Exxon Mobil Corporation 10-Q


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549


FORM 10-Q


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

THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended September 30, 2007


or


(   )  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                                              (I.R.S. Employer                     

               incorporation or organization)                                        Identification Number)               


     5959 Las Colinas Boulevard, Irving, Texas                             75039-2298       

(Address of principal executive offices)                               (Zip Code)


                                         (972) 444-1000                                         

(Registrant's telephone number, including area code)



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  X  No    


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

         Large accelerated filer   X        Accelerated filer               Non-accelerated filer      


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


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 September 30, 2007

Common stock, without par value                                                            5,463,625,615                






EXXON MOBIL CORPORATION


FORM 10-Q


FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2007


TABLE OF CONTENTS


Page

Number


PART I.  FINANCIAL INFORMATION


Item 1.

Financial Statements


Condensed Consolidated Statement of Income

3

Three and nine months ended September 30, 2007 and 2006


Condensed Consolidated Balance Sheet

4

As of September 30, 2007 and December 31, 2006


Condensed Consolidated Statement of Cash Flows

5

Nine months ended September 30, 2007 and 2006


Notes to Condensed Consolidated Financial Statements

6-16


Item 2.

Management's Discussion and Analysis of Financial

Condition and Results of Operations

17-21


Item 3.

Quantitative and Qualitative Disclosures About Market Risk

22


Item 4.

Controls and Procedures

22


PART II.  OTHER INFORMATION


Item 1.

Legal Proceedings

22-23


Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

23


Item 6.

Exhibits

24


Signature

25


Index to Exhibits

26




-2-



PART I.  FINANCIAL INFORMATION



Item 1.  Financial Statements


EXXON MOBIL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF INCOME

(millions of dollars)



 

Three Months Ended

 

Nine Months Ended

 
 

September 30,

 

September 30,

 
  

2007

  

2006

  

2007

  

2006

 

REVENUES AND OTHER INCOME

            

Sales and other operating revenue (1)

$

99,130

 

$

96,268

 

$

278,363

 

$

278,609

 

Income from equity affiliates

 

2,158

  

1,778

  

6,088

  

5,265

 

Other income

 

1,049

  

1,547

  

3,459

  

3,733

 

       Total revenues and other income

 

102,337

  

99,593

  

287,910

  

287,607

 

 

            

COSTS AND OTHER DEDUCTIONS

            

Crude oil and product purchases

 

51,973

  

49,364

  

139,642

  

140,365

 

Production and manufacturing expenses

 

7,884

  

7,057

  

22,845

  

21,897

 

Selling, general and administrative expenses

 

3,656

  

3,412

  

10,836

  

10,435

 

Depreciation and depletion

 

3,159

  

2,730

  

9,095

  

8,134

 

Exploration expenses, including dry holes

 

349

  

352

  

974

  

810

 

Interest expense

 

73

  

281

  

272

  

553

 

Sales-based taxes (1)

 

7,970

  

7,764

  

23,064

  

23,639

 

Other taxes and duties

 

10,229

  

10,163

  

29,708

  

29,206

 

Income applicable to minority interests

 

284

  

292

  

722

  

727

 

       Total costs and other deductions

 

85,577

  

81,415

  

237,158

  

235,766

 

 

            

INCOME BEFORE INCOME TAXES

 

16,760

  

18,178

  

50,752

  

51,841

 

       Income taxes

 

7,350

  

7,688

  

21,802

  

22,591

 

NET INCOME

$

9,410

 

$

10,490

 

$

28,950

 

$

29,250

 
             

 

            

NET INCOME PER COMMON SHARE (dollars)

$

1.72

 

$

1.79

 

$

5.21

 

$

4.91

 

 

            

NET INCOME PER COMMON SHARE

            

 - ASSUMING DILUTION (dollars)

$

1.70

 

$

1.77

 

$

5.15

 

$

4.86

 
             
             

DIVIDENDS PER COMMON SHARE (dollars)

$

0.35

 

$

0.32

 

$

1.02

 

$

0.96

 
             
             

(1) Sales-based taxes included in sales and other

            

         operating revenue

$

7,970

 

$

7,764

 

$

23,064

 

$

23,639

 
             
             

The information in the Notes to Condensed Consolidated Financial Statements

is an integral part of these statements.



-3-



EXXON MOBIL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET

(millions of dollars)


 

Sept. 30,

 

Dec. 31,

 
 

2007

 

2006

 

ASSETS

        

Current assets

        

   Cash and cash equivalents

 

$

31,423

  

$

28,244

 

   Cash and cash equivalents - restricted (note 3)

  

4,604

   

4,604

 

   Marketable securities

  

190

   

0

 

   Notes and accounts receivable - net

  

31,832

   

28,942

 

   Inventories

        

     Crude oil, products and merchandise

  

10,883

   

8,979

 

     Materials and supplies

  

2,136

   

1,735

 

   Prepaid taxes and expenses

  

4,179

   

3,273

 

     Total current assets

  

85,247

   

75,777

 

Property, plant and equipment - net

  

119,102

   

113,687

 

Investments and other assets

  

32,312

   

29,551

 
         

     TOTAL ASSETS

 

$

236,661

  

$

219,015

 
         

LIABILITIES

        

Current liabilities

        

   Notes and loans payable

 

$

2,095

  

$

1,702

 

   Accounts payable and accrued liabilities

  

43,525

   

39,082

 

   Income taxes payable

  

10,300

   

8,033

 

     Total current liabilities

  

55,920

   

48,817

 

Long-term debt

  

6,896

   

6,645

 

Deferred income tax liabilities

  

22,329

   

20,851

 

Other long-term liabilities

  

32,913

   

28,858

 
         

     TOTAL LIABILITIES

  

118,058

   

105,171

 
         

Commitments and contingencies (note 3)

        
         

SHAREHOLDERS' EQUITY

        

Common stock, without par value:

        

   Authorized:  

9,000 million shares

        

   Issued:      

8,019 million shares

  

4,988

   

4,786

 

Earnings reinvested

  

218,761

   

195,207

 

Accumulated other comprehensive income

        

   Cumulative foreign exchange translation adjustment

  

7,433

   

3,733

 

   Postretirement benefits reserves adjustment

  

(6,584

)

  

(6,495

)

Common stock held in treasury:

        

       2,556 million shares at September 30, 2007

  

(105,995

)

    

       2,290 million shares at December 31, 2006

      

(83,387

)

         

     TOTAL SHAREHOLDERS' EQUITY

  

118,603

   

113,844

 
         

     TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 

$

236,661

  

$

219,015

 
         

The number of shares of common stock issued and outstanding at September 30, 2007 and

December 31, 2006 were 5,463,625,615 and 5,728,702,212, respectively.

 
 

The information in the Notes to Condensed Consolidated Financial Statements

is an integral part of these statements.


-4-




EXXON MOBIL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(millions of dollars)




  

Nine Months Ended

 
  

September 30,

 
   

2007

   

2006

 

CASH FLOWS FROM OPERATING ACTIVITIES

        

   Net income

 

$

28,950

  

$

29,250

 

   Depreciation and depletion

  

9,095

   

8,134

 

   Changes in operational working capital, excluding cash and debt

  

1,283

   

3,836

 

   All other items - net

  

1,339

   

(796

)

         

    Net cash provided by operating activities

  

40,667

   

40,424

 
         

CASH FLOWS FROM INVESTING ACTIVITIES

        

   Additions to property, plant and equipment

  

(10,827

)

  

(11,301

)

   Sales of subsidiaries, investments, and property, plant and equipment

  

2,422

   

2,328

 

   Other investing activities - net

  

(1,660

)

  

(1,791

)

         

    Net cash used in investing activities

  

(10,065

)

  

(10,764

)

         

CASH FLOWS FROM FINANCING ACTIVITIES

        

   Additions to long-term debt

  

104

   

123

 

   Reductions in long-term debt

  

(111

)

  

(31

)

   Additions/(reductions) in short-term debt - net

  

186

   

245

 

   Cash dividends to ExxonMobil shareholders

  

(5,718

)

  

(5,775

)

   Cash dividends to minority interests

  

(252

)

  

(207

)

   Changes in minority interests and sales/(purchases)

        

      of affiliate stock

  

(510

)

  

(380

)

   Tax benefits related to stock-based awards

  

356

   

270

 

   Common stock acquired

  

(23,884

)

  

(21,208

)

   Common stock sold

  

891

   

829

 
         

    Net cash used in financing activities

  

(28,938

)

  

(26,134

)

         

Effects of exchange rate changes on cash

  

1,515

   

537

 
         

Increase/(decrease) in cash and cash equivalents

  

3,179

   

4,063

 

Cash and cash equivalents at beginning of period

  

28,244

   

28,671

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

31,423

  

$

32,734

 
         

SUPPLEMENTAL DISCLOSURES

        

   Income taxes paid

 

$

17,947

  

$

18,637

 

   Cash interest paid

 

$

376

  

$

1,099

 
  
  
 

The information in the Notes to Condensed Consolidated Financial Statements

 

is an integral part of these statements.



-5-



EXXON MOBIL CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


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 2006 Annual Report on Form 10-K.  In the opinion of the Corporation, the information furnished herein reflects all known accruals and adjustments necessary for a fair statement of the results for the periods reported herein.  All such adjustments are of a normal recurring nature.  The Corporation's exploration and production activities are accounted for under the "successful efforts" method.



2.

Accounting Change for Uncertainty in Income Taxes


Effective January 1, 2007, the Corporation adopted the Financial Accounting Standards Board’s (FASB) Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes".  FIN 48 is an interpretation of FASB Statement No. 109, "Accounting for Income Taxes", and prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in the financial statements uncertain tax positions that the Corporation has taken or expects to take in its income tax returns.  Upon the adoption of FIN 48, the Corporation recognized a transition gain of $267 million in shareholders’ equity.  The gain reflected the recognition of several refund claims, partly offset by increased liability reserves.


The Corporation is subject to income taxation in many jurisdictions around the world.  The total amount of unrecognized income tax benefits in these jurisdictions at January 1, 2007, was $3.7 billion, almost all of which is classified as long term.  Resolution of the related tax positions through negotiations with the relevant tax authorities or through litigation will take many years to complete.  Accordingly, it is difficult to predict the timing of resolution for individual tax positions.  However, the Corporation does not anticipate that the total amount of unrecognized tax benefits will significantly increase or decrease in the next 12 months.  Given the long time periods involved in resolving individual tax positions, the Corporation does not expect that the recognition of unrecognized tax benefits will have a material impact on the Corporation’s effective income tax rate in any given year.


The unrecognized tax benefits described above will not be included in the Corporation's annual Form 10-K contractual obligations table because the Corporation is unable to make reasonably reliable estimates of the timing of cash settlements with the respective taxing authorities.  The total amount of unrecognized tax benefits will be disclosed in a footnote to the contractual obligations table.


The following table summarizes the tax years that remain subject to examination by major tax jurisdiction:


 

Country of Operation

Open Tax Years

   
 

Abu Dhabi

2000-2006

 

Angola

2002-2006

 

Australia

2000-2006

 

Canada

1990-2006

 

Equatorial Guinea

2004-2006

 

Germany

1998-2006

 

Japan

2002-2006

 

Malaysia

1983-2006

 

Nigeria

1998-2006

 

Norway

1993-2006

 

United Kingdom

2002-2006

 

United States

1989-2006


The Corporation classifies interest on income tax related balances as interest expense or interest income and classifies tax related penalties as operating expense.  


At January 1, 2007, the Corporation had accrued interest payable of $0.5 billion related to income tax reserve balances.



-6-



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 and tax disputes. Management has regular litigation and tax 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. 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 materially adverse effect upon the Corporation’s operations or financial condition.


A number of lawsuits, including class actions, were brought in various courts against Exxon Mobil Corporation and certain of its subsidiaries relating to the accidental release of crude oil from the tanker Exxon Valdez in 1989. All the compensatory claims have been resolved and paid. All of the punitive damage claims were consolidated in the civil trial that began in 1994. The first judgment from the United States District Court for the District of Alaska in the amount of $5 billion was vacated by the United States Court of Appeals for the Ninth Circuit as being excessive under the Constitution. The second judgment in the amount of $4 billion was vacated by the Ninth Circuit panel without argument and sent back for the District Court to reconsider in light of the recent U.S. Supreme Court decision in Campbell v. State Farm. The most recent District Court judgment for punitive damages was for $4.5 billion plus interest and was entered in January 2004. The Corporation posted a $5.4 billion letter of credit. ExxonMobil and the plaintiffs appealed this decision to the Ninth Circuit, which ruled on December 22, 2006, that the award be reduced to $2.5 billion. On January 12, 2007, ExxonMobil petitioned the Ninth Circuit Court of Appeals for a rehearing en banc of its appeal. On May 23, 2007, with two dissenting opinions, the Ninth Circuit determined not to re-hear ExxonMobil's appeal before the full court. ExxonMobil filed a petition for writ of certiorari to the U.S. Supreme Court on August 20, 2007. On October 29, 2007, the U.S. Supreme Court granted ExxonMobil's petition for a writ of certiorari. While it is reasonably possible that a liability for punitive damages may have been incurred from the Exxon Valdez grounding, it is not possible to predict the ultimate outcome or to reasonably estimate any such potential liability.


In December 2000, a jury in the 15th Judicial Circuit Court of Montgomery County, Alabama, returned a verdict against the Corporation in a dispute over royalties in the amount of $88 million in compensatory damages and $3.4 billion in punitive damages in the case of Exxon Corporation v. State of Alabama, et al. The verdict was upheld by the trial court in May 2001. In December 2002, the Alabama Supreme Court vacated the $3.5 billion jury verdict. The case was retried and in November 2003, a state district court jury in Montgomery, Alabama, returned a verdict against Exxon Mobil Corporation. The verdict included $63.5 million in compensatory damages and $11.8 billion in punitive damages. In March 2004, the district court judge reduced the amount of punitive damages to $3.5 billion. ExxonMobil appealed the decision to the Alabama Supreme Court.  On November 1, 2007, the Alabama Supreme Court reversed the trial court's fraud judgment and instructed the district court to enter judgment for ExxonMobil, eliminating the punitive damage award.  The Court also ruled in ExxonMobil's favor on some of the disputed lease issues, reducing the compensatory award to $52 million.  In May 2004, the Corporation posted a $4.5 billion supersedeas bond as required by Alabama law to stay execution of the judgment pending appeal. The Corporation pledged to the issuer of the bond collateral consisting of cash and short-term, high-quality securities with an aggregate value of approximately $4.6 billion. This collateral is reported as restricted cash and cash equivalents on the Condensed Consolidated Balance Sheet. Under the terms of the pledge agreement, the Corporation is entitled to receive the income generated from the cash and securities and to make investment decisions, but is restricted from using the pledged cash and securities for any other purpose until such time the bond is canceled. The Company will pursue the cancellation of the bond and the release of the pledged collateral.



-7-


In 2001, a Louisiana state court jury awarded compensatory damages of $56 million and punitive damages of $1 billion to a landowner for damage caused by a third party that leased the property from the landowner. The third party provided pipe cleaning and storage services for the Corporation and other entities. The Louisiana Fourth Circuit Court of Appeals reduced the punitive damage award to $112 million in 2005. The Corporation appealed this decision to the Louisiana Supreme Court which, in March 2006, refused to hear the appeal. ExxonMobil has fully accrued and paid the compensatory and punitive damage awards. The Corporation appealed the punitive damage award to the U.S. Supreme Court, which on February 26, 2007, vacated the judgment and remanded the case to the Louisiana Fourth Circuit Court of Appeals for reconsideration in light of the recent U.S. Supreme Court decision in Williams v. Phillip Morris USA. On August 8, 2007, the Fourth Circuit issued its decision on remand and declined to reduce the punitive damage award. ExxonMobil is seeking further review in the Louisiana Supreme Court.


Tax issues for 1989 to 1993 remain pending before the U.S. Tax Court. The ultimate resolution of these issues is not expected to have a materially adverse effect upon the Corporation’s operations or financial condition.


Other Contingencies


 

As of September 30, 2007

 

       Equity

  

       Other

   
 

    Company

  

   Third Party

   
 

 Obligations

  

  Obligations

 

   Total

 
 

(millions of dollars)

Total guarantees

 

$

   3,796

 

  $

  697

 

 $

   4,493

 


The Corporation and certain of its consolidated subsidiaries were contingently liable at September 30, 2007, for $4,493 million, primarily relating to guarantees for notes, loans and performance under contracts. Included in this amount were guarantees by consolidated affiliates of $3,796 million, representing ExxonMobil’s share of obligations of certain equity companies. 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.


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. The Corporation's outstanding unconditional purchase obligations at September 30, 2007, were similar to those at the prior year-end period. Unconditional purchase obligations as defined by accounting standards are those long-term commitments that are noncancelable or cancelable only under certain conditions, and that third parties have used to secure financing for the facilities that will provide the contracted goods or services.


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 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.


In accordance with a nationalization decree issued by Venezuela's President Chavez in February of this year, by May 1, 2007, a subsidiary of the Venezuelan National Oil Company (PdVSA) assumed the operatorship of the Cerro Negro Heavy Oil Project. This Project had been operated and owned by ExxonMobil affiliates (ExxonMobil) holding a 41.67 percent ownership interest in the Project. The decree also required conversion of the Cerro Negro Project into a "mixed enterprise" structure and an increase in PdVSA's or one of its affiliate's ownership interest in the Project, with the stipulation that if an agreement was not reached for the formation of the mixed enterprise during a specified period of time, the government would "directly take on the activities" carried out by the joint venture. ExxonMobil and Venezuela were not able to reach agreement on the formation of a mixed enterprise and on June 27, 2007, the government expropriated ExxonMobil's 41.67 percent interest in the Cerro Negro Project.  


Subsequent discussions with Venezuelan authorities have not resulted in an agreement on the amount of compensation to be paid to ExxonMobil. On September 6, 2007, ExxonMobil filed a Request for Arbitration with the International Centre for Settlement of Investment Disputes. At this time the net impact of this matter on the Corporation's consolidated financial results cannot be reasonably estimated.  However, the Corporation does not expect the resolution to have a material effect upon the Corporation's operations or financial condition.  At the time the assets were expropriated, ExxonMobil's remaining net book investment in Cerro Negro producing assets was about $750 million.



-8-



4.

Comprehensive Income



 

Three Months Ended

 

Nine Months Ended

 
 

September 30,

 

September 30,

 
  

2007

  

2006

  

2007

  

2006

 
 

(millions of dollars)

 
             

Net income

$

9,410

 

$

10,490

 

$

28,950

 

$

29,250

 

Other comprehensive income

            

 (net of income taxes)

            

Foreign exchange translation adjustment

 

2,052

  

43

  

3,700

  

1,933

 

Postretirement benefits reserves adjustment

            

 (excluding amortization)

 

(119

)

 

0

  

(694

)

 

0

 

Amortization of postretirement benefits reserves

            

 adjustment included in net periodic benefit costs

 

190

  

0

  

605

  

0

 

Minimum pension liability adjustment

            

 (before December 31, 2006, adoption of FAS 158)

 

0

  

(8

)

 

0

  

(106

)

Total comprehensive income

$

11,533

 

$

10,525

 

$

32,561

 

$

31,077

 



5.

Earnings Per Share



 

Three Months Ended

 

Nine Months Ended

 
 

September 30,

 

September 30,

 
  

2007

  

2006

  

2007

  

2006

 
             

NET INCOME PER COMMON SHARE

            

Net income (millions of dollars)

$

9,410

 

$

10,490

 

$

28,950

 

$

29,250

 

 

            

Weighted average number of common shares

            

  outstanding (millions of shares)

 

5,470

  

5,861

  

5,559

  

5,967

 
             

Net income per common share (dollars)

$

1.72

 

$

1.79

 

$

5.21

 

$

4.91

 
             

NET INCOME PER COMMON SHARE

            

 - ASSUMING DILUTION

            

Net income (millions of dollars)

$

9,410

 

$

10,490

 

$

28,950

 

$

29,250

 
             

Weighted average number of common shares

            

  outstanding (millions of shares)

 

5,470

  

5,861

  

5,559

  

5,967

 

    Effect of employee stock-based awards

 

66

  

61

  

61

  

55

 

Weighted average number of common shares

            

  outstanding - assuming dilution

 

5,536

  

5,922

  

5,620

  

6,022

 
             

Net income per common share

            

   - assuming dilution (dollars)

$

1.70

 

$

1.77

 

$

5.15

 

$

4.86

 




-9-



6.

Pension and Other Postretirement Benefits



 

Three Months Ended

 

Nine Months Ended

 
 

September 30,

 

September 30,

 
  

2007

  

2006

  

2007

  

2006

 
 

(millions of dollars)

 

Pension Benefits - U.S.

            

   Components of net benefit cost

            

      Service cost

$

89

 

$

85

 

$

279

 

$

253

 

      Interest cost

 

172

  

159

  

516

  

476

 

      Expected return on plan assets

 

(212

)

 

(157

)

 

(634

)

 

(469

)

      Amortization of actuarial loss/(gain)

            

        and prior service cost

 

67

  

69

  

201

  

205

 

      Net pension enhancement and

            

        curtailment/settlement cost

 

48

  

39

  

143

  

118

 

      Net benefit cost

$

164

 

$

195

 

$

505

 

$

583

 
             
             

Pension Benefits - Non-U.S.

            

   Components of net benefit cost

            

      Service cost

$

109

 

$

109

 

$

330

 

$

319

 

      Interest cost

 

261

  

225

  

745

  

661

 

      Expected return on plan assets

 

(283

)

 

(247

)

 

(816

)

 

(729

)

      Amortization of actuarial loss/(gain)

            

        and prior service cost

 

108

  

131

  

331

  

384

 

      Net pension enhancement and

            

        curtailment/settlement cost

 

(13

)

 

10

  

(4

)

 

12

 

      Net benefit cost

$

182

 

$

228

 

$

586

 

$

647

 
             
             

Other Postretirement Benefits

            

   Components of net benefit cost

            

      Service cost

$

26

 

$

19

 

$

83

 

$

56

 

      Interest cost

 

99

  

79

  

309

  

231

 

      Expected return on plan assets

 

(11

)

 

(10

)

 

(34

)

 

(30

)

      Amortization of actuarial loss/(gain)

            

        and prior service cost

 

86

  

57

  

244

  

163

 

      Net benefit cost

$

200

 

$

145

 

$

602

 

$

420

 









-10-



7.

Disclosures about Segments and Related Information



 

Three Months Ended

 

Nine Months Ended

 
 

September 30,

 

September 30,

 
  

2007

  

2006

  

2007

  

2006

 
 

(millions of dollars)

 

EARNINGS AFTER INCOME TAX

            

  Upstream

            

    United States

$

1,196

 

$

1,192

 

$

3,595

 

$

4,116

 

    Non-U.S.

 

5,103

  

5,301

  

14,698

  

15,894

 

  Downstream

            

    United States

 

914

  

1,272

  

3,498

  

3,305

 

    Non-U.S.

 

1,087

  

1,466

  

3,808

  

3,189

 

  Chemical

            

    United States

 

296

  

458

  

846

  

976

 

    Non-U.S.

 

906

  

893

  

2,605

  

2,164

 

  All other

 

(92

)

 

(92

)

 

(100

)

 

(394

)

  Corporate total

$

9,410

 

$

10,490

 

$

28,950

 

$

29,250

 
             

SALES AND OTHER OPERATING REVENUE (1)

          

  Upstream

            

     United States

$

1,311

 

$

1,514

 

$

4,109

 

$

4,691

 

     Non-U.S.

 

5,136

  

6,059

  

15,932

  

21,860

 

  Downstream

            

     United States

 

26,243

  

25,068

  

73,148

  

71,852

 

     Non-U.S.

 

57,233

  

54,602

  

158,346

  

154,583

 

  Chemical

            

     United States

 

3,453

  

3,565

  

10,102

  

10,050

 

     Non-U.S.

 

5,743

  

5,454

  

16,707

  

15,559

 

  All other

 

11

  

6

  

19

  

14

 

  Corporate total

$

99,130

 

$

96,268

 

$

278,363

 

$

278,609

 
             

(1) Includes sales-based taxes

            
           

INTERSEGMENT REVENUE

            

  Upstream

            

     United States

$

1,868

 

$

1,675

 

$

5,211

 

$

5,614

 

     Non-U.S.

 

12,181

  

11,588

  

34,446

  

30,812

 

  Downstream

            

     United States

 

3,819

  

3,619

  

10,162

  

9,695

 

     Non-U.S.

 

13,225

  

12,955

  

37,051

  

36,287

 

  Chemical

            

     United States

 

2,462

  

2,067

  

6,376

  

5,990

 

     Non-U.S.

 

2,030

  

1,874

  

5,718

  

5,272

 

  All other

 

70

  

65

  

239

  

197

 





8.

Accounting for Suspended Exploratory Well Costs


For the category of exploratory well costs at year-end 2006 that were suspended more than one year, a total of $46 million was expensed in the first nine months of 2007.





-11-



9.

Condensed Consolidating Financial Information Related to Guaranteed Securities Issued by Subsidiaries


Exxon Mobil Corporation has fully and unconditionally guaranteed the deferred interest debentures due 2012 ($1,683 million long-term at September 30, 2007) and the debt securities due 2007-2011 ($52 million long-term and $13 million short-term) of SeaRiver Maritime Financial Holdings, Inc., a 100 percent owned subsidiary of Exxon Mobil Corporation.


The following condensed consolidating financial information is provided for Exxon Mobil Corporation, as guarantor, and for SeaRiver Maritime Financial Holdings, Inc., as issuer, as an alternative to providing separate financial statements for the issuer.  The accounts of Exxon Mobil Corporation and SeaRiver Maritime Financial Holdings, Inc. are presented utilizing the equity method of accounting for investments in subsidiaries.



   

SeaRiver

       
 

Exxon Mobil

 

Maritime

   

Consolidating

   
 

Corporation

 

Financial

   

and

   
 

Parent

 

Holdings,

 

All Other

 

Eliminating

   
 

Guarantor

 

Inc.

 

Subsidiaries

 

Adjustments

 

Consolidated

 
 

(millions of dollars)

 
 

Condensed consolidated statement of income for three months ended September 30, 2007

Revenues and other income

               

Sales and other operating revenue,

               

including sales-based taxes

$

4,064

 

$

-

 

$

95,066

 

$

-

 

$

99,130

 

Income from equity affiliates

 

9,588

  

(2

)

 

2,148

  

(9,576

)

 

2,158

 

Other income

 

75

  

-

  

974

  

-

  

1,049

 

Intercompany revenue

 

10,424

  

27

  

92,089

  

(102,540

)

 

-

 

Total revenues and other income

 

24,151

  

25

  

190,277

  

(112,116

)

 

102,337

 

Costs and other deductions

               

Crude oil and product purchases

 

10,088

  

-

  

138,100

  

(96,215

)

 

51,973

 

Production and manufacturing

               

expenses

 

1,758

  

-

  

7,476

  

(1,350

)

 

7,884

 

Selling, general and administrative

               

 

expenses

 

629

  

-

  

3,201

  

(174

)

 

3,656

 

Depreciation and depletion

 

455

  

-

  

2,704

  

-

  

3,159

 

Exploration expenses, including dry

               

holes

 

73

  

-

  

276

  

-

  

349

 

Interest expense

 

1,550

  

50

  

3,492

  

(5,019

)

 

73

 

Sales-based taxes

 

-

  

-

  

7,970

  

-

  

7,970

 

Other taxes and duties

 

11

  

-

  

10,218

  

-

  

10,229

 

Income applicable to minority interests

 

-

  

-

  

284

  

-

  

284

 

Total costs and other deductions

 

14,564

  

50

  

173,721

  

(102,758

)

 

85,577

 

Income before income taxes

 

9,587

  

(25

)

 

16,556

  

(9,358

)

 

16,760

 

Income taxes

 

177

  

(9

)

 

7,182

  

-

  

7,350

 

Net income

$

9,410

 

$

(16

)

$

9,374

 

$

(9,358

)

$

9,410

 



-12-



   

SeaRiver

       
 

Exxon Mobil

 

Maritime

   

Consolidating

   
 

Corporation

 

Financial

   

and

   
 

Parent

 

Holdings,

 

All Other

 

Eliminating

   
 

Guarantor

 

Inc.

 

Subsidiaries

 

Adjustments

 

Consolidated

 
 

(millions of dollars)

 
 

Condensed consolidated statement of income for three months ended September 30, 2006

Revenues and other income

               

Sales and other operating revenue,

               

including sales-based taxes

$

4,286

 

$

-

 

$

91,982

 

$

-

 

$

96,268

 

Income from equity affiliates

 

10,302

  

(5

)

 

1,774

  

(10,293

)

 

1,778

 

Other income

 

314

  

-

  

1,233

  

-

  

1,547

 

Intercompany revenue

 

10,558

  

26

  

89,101

  

(99,685

)

 

-

 

Total revenues and other income

 

25,460

  

21

  

184,090

  

(109,978

)

 

99,593

 

Costs and other deductions

               

Crude oil and product purchases

 

10,187

  

-

  

132,976

  

(93,799

)

 

49,364

 

Production and manufacturing

               

expenses

 

1,799

  

-

  

6,464

  

(1,206

)

 

7,057

 

Selling, general and administrative

               

 

expenses

 

584

  

-

  

2,987

  

(159

)

 

3,412

 

Depreciation and depletion

 

374

  

-

  

2,356

  

-

  

2,730

 

Exploration expenses, including dry

               

holes

 

60

  

-

  

292

  

-

  

352

 

Interest expense

 

1,327

  

46

  

3,439

  

(4,531

)

 

281

 

Sales-based taxes

 

-

  

-

  

7,764

  

-

  

7,764

 

Other taxes and duties

 

10

  

-

  

10,153

  

-

  

10,163

 

Income applicable to minority interests

 

-

  

-

  

292

  

-

  

292

 

Total costs and other deductions

 

14,341

  

46

  

166,723

  

(99,695

)

 

81,415

 

Income before income taxes

 

11,119

  

(25

)

 

17,367

  

(10,283

)

 

18,178

 

Income taxes

 

629

  

(7

)

 

7,066

  

-

  

7,688

 

Net income

$

10,490

 

$

(18

)

$

10,301

 

$

(10,283

)

$

10,490

 



Condensed consolidated statement of income for nine months ended September 30, 2007

Revenues and other income

               

Sales and other operating revenue,

               

including sales-based taxes

$

12,063

 

$

-

 

$

266,300

 

$

-

 

$

278,363

 

Income from equity affiliates

 

28,906

  

4

  

6,051

  

(28,873

)

 

6,088

 

Other income

 

357

  

-

  

3,102

  

-

  

3,459

 

Intercompany revenue

 

28,172

  

78

  

255,917

  

(284,167

)

 

-

 

Total revenues and other income

 

69,498

  

82

  

531,370

  

(313,040

)

 

287,910

 

Costs and other deductions

               

Crude oil and product purchases

 

26,587

  

-

  

378,106

  

(265,051

)

 

139,642

 

Production and manufacturing

               

expenses

 

5,305

  

-

  

21,423

  

(3,883

)

 

22,845

 

Selling, general and administrative

               

 

expenses

 

1,901

  

-

  

9,498

  

(563

)

 

10,836

 

Depreciation and depletion

 

1,240

  

-

  

7,855

  

-

  

9,095

 

Exploration expenses, including dry

               

holes

 

215

  

-

  

759

  

-

  

974

 

Interest expense

 

4,566

  

151

  

10,824

  

(15,269

)

 

272

 

Sales-based taxes

 

-

  

-

  

23,064

  

-

  

23,064

 

Other taxes and duties

 

35

  

-

  

29,673

  

-

  

29,708

 

Income applicable to minority interests

 

-

  

-

  

722

  

-

  

722

 

Total costs and other deductions

 

39,849

  

151

  

481,924

  

(284,766

)

 

237,158

 

Income before income taxes

 

29,649

  

(69

)

 

49,446

  

(28,274

)

 

50,752

 

Income taxes

 

699

  

(26

)

 

21,129

  

-

  

21,802

 

Net income

$

28,950

 

$

(43

)

$

28,317

 

$

(28,274

)

$

28,950

 



-13-




   

SeaRiver

       
 

Exxon Mobil

 

Maritime

   

Consolidating

   
 

Corporation

 

Financial

   

and

   
 

Parent

 

Holdings,

 

All Other

 

Eliminating

   
 

Guarantor

 

Inc.

 

Subsidiaries

 

Adjustments

 

Consolidated

 
 

(millions of dollars)

 
 

Condensed consolidated statement of income for nine months ended September 30, 2006

Revenues and other income

               

Sales and other operating revenue,

               

including sales-based taxes

$

12,436

 

$

-

 

$

266,173

 

$

-

 

$

278,609

 

Income from equity affiliates

 

28,646

  

7

  

5,256

  

(28,644

)

 

5,265

 

Other income

 

722

  

-

  

3,011

  

-

  

3,733

 

Intercompany revenue

 

30,374

  

69

  

251,345

  

(281,788

)

 

-

 

Total revenues and other income

 

72,178

  

76

  

525,785

  

(310,432

)

 

287,607

 

Costs and other deductions

               

Crude oil and product purchases

 

28,914

  

-

  

377,212

  

(265,761

)

 

140,365

 

Production and manufacturing

               

expenses

 

5,588

  

-

  

20,031

  

(3,722

)

 

21,897

 

Selling, general and administrative

               

 

expenses

 

1,939

  

-

  

8,946

  

(450

)

 

10,435

 

Depreciation and depletion

 

1,027

  

-

  

7,107

  

-

  

8,134

 

Exploration expenses, including dry

               

holes

 

215

  

-

  

595

  

-

  

810

 

Interest expense

 

3,403

  

137

  

8,884

  

(11,871

)

 

553

 

Sales-based taxes

 

-

  

-

  

23,639

  

-

  

23,639

 

Other taxes and duties

 

26

  

-

  

29,180

  

-

  

29,206

 

Income applicable to minority interests

 

-

  

-

  

727

  

-

  

727

 

Total costs and other deductions

 

41,112

  

137

  

476,321

  

(281,804

)

 

235,766

 

Income before income taxes

 

31,066

  

(61

)

 

49,464

  

(28,628

)

 

51,841

 

Income taxes

 

1,816

  

(24

)

 

20,799

  

-

  

22,591

 

Net income

$

29,250

 

$

(37

)

$

28,665

 

$

(28,628

)

$

29,250

 



-14-



   

SeaRiver

       
 

Exxon Mobil

 

Maritime

   

Consolidating

   
 

Corporation

 

Financial

   

and

   
 

Parent

 

Holdings,

 

All Other

 

Eliminating

   
 

Guarantor

 

Inc.

 

Subsidiaries

 

Adjustments

 

Consolidated

 
 

(millions of dollars)

 
  

Condensed consolidated balance sheet as of September 30, 2007

 

Cash and cash equivalents

$

3,055

 

$

-

 

$

28,368

 

$

-

 

$

31,423

 

Cash and cash equivalents - restricted

 

-

  

-

  

4,604

  

-

  

4,604

 

Notes and accounts receivable - net

 

5,585

  

10

  

29,844

  

(3,607

)

 

31,832

 

Inventories

 

1,352

  

-

  

11,667

  

-

  

13,019

 

Prepaid taxes and expenses

 

471

  

-

  

3,898

  

-

  

4,369

 

      Total current assets

 

10,463

  

10

  

78,381

  

(3,607

)

 

85,247

 

Property, plant and equipment - net

 

16,262

  

-

  

102,840

  

-

  

119,102

 

Investments and other assets

 

216,886

  

427

  

433,474

  

(618,475

)

 

32,312

 

Intercompany receivables

 

11,258

  

1,938

  

439,850

  

(453,046

)

 

-

 

      Total assets

$

254,869

 

$

2,375

 

$

1,054,545

 

$

(1,075,128

)

$

236,661

 
                

Notes and loan payables

$

261

 

$

13

 

$

1,821

 

$

-

 

$

2,095

 

Accounts payable and accrued liabilities

 

2,955

  

1

  

40,569

  

-

  

43,525

 

Income taxes payable

 

-

  

-

  

13,907

  

(3,607

)

 

10,300

 

      Total current liabilities

 

3,216

  

14

  

56,297

  

(3,607

)

 

55,920

 

Long-term debt

 

276

  

1,735

  

4,885

  

-

  

6,896

 

Deferred income tax liabilities

 

1,636

  

222

  

20,471

  

-

  

22,329

 

Other long-term liabilities

 

11,954

  

-

  

20,959

  

-

  

32,913

 

Intercompany payables

 

119,184

  

383

  

333,479

  

(453,046

)

 

-

 

      Total liabilities

 

136,266

  

2,354

  

436,091

  

(456,653

)

 

118,058

 
                

Earnings reinvested

 

218,761

  

(447

)

 

152,343

  

(151,896

)

 

218,761

 

Other shareholders' equity

 

(100,158

)

 

468

  

466,111

  

(466,579

)

 

(100,158

)

      Total shareholders' equity

 

118,603

  

21

  

618,454

  

(618,475

)

 

118,603

 

      Total liabilities and

               

        shareholders' equity

$

254,869

 

$

2,375

 

$

1,054,545

 

$

(1,075,128

)

$

236,661

 


Condensed consolidated balance sheet as of December 31, 2006

 

Cash and cash equivalents

$

6,355

 

$

-

 

$

21,889

 

$

-

 

$

28,244

 

Cash and cash equivalents - restricted

 

-

  

-

  

4,604

  

-

  

4,604

 

Notes and accounts receivable - net

 

2,057

  

-

  

26,885

  

-

  

28,942

 

Inventories

 

1,213

  

-

  

9,501

  

-

  

10,714

 

Prepaid taxes and expenses

 

357

  

-

  

2,916

  

-

  

3,273

 

      Total current assets

 

9,982

  

-

  

65,795

  

-

  

75,777

 

Property, plant and equipment - net

 

16,730

  

-

  

96,957

  

-

  

113,687

 

Investments and other assets

 

201,257

  

423

  

415,910

  

(588,039

)

 

29,551

 

Intercompany receivables

 

16,501

  

1,883

  

435,221

  

(453,605

)

 

-

 

      Total assets

$

244,470

 

$

2,306

 

$

1,013,883

 

$

(1,041,644

)

$

219,015

 
                

Notes and loan payables

$

90

 

$

13

 

$

1,599

 

$

-

 

$

1,702

 

Accounts payable and accrued liabilities

 

3,025

  

1

  

36,056

  

-

  

39,082

 

Income taxes payable

 

548

  

1

  

7,484

  

-

  

8,033

 

      Total current liabilities

 

3,663

  

15

  

45,139

  

-

  

48,817

 

Long-term debt

 

274

  

1,602

  

4,769

  

-

  

6,645

 

Deferred income tax liabilities

 

1,975

  

237

  

18,639

  

-

  

20,851

 

Other long-term liabilities

 

8,044

  

-

  

20,814

  

-

  

28,858

 

Intercompany payables

 

116,670

  

387

  

336,548

  

(453,605

)

 

-

 

      Total liabilities

 

130,626

  

2,241

  

425,909

  

(453,605

)

 

105,171

 
                

Earnings reinvested

 

195,207

  

(404

)

 

144,607

  

(144,203

)

 

195,207

 

Other shareholders' equity

 

(81,363

)

 

469

  

443,367

  

(443,836

)

 

(81,363

)

      Total shareholders' equity

 

113,844

  

65

  

587,974

  

(588,039

)

 

113,844

 

      Total liabilities and

               

        shareholders' equity

$

244,470

 

$

2,306

 

$

1,013,883

 

$

(1,041,644

)

$

219,015

 



-15-



   

SeaRiver

       
 

Exxon Mobil

 

Maritime

   

Consolidating

   
 

Corporation

 

Financial

   

and

   
 

Parent

 

Holdings,

 

All Other

 

Eliminating

   
 

Guarantor

 

Inc.

 

Subsidiaries

 

Adjustments

 

Consolidated

 
 

(millions of dollars)

 
  

Condensed consolidated statement of cash flows for nine months ended September 30, 2007

 

Cash provided by/(used in) operating

               

activities

$

21,063

 

$

60

 

$

40,176

 

$

(20,632

)

$

40,667

 

Cash flows from investing activities

               

Additions to property, plant and

               

equipment

 

(912

)

 

-

  

(9,915

)

 

-

  

(10,827

)

Sales of long-term assets

 

187

  

-

  

2,235

  

-

  

2,422

 

Net intercompany investing

 

4,554

  

(56

)

 

(4,565

)

 

67

  

-

 

All other investing, net

 

-

  

-

  

(1,660

)

 

-

  

(1,660

)

Net cash provided by/(used in)

               

investing activities

 

3,829

  

(56

)

 

(13,905

)

 

67

  

(10,065

)

Cash flows from financing activities

               

Additions to long-term debt

 

-

  

-

  

104

  

-

  

104

 

Reductions in long-term debt

 

-

  

-

  

(111

)

 

-

  

(111

)

Additions/(reductions) in short-term

               

debt - net

 

163

  

-

  

23

  

-

  

186

 

Cash dividends

 

(5,718

)

 

-

  

(20,632

)

 

20,632

  

(5,718

)

Net ExxonMobil shares sold/(acquired)

 

(22,993

)

 

-

  

-

  

-

  

(22,993

)

Net intercompany financing activity

 

-

  

(4

)

 

71

  

(67

)

 

-

 

All other financing, net

 

356

  

-

  

(762

)

 

-

  

(406

)

Net cash provided by/(used in)

               

financing activities

 

(28,192

)

 

(4

)

 

(21,307

)

 

20,565

  

(28,938

)

Effects of exchange rate changes

               

on cash

 

-

  

-

  

1,515

  

-

  

1,515

 

Increase/(decrease) in cash and cash

               

equivalents

$

(3,300

)

$

-

 

$

6,479

 

$

-

 

$

3,179

 


Condensed consolidated statement of cash flows for nine months ended September 30, 2006

 

Cash provided by/(used in) operating

               

activities

$

1,122

 

$

74

 

$

40,556

 

$

(1,328

)

$

40,424

 

Cash flows from investing activities

               

Additions to property, plant and

               

equipment

 

(1,188

)

 

-

  

(10,113

)

 

-

  

(11,301

)

Sales of long-term assets

 

226

  

-

  

2,102

  

-

  

2,328

 

Net intercompany investing

 

20,711

  

(75

)

 

(20,745

)

 

109

  

-

 

All other investing, net

 

-

  

-

  

(1,791

)

 

-

  

(1,791

)

Net cash provided by/(used in)

               

investing activities

 

19,749

  

(75

)

 

(30,547

)

 

109

  

(10,764

)

Cash flows from financing activities

               

Additions to long-term debt

 

-

  

-

  

123

  

-

  

123

 

Reductions in long-term debt

 

-

  

-

  

(31

)

 

-

  

(31

)

Additions/(reductions) in short-term

               

debt - net

 

(151

)

 

-

  

396

  

-

  

245

 

Cash dividends

 

(5,775

)

 

-

  

(1,328

)

 

1,328

  

(5,775

)

Net ExxonMobil shares sold/(acquired)

 

(20,379

)

 

-

  

-

  

-

  

(20,379

)

Net intercompany financing activity

 

-

  

1

  

108

  

(109

)

 

-

 

All other financing, net

 

270

  

-

  

(587

)

 

-

  

(317

)

Net cash provided by/(used in)

               

financing activities

 

(26,035

)

 

1

  

(1,319

)

 

1,219

  

(26,134

)

Effects of exchange rate changes

               

on cash

 

-

  

-

  

537

  

-

  

537

 

Increase/(decrease) in cash and cash

               

equivalents

$

(5,164

)

$

-

 

$

9,227

 

$

-

 

$

4,063

 



-16-



EXXON MOBIL CORPORATION


Item 2.

Management's Discussion and Analysis of Financial Condition

and Results of Operations


FUNCTIONAL EARNINGS SUMMARY


 

Third Quarter

 

First Nine Months

 
  

2007

  

2006

  

2007

  

2006

 
  

(millions of dollars)

 

Net Income (U.S. GAAP)

            

Upstream

            

   United States

$

1,196

 

$

1,192

 

$

3,595

 

$

4,116

 

   Non-U.S.

 

5,103

  

5,301

  

14,698

  

15,894

 

Downstream

            

   United States

 

914

  

1,272

  

3,498

  

3,305

 

   Non-U.S.

 

1,087

  

1,466

  

3,808

  

3,189

 

Chemical

            

   United States

 

296

  

458

  

846

  

976

 

   Non-U.S.

 

906

  

893

  

2,605

  

2,164

 

Corporate and financing

 

(92

)

 

(92

)

 

(100

)

 

(394

)

Net Income (U.S. GAAP)

$

9,410

 

$

10,490

 

$

28,950

 

$

29,250

 
             
             

Net income per common share (dollars)

$

1.72

 

$

1.79

 

$

5.21

 

$

4.91

 

Net income per common share

            

   - assuming dilution (dollars)

$

1.70

 

$

1.77

 

$

5.15

 

$

4.86

 




REVIEW OF THIRD QUARTER AND FIRST NINE MONTHS 2007 RESULTS


Exxon Mobil Corporation reported third quarter 2007 net income of $9,410 million ($1.70 per share), down 10 percent from the third quarter of 2006, while earnings per share were down 4 percent for the same period.  The decrease reflected lower downstream and chemical margins partly offset by higher crude oil realizations.  Excluding the impact of entitlements, divestments, OPEC quota effects and Venezuela, production on an oil-equivalent basis increased by 3 percent.



__________________________________________________________


Net income of $28,950 million for the first nine months of 2007 was $300 million lower than the record first nine months of 2006.  Earnings per share of $5.15 reflected strong earnings and increased by 6 percent due to the reduction in the number of shares outstanding.  Excluding the impact of entitlements, divestments, OPEC quota effects and Venezuela, liquids production increased by 5 percent.




 

Third Quarter

 

First Nine Months

 
 

 2007

 

 2006

 

 2007

 

 2006

 
 

(millions of dollars)

 

Upstream earnings

            

   United States

$

1,196

 

$

1,192

 

$

3,595

 

$

4,116

 

   Non-U.S.

 

5,103

  

5,301

  

14,698

  

15,894

 

Total

$

6,299

 

$

6,493

 

$

18,293

 

$

20,010

 


Upstream earnings in the third quarter of 2007 were $6,299 million, down $194 million from the third quarter of 2006 primarily reflecting lower natural gas realizations and higher operating expenses, mostly offset by higher crude oil realizations.  On an oil-equivalent basis, production decreased by 2 percent from the third quarter of 2006.  Excluding the impact of entitlements, divestments, OPEC quota effects and Venezuela, production was up 3 percent.


-17-



Liquids production of 2,536 kbd (thousands of barrels per day) was 111 kbd lower.  Mature field decline and reduced entitlements were partly offset by increased production from projects in Africa and Russia.  Excluding the impact of entitlements, divestments, OPEC quota effects and Venezuela, liquids production was up 3 percent.


Third quarter natural gas production was 8,302 mcfd (millions of cubic feet per day), up 163 mcfd from 2006.   Increased volume from projects in Qatar was partly offset by the impact of mature field decline.  Excluding entitlement and divestment effects, natural gas production increased by 3 percent.


Earnings from U.S. Upstream operations were $1,196 million, $4 million higher than the third quarter of 2006.  Non-U.S. Upstream earnings were $5,103 million, down $198 million from 2006.


__________________________________________________________


Upstream earnings for the first nine months of 2007 were $18,293 million, a decrease of $1,717 million from 2006 due to lower natural gas realizations and higher operating expenses, partly offset by higher crude oil realizations and favorable sales mix effects.  On an oil-equivalent basis, production decreased 2 percent from last year.  Excluding the impact of entitlements, divestments, OPEC quota effects and Venezuela, production was up nearly 3 percent.


Liquids production of 2,649 kbd decreased by 33 kbd from 2006.  Higher production from projects in Africa and Russia was offset by mature field decline and reduced entitlements.  Excluding the impact of entitlements, divestments, OPEC quota effects and Venezuela, liquids production increased 5 percent.


Natural gas production of 9,043 mcfd decreased 302 mcfd from 2006.  Lower volume from mature field decline was partly offset by projects in Qatar, Europe, Canada and Malaysia.    


Earnings from U.S. Upstream operations for 2007 were $3,595 million, a decrease of $521 million.  Earnings outside the U.S. were $14,698 million, $1,196 million lower than 2006.





 

Third Quarter

 

First Nine Months

 
 

 2007

 

 2006

 

 2007

 

 2006

 
 

(millions of dollars)

 

Downstream earnings

            

   United States

$

914

 

$

1,272

 

$

3,498

 

$

3,305

 

   Non-U.S.

 

1,087

  

1,466

  

3,808

  

3,189

 

Total

$

2,001

 

$

2,738

 

$

7,306

 

$

6,494

 


Downstream earnings in the third quarter of 2007 were $2,001 million, down $737 million from the third quarter of 2006, driven by lower refining and fuels marketing margins.  Petroleum product sales were 7,101 kbd, 201 kbd lower than last year's third quarter.


U.S. Downstream earnings were $914 million, down $358 million from the third quarter of 2006.  Non-U.S. Downstream earnings of $1,087 million were $379 million lower.


__________________________________________________________


Downstream earnings for the first nine months of 2007 were a record $7,306 million, an increase of $812 million from 2006 reflecting stronger marketing margins, refinery optimization activities and the sale of the Ingolstadt refinery, partly offset by lower refining margins.  Petroleum product sales of 7,090 kbd decreased from 7,180 kbd in 2006.


U.S. Downstream earnings were $3,498 million, up $193 million.  Non-U.S. Downstream earnings were $3,808 million, $619 million higher than last year.



-18-



 

Third Quarter

 

First Nine Months

 
 

 2007

 

 2006

 

 2007

 

 2006

 
 

(millions of dollars)

 

Chemical earnings

            

   United States

$

296

 

$

458

 

$

846

 

$

976

 

   Non-U.S.

 

906

  

893

  

2,605

  

2,164

 

Total

$

1,202

 

$

1,351

 

$

3,451

 

$

3,140

 


Chemical earnings in the third quarter of 2007 were $1,202 million, down $149 million from the third quarter of 2006 due to lower margins partly offset by favorable tax items.  Prime product sales of 6,729 kt (thousands of metric tons) in the third quarter of 2007 were down 23 kt from the prior year.


__________________________________________________________


Chemical earnings for the first nine months of 2007 were a record $3,451 million, up $311 million from 2006 driven by higher margins.  Prime product sales were 20,431 kt, down 92 kt from 2006.



 

Third Quarter

 

First Nine Months

 
 

 2007

 

 2006

 

 2007

 

 2006

 
 

(millions of dollars)

 
             

Corporate and financing earnings

$

(92

)

$

(92

)

$

(100

)

$

(394

)


Corporate and financing expenses in the third quarter of 2007 of $92 million were flat with 2006.


__________________________________________________________


Corporate and financing expenses for the first nine months of 2007 of $100 million decreased $294 million, mainly due to favorable tax items.



LIQUIDITY AND CAPITAL RESOURCES


 

Third Quarter

 

First Nine Months

 
  

2007

  

2006

  

2007

  

2006

 
 

(millions of dollars)

 

Net cash provided by/(used in)

            

Operating activities

      

$

40,667

 

$

40,424

 

Investing activities

       

(10,065

)

 

(10,764

)

Financing activities

       

(28,938

)

 

(26,134

)

Effect of exchange rate changes

       

1,515

  

537

 

Increase/(decrease) in cash and cash equivalents

      

$

3,179

 

$

4,063

 
             

Cash and cash equivalents

      

$

31,423

 

$

32,734

 

Cash and cash equivalents - restricted (note 3)

       

4,604

  

4,604

 

Total cash and cash equivalents (at end of period)

      

$

36,027

 

$

37,338

 
             

Cash flow from operations and asset sales

            

Net cash provided by operating activities (U.S. GAAP)

$

15,063

 

$

14,497

 

$

40,667

 

$

40,424

 

Sales of subsidiaries, investments and property,

            

    plant and equipment

 

749

  

878

  

2,422

  

2,328

 

Cash flow from operations and asset sales

$

15,812

 

$

15,375

 

$

43,089

 

$

42,752

 


Because of the ongoing nature of our asset management and divestment program, we believe

it is useful for investors to consider asset sales proceeds together with cash provided by operating

activities when evaluating cash available for investment in the business and financing activities.


-19-



Total cash and cash equivalents, including the $4.6 billion of restricted cash, was $36.0 billion at the end of the third quarter of 2007.


Cash provided by operating activities totaled $40,667 million for the first nine months of 2007, similar to 2006.  The major source of funds was net income of $28,950 million, adjusted for the noncash provision of $9,095 million for depreciation and depletion.  Net changes in operational working capital and other items in 2007 added $2.6 billion.  For additional details, see the Condensed Consolidated Statement of Cash Flows on page 5.


Investing activities for the first nine months of 2007 used net cash of $10,065 million compared to $10,764 million in the prior year.  Spending for additions to property, plant and equipment decreased $474 million to $10,827 million.


Cash flow from operations and asset sales in the third quarter of 2007 of $15.8 billion, including asset sales of $0.7 billion, was comparable to the prior year period.  For the first nine months of 2007, cash flow from operations and asset sales was $43.1 billion, including $2.4 billion from asset sales.


Net cash used in financing activities of $28,938 million in the first nine months of 2007 increased $2,804 million reflecting a higher level of purchases of shares of ExxonMobil stock.


During the third quarter of 2007, Exxon Mobil Corporation purchased 90 million shares of its common stock for the treasury at a gross cost of $7.8 billion.  These purchases included $7.0 billion to reduce the number of shares outstanding, with the balance used to offset shares issued in conjunction with the company's benefit plans and programs.  Shares outstanding were reduced from 5,546 million at the end of the second quarter to 5,464 million at the end of the third quarter.


Gross share purchases in the first nine months of 2007 were $23.9 billion, which reduced shares outstanding by 4.6 percent.  Purchases may be made in both the open market and through negotiated transactions, and may be increased, decreased or discontinued at any time without prior notice.


The Corporation distributed a total of $8.9 billion to shareholders in the third quarter through dividends of $1.9 billion and share purchases to reduce shares outstanding of $7.0 billion.  For the first nine months of 2007 distributions to shareholders totaled $26.7 billion through dividends and share purchases to reduce shares outstanding, an increase of $2.9 billion versus 2006.


Total debt of $9.0 billion at September 30, 2007, increased from $8.3 billion at year-end 2006.  The Corporation's debt to total capital ratio was 6.8 percent at the end of the third quarter of 2007 compared to 6.6 percent at year-end 2006.


Although the Corporation issues long-term debt from time to time and maintains a revolving commercial paper program, internally generated funds cover the majority of its financial requirements.


In accordance with a nationalization decree issued by Venezuela's President Chavez in February of this year, by May 1, 2007, a subsidiary of the Venezuelan National Oil Company (PdVSA) assumed the operatorship of the Cerro Negro Heavy Oil Project.  This Project had been operated and owned by ExxonMobil affiliates (ExxonMobil) holding a 41.67 percent ownership interest in the Project.  The decree also required conversion of the Cerro Negro Project into a "mixed enterprise" structure and an increase in PdVSA's or one of its affiliate's ownership interest in the Project, with the stipulation that if an agreement was not reached for the formation of the mixed enterprise during a specified period of time, the government would "directly take on the activities" carried out by the joint venture.  ExxonMobil and Venezuela were not able to reach agreement on the formation of a mixed enterprise and on June 27, 2007, the government expropriated ExxonMobil's 41.67 percent interest in the Cerro Negro Project.  


Subsequent discussions with Venezuelan authorities have not resulted in an agreement on the amount of compensation to be paid to ExxonMobil.  On September 6, 2007, ExxonMobil filed a Request for Arbitration with the International Centre for Settlement of Investment Disputes.  At this time the net impact of this matter on the Corporation's consolidated financial results cannot be reasonably estimated.  However, the Corporation does not expect the resolution to have a material effect upon the Corporation's operations or financial condition.  At the time the assets were expropriated, ExxonMobil's remaining net book investment in Cerro Negro producing assets was about $750 million.


The Corporation, as part of its ongoing asset management program, continues to evaluate its mix of assets for potential upgrade.  Because of the ongoing nature of this program, dispositions will continue to be made from time to time which will result in either gains or losses.



-20-




TAXES

 

Third Quarter

 

First Nine Months

 
 

 2007

 

2006

 

 2007

 

 2006

 
  

(millions of dollars)

 

Taxes

            

Income taxes

$

7,350

 

$

7,688

 

$

21,802

 

$

22,591

 

Sales-based taxes

 

7,970

  

7,764

  

23,064

  

23,639

 

All other taxes and duties

 

10,953

  

10,793

  

32,026

  

31,573

 

Total

$

26,273

 

$

26,245

 

$

76,892

 

$

77,803

 
             

Effective income tax rate

 

46

%

 

44

%

 

45

%

 

45

%


Income, sales-based and all other taxes and duties for the third quarter of 2007 of $26,273 million were flat as compared to 2006.  In the third quarter of 2007 income tax expense was $7,350 million and the effective income tax rate was 46 percent, compared to $7,688 million and 44 percent, respectively, in the prior year period.


__________________________________________________________


Income, sales-based and all other taxes and duties for the first nine months of 2007 of $76,892 million were down $911 million compared to 2006.  In the first nine months of 2007 income tax expense was $21,802 million and the effective income tax rate was 45 percent, compared to $22,591 million and 45 percent, respectively, in the prior year period.




CAPITAL AND EXPLORATION EXPENDITURES


 

Third Quarter

 

First Nine Months

 
  

2007

  

2006

  

2007

  

2006

 
  

(millions of dollars)

 

Capital and exploration expenditures

            

Upstream (including exploration expenses)

$

3,851

 

$

4,142

 

$

11,186

 

$

12,161

 

Downstream

 

984

  

658

  

2,389

  

1,981

 

Chemical

 

601

  

195

  

1,096

  

525

 

Other

 

5

  

66

  

31

  

119

 

Total

$

5,441

 

$

5,061

 

$

14,702

 

$

14,786

 



ExxonMobil continued to actively invest in the third quarter, spending $5.4 billion on capital and exploration projects, an increase of 8 percent over 2006.  For the first nine months of 2007, spending on capital and exploration projects was $14.7 billion.


Capital and exploration expenditures for full year 2006 were $19.9 billion and are expected to continue in this range for the next several years.  Actual spending could vary depending on the progress of individual projects.



FORWARD-LOOKING STATEMENTS


Statements in this report relating to future plans, projections, events or conditions are forward-looking statements.  Actual results, including project plans and related expenditures, resource recoveries, timing and capacities, could differ materially due to changes in long-term oil or gas prices or other market conditions affecting the oil and gas industry; political events or disturbances; reservoir performance; the outcome of commercial negotiations; potential liability resulting from pending or future litigation; wars and acts of terrorism or sabotage; changes in technical or operating conditions; and other factors discussed under the heading "Factors Affecting Future Results" on our website and in Item 1A of ExxonMobil's 2006 Form 10-K.  We assume no duty to update these statements as of any future date.



-21-


Item 3.  Quantitative and Qualitative Disclosures About Market Risk


Information about market risks for the nine months ended September 30, 2007, does not differ materially from that discussed under Item 7A of the registrant's Annual Report on Form 10-K for 2006.


Item 4.  Controls and Procedures


As indicated in the certifications in Exhibit 31 of this report, the Corporation’s chief executive officer, principal financial officer and principal accounting officer have evaluated the Corporation’s disclosure controls and procedures as of September 30, 2007.  Based on that evaluation, these officers have concluded that the Corporation’s disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Corporation in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to them in a manner that allows for timely decisions regarding required disclosures and are effective in ensuring that such information is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.  There were no changes during the Corporation's last fiscal quarter that materially affected, or are reasonably likely to materially affect, the Corporation's internal control over financial reporting.



PART II.  OTHER INFORMATION


Item 1.  Legal Proceedings


On October 9, 2007, ExxonMobil Oil Corporation received a proposed agreed order from the Texas Commission on Environmental Quality (TCEQ) relating to three separate air emissions events (in January, April and May of 2007) at the Beaumont, Texas refinery.  The events are associated with, respectively, a power disruption, a feed tank roof landing, and coker flaring due to low feedrate to the Wet Gas Compressor as the coker unit moved into turnaround.  The TCEQ alleges that the three events were avoidable.  In the proposed order, the TCEQ has assessed a penalty of $106,000.  The Company is assessing the appropriate response to the proposed order.  


On September 14, 2007, the TCEQ issued a proposed agreed order relating to the Company's Baytown, Texas refinery.  The enforcement action relates to three separate air emissions events, occurring in October 2005, June 2006 and October 2006.  The events are associated with, respectively, a forced draft fan trip at a fluid catalytic cracking unit, flooding/foaming in the delayed coker unit lean oil absorber, and a power plant relay trip.  The TCEQ has assessed an administrative penalty of $160,000 in the aggregate.  The Company is contesting enforcement related to the October 2006 power plant event (for which $60,000 of the penalty is being sought), and negotiations are ongoing regarding the amount of penalty for the other two events.


On September 4, 2007, the TCEQ issued a proposed agreed order in which it assessed an administrative penalty of $133,000 relating to two separate air emissions events occurring in February 2007 at the Company's Baytown, Texas refinery.  The events are associated with, respectively, a compressor trip at Booster Station 4 and an air blower interval of surge at the Flexicoker.  ExxonMobil is not contesting the enforcement of either event, but negotiations are in progress regarding the penalty amount.


Pursuant to a proposed agreed order received in August 2007, the Colorado Department of Public Health and Environment (CDPHE) is pursuing an enforcement action against the Company relating to excess air emissions (VOC, NOx, HAPs) events at the Piceance Creek Unit Gas Plant.  The issues were identified during agency inspections and internal reviews in 2006 and 2007.  The violations were due to reciprocating engine exhaust catalyst failure and glycol dehydrator control device failure, as well as associated recordkeeping issues.  The Company also self-disclosed an issue associated with emissions that were not reflected in the air permit, but discovered during testing.  The Company is engaged with the CDPHE in settlement discussions to enter into a Compliance Order on Consent that will require the installation of a new control device (thermal oxidizer) as well as payment of penalties.  The initial administrative penalty demand and associated economic benefit penalty demand exceed $500,000, but are under negotiation.



-22-



The Environmental Protection Agency (EPA) is evaluating enforcement under the Toxic Substances Control Act for alleged leaks of PCB-containing oil from transformers and related alleged violations of PCB disposal requirements at the Company's  Santa Ynez Unit Platform Hondo facility, offshore California.  The EPA has indicated that they intend to seek civil penalties in excess of $100,000.


The Department of Justice (DOJ) and the U.S. Fish and Wildlife Service are evaluating enforcement for alleged violations of the Migratory Bird Treaty Act at the Company's Piceance Creek production unit in Colorado, the LaBarge, Wyoming production facility, and isolated production facilities in Kansas, Oklahoma and Texas.  The DOJ has indicated that it intends to seek fines and restitution in excess of $100,000.


Refer to the relevant portions of note 3 on pages 7 and 8 of this Quarterly Report on Form 10-Q for further information on legal proceedings.




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


 

Issuer Purchase of Equity Securities for the Quarter Ended September 30, 2007

          
       

Total Number of

 

Maximum Number

       

Shares Purchased

 

Of Shares that May

   

Total Number

 

Average

 

as Part of Publicly

 

Yet Be Purchased

   

Of Shares

 

Price Paid

 

Announced Plans

 

Under the Plans or

 

Period

 

Purchased

 

per Share

 

or Programs

 

Programs

          
 

July, 2007

 

29,190,852

 

$88.53

 

29,190,852

  
          
 

August, 2007

 

34,163,690

 

$84.10

 

34,163,690

  
          
 

September, 2007

 

26,635,561

 

$89.50

 

26,635,561

  
          
 

Total

 

89,990,103

 

$87.14

 

89,990,103

 

(See Note 1)


Note 1 -- On August 1, 2000, the Corporation announced its intention to resume purchases of shares of its common stock for the treasury both to offset shares issued in conjunction with company benefit plans and programs and to gradually reduce the number of shares outstanding.  The announcement did not specify an amount or expiration date.  The Corporation has continued to purchase shares since this announcement and to report purchased volumes in its quarterly earnings releases.  Purchases may be made in both the open market and through negotiated transactions, and purchases may be increased, decreased or discontinued at any time without prior notice.




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Item 6.  Exhibits


Exhibit

Description


10(iii)(d)

ExxonMobil Executive Life Insurance and Death Benefit Plan.


31.1

Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by Chief

 

  Executive Officer.


31.2

Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by Principal

  Financial Officer.


31.3

Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by Principal

  Accounting Officer.


32.1

Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Chief

  

 

  Executive Officer.


32.2

Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by

  Principal Financial Officer.


32.3

Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by

  Principal Accounting Officer.





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EXXON MOBIL CORPORATION



SIGNATURE




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, thereunto duly authorized.




EXXON MOBIL CORPORATION




Date: November 7, 2007  

By:   /s/  Patrick T. Mulva                        

        Name:  Patrick T. Mulva

           

        Title:     Vice President, Controller and

                      Principal Accounting Officer





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INDEX TO EXHIBITS


Exhibit

Description


10(iii)(d)

ExxonMobil Executive Life Insurance and Death Benefit Plan.


31.1

Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by

  Chief Executive Officer.


31.2

Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by

  Principal Financial Officer.


31.3

Certification (pursuant to Securities Exchange Act Rule 13a-14(a)) by

  Principal Accounting Officer.


32.1

Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Chief

  

  Executive Officer.


32.2

Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal

 

   Financial Officer.


32.3

Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal

 

   Accounting Officer.








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