit cost
Pension Benefits - U.S.
Service cost	120	179
Interest cost	166	129
Expected return on plan assets	(133)	(140)
Amortization of actuarial loss/(gain)	21	39
Amortization of prior service cost	(7)	(7)
Net pension enhancement and curtailment/settlement cost	8	37
Net benefit cost	175	237

Pension Benefits - Non-U.S.
Service cost	82	150
Interest cost	234	160
Expected return on plan assets	(174)	(213)
Amortization of actuarial loss/(gain)	14	47
Amortization of prior service cost	12	12

Net benefit cost	168	156

Other Postretirement Benefits
Service cost	20	40
Interest cost	70	55
Expected return on plan assets	(4)	(3)
Amortization of actuarial loss/(gain)	(30)	3
Amortization of prior service cost	(10)	(11)
Net benefit cost	46	84

Note 7. Financial Instruments and Derivatives

The estimated fair value of financial instruments and derivatives at March 31, 2023 and December 31, 2022, and the related hierarchy level for the fair value measurement was as follows:


	March 31, 2023


	Fair Value
(millions of dollars)	Level 1	Level 2	Level 3	Total Gross Assets & Liabilities	Effect of Counterparty Netting	Effect of Collateral Netting	Difference in Carrying Value and Fair Value	Net Carrying Value
Assets
Derivative assets (1)	5,122	2,372	—	7,494	(5,761)	(943)	—	790

Advances to/receivables from equity companies (2)(6)	—	2,440	5,165	7,605	—	—	614	8,219

Other long-term financial assets (3)	1,243	—	1,506	2,749	—	—	313	3,062

Liabilities
Derivative liabilities (4)	4,233	2,720	—	6,953	(5,761)	(60)	—	1,132
Long-term debt (5)	32,905	1,036	6	33,947	—	—	3,415	37,362

Long-term obligations to equity companies (6)	—	—	2,502	2,502	—	—	(126)	2,376

Other long-term financial liabilities (7)	—	—	713	713	—	—	40	753


	December 31, 2022


	Fair Value
(millions of dollars)	Level 1	Level 2	Level 3	Total Gross Assets & Liabilities	Effect of Counterparty Netting	Effect of Collateral Netting	Difference in Carrying Value and Fair Value	Net Carrying Value
Assets
Derivative assets (1)	4,309	3,455	—	7,764	(5,778)	(969)	—	1,017

Advances to/receivables from equity companies (2)(6)	—	2,406	4,958	7,364	—	—	685	8,049

Other long-term financial assets (3)	1,208	—	1,413	2,621	—	—	346	2,967

Liabilities
Derivative liabilities (4)	3,417	3,264	—	6,681	(5,778)	(79)	—	824
Long-term debt (5)	33,112	1,880	6	34,998	—	—	4,173	39,171

Long-term obligations to equity companies (6)	—	—	2,467	2,467	—	—	(129)	2,338

Other long-term financial liabilities (7)	—	—	679	679	—	—	38	717


(1) Included in the Balance Sheet lines: Notes and accounts receivable - net and Other assets, including intangibles - net
(2) Included in the Balance Sheet line: Investments, advances and long-term receivables
(3) Included in the Balance Sheet lines: Investments, advances and long-term receivables and Other assets, including intangibles - net
(4) Included in the Balance Sheet lines: Accounts payable and accrued liabilities and Other long-term obligations
(5) Excluding finance lease obligations
(6) Advances to/receivables from equity companies and long-term obligations to equity companies are mainly designated as hierarchy level 3 inputs. The fair value is calculated by discounting the remaining obligations by a rate consistent with the credit quality and industry of the company.
(7) Included in the Balance Sheet line: Other long-term obligations. Includes contingent consideration related to a prior year acquisition where fair value is based on expected drilling activities and discount rates.

At March 31, 2023 and December 31, 2022, respectively, the Corporation had $884 million and $1,494 million of collateral under master netting arrangements not offset against the derivatives on the Consolidated Balance Sheet, primarily related to initial margin requirements.

The Corporation may use non-derivative financial instruments, such as its foreign currency-denominated debt, as hedges of its net investments in certain foreign subsidiaries. Under this method, the change in the carrying value of the financial instruments due to foreign exchange fluctuations is reported in accumulated other comprehensive income. As of March 31, 2023, the Corporation has designated $4.9 billion of its Euro-denominated long-term debt and related accrued interest as a net investment hedge of its European business. The net investment hedge is deemed to be perfectly effective.

The Corporation had undrawn short-term committed lines of credit of $363 million and undrawn long-term committed lines of credit of $1,281 million as of first quarter 2023.

Derivative Instruments

The Corporation’s size, strong capital structure, geographic diversity, and the complementary nature of its business segments reduce the Corporation’s enterprise-wide risk from changes in commodity prices, currency rates and interest rates. In addition, the Corporation uses commodity-based contracts, including derivatives, to manage commodity price risk and to generate returns from trading. Commodity contracts held for trading purposes are presented in the Condensed Consolidated Statement of Income on a net basis in the line “Sales and other operating revenue". The Corporation’s commodity derivatives are not accounted for under hedge accounting. At times, the Corporation also enters into currency and interest rate derivatives, none of which are material to the Corporation’s financial position as of March 31, 2023 and December 31, 2022, or results of operations for the periods ended March 31, 2023 and 2022.

Credit risk associated with the Corporation’s derivative position is mitigated by several factors, including the use of derivative clearing exchanges and the quality of and financial limits placed on derivative counterparties. The Corporation maintains a system of controls that includes the authorization, reporting, and monitoring of derivative activity.

The net notional long/(short) position of derivative instruments at March 31, 2023 and December 31, 2022, was as follows:




(millions)	March 31, 2023	December 31, 2022
Crude oil (barrels)	15	4
Petroleum products (barrels)	(48)	(52)
Natural gas (MMBTUs)	(29)	(64)

Realized and unrealized gains/(losses) on derivative instruments that were recognized in the Condensed Consolidated Statement of Income are included in the following lines on a before-tax basis:





(millions of dollars)	Three Months Ended March 31,
	2023	2022
Sales and other operating revenue	651	(2,535)
Crude oil and product purchases	(25)	(26)
Total	626	(2,561)

Note 8. Disclosures about Segments and Related Information


(millions of dollars)	Three Months Ended March 31,
	2023	2022
Earnings (Loss) After Income Tax
Upstream
United States	1,632	2,376
Non-U.S. (1)	4,825	2,112
Energy Products
United States	1,910	489
Non-U.S.	2,273	(684)
Chemical Products
United States	324	770
Non-U.S.	47	636
Specialty Products
United States	451	246
Non-U.S.	323	230
Corporate and Financing (1)	(355)	(694)
Corporate total	11,430	5,480

Sales and Other Operating Revenue
Upstream
United States	2,770	2,656
Non-U.S.	5,387	6,343
Energy Products
United States	24,924	24,853
Non-U.S.	39,976	41,715
Chemical Products
United States	2,029	3,094
Non-U.S.	3,692	4,497
Specialty Products
United States	1,568	1,391
Non-U.S.	3,289	3,178
Corporate and Financing	9	7
Corporate total	83,644	87,734

Intersegment Revenue
Upstream
United States	4,956	6,191
Non-U.S.	9,399	10,835
Energy Products
United States	5,451	6,849
Non-U.S.	6,969	8,762
Chemical Products
United States	1,788	1,767
Non-U.S.	777	1,507
Specialty Products
United States	680	559
Non-U.S.	99	224
Corporate and Financing	64	57

(1) Results for 2022 include charges of $3.3 billion in non-U.S. Upstream and $0.1 billion in Corporate and Financing associated with the expropriation of the Corporation's interest in Sakhalin-1.


Geographic Sales and Other Operating Revenue
(millions of dollars)	Three Months Ended March 31,
	2023	2022
United States	31,291	31,994
Non-U.S.	52,353	55,740
Total	83,644	87,734

Significant Non-U.S. revenue sources include: (1)
United Kingdom	7,011	7,548
Canada	6,721	6,995
Singapore	3,731	4,322
France	3,484	4,356
Belgium	2,649	2,836
Italy	2,536	2,836
Australia	2,428	2,456

(1) Revenue is determined by primary country of operations. Excludes certain sales and other operating revenues in non-U.S. operations where attribution to a specific country is not practicable.

Revenue from Contracts with Customers

Sales and other operating revenue includes both revenue within the scope of ASC 606 and outside the scope of ASC 606. Trade receivables in Notes and accounts receivable – net reported on the Balance Sheet also includes both receivables within the scope of ASC 606 and those outside the scope of ASC 606. Revenue and receivables outside the scope of ASC 606 primarily relate to physically settled commodity contracts accounted for as derivatives. Contractual terms, credit quality, and type of customer are generally similar between those revenues and receivables within the scope of ASC 606 and those outside it.


Sales and other operating revenue (millions of dollars)	Three Months Ended March 31,
	2023	2022

Revenue from contracts with customers	64,304	68,816
Revenue outside the scope of ASC 606	19,340	18,918
Total	83,644	87,734

Note 9. Divestment Activities

In the first quarter, the Corporation completed the sale of Mobil California Exploration and Producing Asset Company, consisting of ExxonMobil's interest in the Aera Energy joint venture, to Green Gate Resources E, LLC. Cash flow related to the divestment was $0.6 billion in the first quarter, and the Corporation expects to receive additional consideration of $0.4 billion, primarily in 2023. The net book value of the assets divested was $1.1 billion.

In January 2023, the Corporation executed an agreement with Bangchak Corporation to sell its interest in Esso Thailand Ltd. that includes the Sriracha Refinery, select distribution terminals, and a network of retail stations. The transaction is anticipated to close in third quarter 2023.

In November 2022, the Corporation executed an agreement for the sale of the Santa Ynez Unit and associated assets in California. The agreement is subject to certain conditions precedent and government approvals and does not yet meet held-for-sale criteria under ASC 360. Should the conditions precedent be met and the potential transaction close, the Corporation would expect to recognize a loss of up to $2 billion.

In February 2022, the Corporation signed an agreement with Seplat Energy Offshore Limited for the sale of Mobil Producing Nigeria Unlimited. The agreement is subject to certain conditions precedent and government approvals. In mid-2022, a Nigerian court issued an order to halt transition activities and enter into arbitration with the Nigerian National Petroleum Company. The closing date and any loss on sale will depend on resolution of these matters.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

During the first quarter of 2023 the price of crude oil decreased as the global oil market saw higher inventory levels; however prices remained above the 10-year average (2010-2019). The increase in inventory levels was followed by an early April announcement from OPEC+ oil producers to further reduce oil output. Natural gas prices remained above the 10-year range, despite declining significantly in the quarter as milder weather eased demand for natural gas heating, allowing storage levels to increase above historical averages in the United States and Europe. While moderating slightly from the fourth quarter of 2022, refining margins remained above the 10-year range due to low inventory levels of petroleum products. While chemical margins remained below the 10-year range due to continued bottom-of-cycle conditions in Asia Pacific, margins in North America improved on lower energy and feed costs.

The Corporation’s first quarter results include after-tax charges of $0.2 billion related to additional European taxes imposed on the energy sector, mainly reflected in the line “Income tax expense (benefit).” The enactment of regulations in late 2022 by European Member States and other countries imposed mandatory taxes on certain companies active in the crude petroleum, coal, natural gas, and refinery sectors.

FUNCTIONAL EARNINGS SUMMARY

Earnings (loss) excluding Identified Items (non-GAAP) are earnings (loss) excluding individually significant non-operational events with, typically, an absolute corporate total earnings impact of at least $250 million in a given quarter. The earnings (loss) impact of an identified item for an individual segment may be less than $250 million when the item impacts several periods or several segments. Earnings (loss) excluding Identified Items does include non-operational earnings events or impacts that are generally below the $250 million threshold utilized for Identified Items. Management uses these figures to improve comparability of the underlying business across multiple periods by isolating and removing significant non-operational events from business results. The Corporation believes this view provides investors increased transparency into business results and trends and provides investors with a view of the business as seen through the eyes of management. Earnings (loss) excluding Identified Items is not meant to be viewed in isolation or as a substitute for net income (loss) attributable to ExxonMobil as prepared in accordance with U.S. GAAP.


Three Months Ended March 31, 2023	Upstream		Energy Products		Chemical Products		Specialty Products		Corporate and Financing	Total
(millions of dollars)	U.S.	Non-U.S.	U.S.	Non-U.S.	U.S.	Non-U.S.	U.S.	Non-U.S.
Earnings (loss) (U.S. GAAP)	1,632	4,825	1,910	2,273	324	47	451	323	(355)	11,430
Identified Items



Tax-related items	—	(158)	—	(30)	—	—	—	—	—	(188)




Earnings (loss) excluding Identified Items (Non-GAAP)	1,632	4,983	1,910	2,303	324	47	451	323	(355)	11,618

Three Months Ended March 31, 2022	Upstream		Energy Products		Chemical Products		Specialty Products		Corporate and Financing	Total
(millions of dollars)	U.S.	Non-U.S.	U.S.	Non-U.S.	U.S.	Non-U.S.	U.S.	Non-U.S.
Earnings (loss) (U.S. GAAP)	2,376	2,112	489	(684)	770	636	246	230	(694)	5,480
Identified Items
Impairments	—	(2,877)	—	—	—	—	—	—	(98)	(2,975)





Other	—	(378)	—	—	—	—	—	—	—	(378)

Earnings (loss) excluding Identified Items (Non-GAAP)	2,376	5,367	489	(684)	770	636	246	230	(596)	8,833

References in this discussion to Corporate earnings (loss) mean net income (loss) attributable to ExxonMobil (U.S. GAAP) from the Condensed Consolidated Statement of Income. Unless otherwise indicated, references to earnings (loss); Upstream, Energy Products, Chemical Products, Specialty Products, and Corporate and Financing earnings (loss); and earnings (loss) per share are ExxonMobil's share after excluding amounts attributable to noncontrolling interests.

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

REVIEW OF FIRST QUARTER 2023 RESULTS

ExxonMobil’s first quarter 2023 earnings were $11.4 billion, or $2.79 per share assuming dilution, compared with earnings of $5.5 billion a year earlier. The increase in earnings was driven by higher Energy Products and Specialty Products margins as well as increased volume and improved mix. Capital and exploration expenditures were $6.4 billion, up $1.5 billion from first quarter 2022.

UPSTREAM


Upstream Financial Results

(millions of dollars)	Three Months Ended March 31,
	2023	2022
Earnings (loss) (U.S. GAAP)
United States	1,632	2,376
Non-U.S.	4,825	2,112
Total	6,457	4,488

Identified Items (1)
United States	—	—
Non-U.S.	(158)	(3,255)
Total	(158)	(3,255)

Earnings (loss) excluding Identified Items (1) (Non-GAAP)
United States	1,632	2,376
Non-U.S.	4,983	5,367
Total	6,615	7,743

Upstream First Quarter Earnings Factor Analysis

(millions of dollars)

Price – Price impacts, driven by a 23% decrease in average crude realizations, decreased earnings by $1,750 million.

Volume/Mix – Higher production volumes increased earnings by $620 million. Advantaged projects growth in Guyana and Permian more than offset the impact from divestments and the Russia expropriation.

Identified Items (1) – 1Q 2022 $(3,255) million loss as a result of the Russia expropriation. 1Q 2023 $(158) million loss from additional European taxes.

(1) Refer to Functional Earnings Summary for definition of Identified Items and earnings (loss) excluding Identified Items.


Upstream Operational Results

	Three Months Ended March 31,
	2023	2022
Net production of crude oil, natural gas liquids, bitumen and synthetic oil