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,~~September 30, 2018

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) 940-6000

(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 ☑ No ☐ ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T 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,~~September 30, 2018
Common stock, without par value		~~4,233,834,437~~4,233,807,170

EXXON MOBIL CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED ~~MARCH 31,~~SEPTEMBER 30, 2018

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements	��
Condensed Consolidated Statement of Income Three and nine months ended ~~March 31,~~September 30, 2018 and 2017	3
Condensed Consolidated Statement of Comprehensive Income Three and nine months ended ~~March 31,~~September 30, 2018 and 2017	4
Condensed Consolidated Balance Sheet As of ~~March 31,~~September 30, 2018 and December 31, 2017	5

Condensed Consolidated Statement of Cash Flows ~~Three~~Nine months ended ~~March 31,~~September 30, 2018 and 2017	6
Condensed Consolidated Statement of Changes in Equity ~~Three~~Nine months ended ~~March 31,~~September 30, 2018 and 2017	7
Notes to Condensed Consolidated Financial Statements	8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3. Quantitative and Qualitative Disclosures About Market Risk	2324
Item 4. Controls and Procedures	2324

PART II. OTHER INFORMATION
Item 1. Legal Proceedings	2425
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	2526
Item 6. Exhibits	25
~~Index to Exhibits~~	26
Index to Exhibits	27
Signature	2728

2

PART I. FINANCIAL INFORMATION

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

~~March 31,~~September 30,
September 30,

2018
2017
2018
2017
Revenues and other income

~~2018~~
~~2017~~
~~Revenues and other income~~

Sales and other operating revenue

~~65,436~~74,187

~~56,474~~59,350

211,079
171,850

Income from equity affiliates

~~1,910~~1,960

~~1,710~~1,472

5,599
4,707

Other income

~~865~~458

~~487~~278

1,639
1,291

Total revenues and other income

~~68,211~~76,605

~~58,671~~61,100

218,317
177,848
Costs and other deductions

Crude oil and product purchases

~~36,288~~41,776

~~30,359~~31,432

119,391
91,985

Production and manufacturing expenses

~~8,491~~9,097

~~7,566~~7,952

26,506
23,578

Selling, general and administrative expenses

~~2,747~~2,892

~~2,505~~2,632

8,632
7,693

Depreciation and depletion

~~4,470~~4,658

~~4,519~~4,880

13,717
14,051

Exploration expenses, including dry holes

~~287~~292

~~289~~284

911
1,087

Non-service pension and postretirement benefit expense

~~337~~307

~~373~~475

952
1,267

Interest expense

~~204~~200

~~146~~111

551
415

Other taxes and duties

~~8,147~~8,303

~~6,996~~7,751

24,825
22,115

Total costs and other deductions

~~60,971~~67,525

~~52,753~~55,517

195,485
162,191
Income before income taxes

~~7,240~~9,080

~~5,918~~5,583

22,832
15,657

Income taxes

~~2,457~~2,634

~~1,828~~1,498

7,617
4,218
Net income including noncontrolling interests

~~4,783~~6,446

~~4,090~~4,085

15,215
11,439

Net income attributable to noncontrolling interests

~~133~~206

80115

375
109
Net income attributable to ExxonMobil

~~4,650~~6,240

~~4,010~~3,970

14,840
11,330



Earnings per common share (dollars)

~~1.09~~1.46

~~0.95~~0.93

3.47
2.66

Earnings per common share - assuming dilution (dollars)

~~1.09~~1.46

~~0.95~~
0.93

3.47

~~Dividends per common share~~~~(dollars)~~
~~0.77~~
~~0.75~~
2.66

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

3

EXXON MOBIL CORPORATION
EXXON MOBIL CORPORATION

EXXON MOBIL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(millions of dollars)
(millions of dollars)

(millions of dollars)

Three Months Ended

Three Months Ended

Nine Months Ended

March 31,

September 30,

September 30,

2018

2017

2018

2017

2018

2017

Net income including noncontrolling interests
Net income including noncontrolling interests

6,446

4,085

15,215

11,439
Other comprehensive income (net of income taxes)
Other comprehensive income (net of income taxes)

Net income including noncontrolling interests

4,783

4,090

Foreign exchange translation adjustment

124

2,342

(2,720)

5,424

Other comprehensive income (net of income taxes)

Adjustment for foreign exchange translation (gain)/loss

Foreign exchange translation adjustment

(804)

1,408

included in net income

-

-

186

234

Adjustment for foreign exchange translation (gain)/loss included in net income

168

-

Postretirement benefits reserves adjustment

Postretirement benefits reserves adjustment (excluding amortization)

(434)

(25)

(excluding amortization)

(3)

(145)

(394)

(329)

Amortization and settlement of postretirement benefits reserves adjustment

Amortization and settlement of postretirement benefits reserves

included in net periodic benefit costs

237

256

adjustment included in net periodic benefit costs

223

311

689

850

Total other comprehensive income

(833)

1,639

Total other comprehensive income

344

2,508

(2,239)

6,179
Comprehensive income including noncontrolling interests
Comprehensive income including noncontrolling interests

6,790

6,593

12,976

17,618

Comprehensive income including noncontrolling interests

3,950

5,729

Comprehensive income attributable to

Comprehensive income attributable to noncontrolling interests

(9)

159

noncontrolling interests

311

372

205

700

Comprehensive income attributable to ExxonMobil

3,959

5,570

Comprehensive income attributable to ExxonMobil
Comprehensive income attributable to ExxonMobil

6,479

6,221

12,771

16,918

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

4

EXXON MOBIL CORPORATION
EXXON MOBIL CORPORATION

EXXON MOBIL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET
CONDENSED CONSOLIDATED BALANCE SHEET

CONDENSED CONSOLIDATED BALANCE SHEET

(millions of dollars)
(millions of dollars)

(millions of dollars)

Mar. 31,

Dec. 31,

Sept. 30,

Dec. 31,

2018

2017

2018

2017

Assets
Assets

Assets

Current assets

Current assets

Cash and cash equivalents

4,125

3,177

Cash and cash equivalents

5,669

3,177

Notes and accounts receivable – net

24,686

25,597

Notes and accounts receivable – net

27,880

25,597

Inventories

Inventories

Crude oil, products and merchandise

13,879

12,871

Crude oil, products and merchandise

14,617

12,871

Materials and supplies

4,169

4,121

Materials and supplies

4,144

4,121

Other current assets

1,456

1,368

Other current assets

1,665

1,368

Total current assets

48,315

47,134

Total current assets

53,975

47,134

Investments, advances and long-term receivables

40,350

39,160

Investments, advances and long-term receivables

40,427

39,160

Property, plant and equipment – net

250,352

252,630

Property, plant and equipment – net

249,153

252,630

Other assets, including intangibles – net

9,809

9,767

Other assets, including intangibles – net

11,073

9,767

Total assets

348,826

348,691

Total assets

354,628

348,691

Liabilities
Liabilities

Liabilities

Current liabilities

Current liabilities

Notes and loans payable

19,836

17,930

Notes and loans payable

19,413

17,930

Accounts payable and accrued liabilities

37,207

36,796

Accounts payable and accrued liabilities

41,714

36,796

Income taxes payable

3,263

3,045

Income taxes payable

4,161

3,045

Total current liabilities

60,306

57,771

Total current liabilities

65,288

57,771

Long-term debt

20,781

24,406

Long-term debt

20,624

24,406

Postretirement benefits reserves

21,696

21,132

Postretirement benefits reserves

21,448

21,132

Deferred income tax liabilities

26,760

26,893

Deferred income tax liabilities

27,084

26,893

Long-term obligations to equity companies

4,818

4,774

Long-term obligations to equity companies

4,625

4,774

Other long-term obligations

19,554

19,215

Other long-term obligations

18,728

19,215

Total liabilities

153,915

154,191

Total liabilities

157,797

154,191

Commitments and contingencies (Note 3)
Commitments and contingencies (Note 3)

Commitments and contingencies (Note 3)

Equity
Equity

Equity

Common stock without par value

Common stock without par value

(9,000 million shares authorized, 8,019 million shares issued)

14,888

14,656

(9,000 million shares authorized, 8,019 million shares issued)

15,254

14,656

Earnings reinvested

415,970

414,540

Earnings reinvested

419,155

414,540

Accumulated other comprehensive income

(16,992)

(16,262)

Accumulated other comprehensive income

(18,370)

(16,262)

Common stock held in treasury

Common stock held in treasury

(3,785 million shares at March 31, 2018 and

(3,785 million shares at September 30, 2018 and

   3,780 million shares at December 31, 2017)

(225,671)

(225,246)

   3,780 million shares at December 31, 2017)

(225,674)

(225,246)

ExxonMobil share of equity

188,195

187,688

ExxonMobil share of equity

190,365

187,688

Noncontrolling interests

6,716

6,812

Noncontrolling interests

6,466

6,812

Total equity

194,911

194,500

Total equity

196,831

194,500

Total liabilities and equity

348,826

348,691

Total liabilities and equity

354,628

348,691

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

5

EXXON MOBIL CORPORATION
EXXON MOBIL CORPORATION

EXXON MOBIL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(millions of dollars)
(millions of dollars)

(millions of dollars)

Three Months Ended

Nine Months Ended

March 31,

September 30,

2018

2017

2018

2017

Cash flows from operating activities
Cash flows from operating activities

Cash flows from operating activities

Net income including noncontrolling interests

4,783

4,090

Net income including noncontrolling interests

15,215

11,439

Depreciation and depletion

4,470

4,519

Depreciation and depletion

13,717

14,051

Changes in operational working capital, excluding cash and debt

351

793

Changes in operational working capital, excluding cash and debt

(25)

(547)

All other items – net

(1,085)

(1,229)

All other items – net

(1,500)

(2,288)

Net cash provided by operating activities

8,519

8,173

Net cash provided by operating activities

27,407

22,655

Cash flows from investing activities
Cash flows from investing activities

Cash flows from investing activities

Additions to property, plant and equipment

(3,349)

(2,890)

Additions to property, plant and equipment

(13,480)

(10,901)

Proceeds associated with sales of subsidiaries, property, plant and

Proceeds associated with sales of subsidiaries, property, plant and

equipment, and sales and returns of investments

1,441

687

equipment, and sales and returns of investments

3,239

1,695

Additional investments and advances

(138)

(1,738)

Additional investments and advances

(1,113)

(1,950)

Other investing activities including collection of advances

187

180

Other investing activities including collection of advances

492

1,962

Net cash used in investing activities

(1,859)

(3,761)

Net cash used in investing activities

(10,862)

(9,194)

Cash flows from financing activities
Cash flows from financing activities

Cash flows from financing activities

Additions to long-term debt

-

60

Additions to long-term debt

-

60

Additions to short-term debt

-

1,734

Additions to short-term debt

-

1,735

Reductions in short-term debt

(3,872)

(2,669)

Reductions in short-term debt

(4,279)

(4,971)

Additions/(reductions) in commercial paper, and debt with three

Additions/(reductions) in commercial paper, and debt with three

months or less maturity (1)

1,950

1,308

months or less maturity (1)

1,626

339

Cash dividends to ExxonMobil shareholders

(3,291)

(3,134)

Cash dividends to ExxonMobil shareholders

(10,296)

(9,712)

Cash dividends to noncontrolling interests

(43)

(44)

Cash dividends to noncontrolling interests

(192)

(139)

Changes in noncontrolling interests

(59)

-

Changes in noncontrolling interests

(374)

(90)

Common stock acquired

(427)

(501)

Common stock acquired

(430)

(515)

Net cash used in financing activities

(5,742)

(3,246)

Net cash used in financing activities

(13,945)

(13,293)

Effects of exchange rate changes on cash
Effects of exchange rate changes on cash

30

74

Effects of exchange rate changes on cash

(108)

441

Increase/(decrease) in cash and cash equivalents
Increase/(decrease) in cash and cash equivalents

948

1,240

Increase/(decrease) in cash and cash equivalents

2,492

609

Cash and cash equivalents at beginning of period
Cash and cash equivalents at beginning of period

3,177

3,657

Cash and cash equivalents at beginning of period

3,177

3,657

Cash and cash equivalents at end of period
Cash and cash equivalents at end of period

4,125

4,897

Cash and cash equivalents at end of period

5,669

4,266

Supplemental Disclosures
Supplemental Disclosures

Supplemental Disclosures

Income taxes paid

2,117

1,970

Income taxes paid

6,740

4,611

Cash interest paid

360

368

Cash interest paid

839

965

2017 Noncash Transactions
In the first ~~three~~nine months of 2017, the Corporation completed the acquisitions of InterOil Corporation and of companies that own certain oil and gas properties in the Permian Basin and other assets. These transactions included a significant noncash component associated with the issuance of a combined 96 million shares of Exxon Mobil Corporation common stock in acquisition consideration.

(1) Includes a net ~~reduction~~addition of commercial paper with a maturity of over three months of $0.3 billion in 2018 and a net ~~addition~~reduction of ~~$0.1~~$0.5 billion in 2017. The gross amount of commercial paper with a maturity of over three months issued was ~~$0.4~~$3.1 billion in 2018 and ~~$1.1~~$2.7 billion in 2017, while the gross amount repaid was ~~$0.7~~$2.8 billion in 2018 and ~~$1.0~~$3.2 billion in 2017.

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

6

EXXON MOBIL CORPORATION
EXXON MOBIL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(millions of dollars)
(millions of dollars)

ExxonMobil Share of Equity

ExxonMobil Share of Equity

Accumulated

Accumulated

Other

Common

Other

Common

Compre-

Stock

ExxonMobil

Non-

Compre-

Stock

ExxonMobil

Non-

Common

Earnings

hensive

Held in

Share of

controlling

Total

Common

Earnings

hensive

Held in

Share of

controlling

Total

Stock

Reinvested

Income

Treasury

Equity

Interests

Equity

Stock

Reinvested

Income

Treasury

Equity

Interests

Equity

Balance as of December 31, 2016
Balance as of December 31, 2016

12,157

407,831

(22,239)

(230,424)

167,325

6,505

173,830
Balance as of December 31, 2016

12,157

407,831

(22,239)

(230,424)

167,325

6,505

173,830

Amortization of stock-based awards

264

-

-

-

264

-

264
Amortization of stock-based awards

635

-

-

-

635

-

635

Other

(84)

-

-

-

(84)

-

(84)
Other

(87)

-

-

-

(87)

(54)

(141)

Net income for the period

-

4,010

-

-

4,010

80

4,090
Net income for the period

-

11,330

-

-

11,330

109

11,439

Dividends

-

(3,134)

-

-

(3,134)

(44)

(3,178)
Dividends - common shares

-

(9,712)

-

-

(9,712)

(139)

(9,851)

Other comprehensive income

-

-

1,560

-

1,560

79

1,639
Other comprehensive income

-

-

5,588

-

5,588

591

6,179

Acquisitions, at cost

-

-

-

(582)

(582)

-

(582)
Acquisitions, at cost

-

-

-

(596)

(596)

(90)

(686)

Issued for acquisitions

2,078

-

-

5,711

7,789

-

7,789
Issued for acquisitions

2,078

-

-

5,711

7,789

-

7,789

Dispositions

-

-

-

3

3

-

3
Dispositions

-

-

-

4

4

-

4
Balance as of March 31, 2017

14,415

408,707

(20,679)

(225,292)

177,151

6,620

183,771
Balance as of September 30, 2017
Balance as of September 30, 2017

14,783

409,449

(16,651)

(225,305)

182,276

6,922

189,198

Balance as of December 31, 2017
Balance as of December 31, 2017

14,656

414,540

(16,262)

(225,246)

187,688

6,812

194,500
Balance as of December 31, 2017

14,656

414,540

(16,262)

(225,246)

187,688

6,812

194,500

Amortization of stock-based awards

237

-

-

-

237

-

237
Amortization of stock-based awards

605

-

-

-

605

-

605

Other

(5)

-

-

-

(5)

-

(5)
Other

(7)

-

-

-

(7)

(8)

(15)

Net income for the period

-

4,650

-

-

4,650

133

4,783
Net income for the period

-

14,840

-

-

14,840

375

15,215

Dividends

-

(3,291)

-

-

(3,291)

(43)

(3,334)
Dividends - common shares

-

(10,296)

-

-

(10,296)

(192)

(10,488)

Cumulative effect of accounting

Cumulative effect of accounting

change

-

71

(39)

-

32

15

47

change

-

71

(39)

-

32

15

47

Other comprehensive income

-

-

(691)

-

(691)

(142)

(833)
Other comprehensive income

-

-

(2,069)

-

(2,069)

(170)

(2,239)

Acquisitions, at cost

-

-

-

(427)

(427)

(59)

(486)
Acquisitions, at cost

-

-

-

(430)

(430)

(366)

(796)

Dispositions

-

-

-

2

2

-

2
Dispositions

-

-

-

2

2

-

2
Balance as of March 31, 2018

14,888

415,970

(16,992)

(225,671)

188,195

6,716

194,911
Balance as of September 30, 2018
Balance as of September 30, 2018

15,254

419,155

(18,370)

(225,674)

190,365

6,466

196,831

Three Months Ended March 31, 2018

Three Months Ended March 31, 2017

Nine Months Ended September 30, 2018

Nine Months Ended September 30, 2017

Held in

Held in

Held in

Held in

Common Stock Share Activity

Issued

Treasury

Outstanding

Issued

Treasury

Outstanding
Common Stock Share Activity

Issued

Treasury

Outstanding

Issued

Treasury

Outstanding

(millions of shares)

(millions of shares)

(millions of shares)

(millions of shares)

Balance as of December 31

8,019

(3,780)

4,239

8,019

(3,871)

4,148
Balance as of December 31

8,019

(3,780)

4,239

8,019

(3,871)

4,148

Acquisitions

-

(5)

(5)

-

(7)

(7)

Acquisitions

-

(5)

(5)

-

(7)

(7)

Issued for acquisitions

-

-

-

-

96

96

Issued for acquisitions

-

-

-

-

96

96

Dispositions

-

-

-

-

-

-

Dispositions

-

-

-

-

-

-

Balance as of March 31

8,019

(3,785)

4,234

8,019

(3,782)

4,237
Balance as of September 30

8,019

(3,785)

4,234

8,019

(3,782)

4,237

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

7

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 2017 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.

2.     Accounting Changes

Effective January 1, 2018, ExxonMobil adopted the Financial Accounting Standards Board’s standard, Revenue from Contracts with Customers (Topic 606), as amended. The standard establishes a single revenue recognition model for all contracts with customers, eliminates industry and transaction specific requirements, and expands disclosure requirements. The standard was adopted using the Modified Retrospective method, under which prior year results are not restated, but supplemental information is provided for any material impacts of the standard on 2018 results. The adoption of the standard did not have a material impact on any of the lines reported in the Corporation’s financial statements. The cumulative effect of adoption of the standard was de minimis. The Corporation did not elect any practical expedients that require disclosure. See Note 9.

Effective January 1, 2018, ExxonMobil adopted the Financial Accounting Standards Board’s Update, Financial ~~Instruments—~~Instruments–Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The standard requires investments in equity securities other than consolidated subsidiaries and equity method investments to be measured at fair value with changes in the fair value recognized through net income. The Corporation elected a modified approach for equity securities that do not have a readily determinable fair value. This modified approach measures investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The cumulative effect adjustment related to the adoption of this standard increased equity $47 million. The portion of unrealized gains and losses recognized during the reporting period on equity securities still held at ~~March 31,~~September 30, 2018 and the carrying value of equity securities without readily determinable fair values at ~~March 31,~~September 30, 2018 were not significant to the Corporation. The standard also expanded disclosures related to financial instruments. See Note 7.

Effective January 1, 2018, ExxonMobil adopted the Financial Accounting Standards Board’s Update, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The update requires separate presentation of the service cost component from other components of net benefit costs. The other components are reported in a new line on the Corporation’s Statement of Income, “Non-service pension and postretirement benefit expense.” The Corporation elected to use the practical expedient which uses the amounts disclosed in the pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements, as it is impracticable to determine the amounts capitalized in those periods. Beginning in 2018, the other components of net benefit costs are included in the Corporate and financing segment. The estimated after-tax impact from the change in segmentation is an increase ~~of about $100 million~~ in Corporate and financing expenses of about $100 million for the third quarter and $300 million for the first ~~quarter~~nine months of ~~2018,~~2018. The increase in the Corporate and financing expenses is offset by lower expenses across the operating segments. Additionally, only the service cost component of net benefit costs is eligible for capitalization in situations where it is otherwise appropriate to capitalize employee costs in connection with the construction or production of an asset.

8

The impact of the retrospective presentation change on ExxonMobil's ~~consolidated statement~~Consolidated Statement of ~~income~~Income for the ~~period~~three months and nine months ended ~~March 31,~~September 30, 2017, is shown below.

As of March 31, 2017

As Reported

Change

As Adjusted

(millions of dollars)

Production and manufacturing expenses

7,845

(279)

7,566

Selling, general and administrative expenses

2,599

(94)

2,505

Non-service pension and postretirement benefit expense

-

373

373

Three Months Ended

Nine Months Ended

September 30, 2017

September 30, 2017

As Reported

Change

As Adjusted

As Reported

Change

As Adjusted

(millions of dollars)

Production and manufacturing expenses
8,334

(382)

7,952

24,586

(1,008)

23,578
Selling, general and administrative expenses
2,725

(93)

2,632

7,952

(259)

7,693
Non-service pension and postretirement benefit expense
-

475

475

-

1,267

1,267

8
Effective January 1, 2019, ExxonMobil will adopt the Financial Accounting Standards Board’s standard, Leases (Topic 842), as amended. The standard requires all leases with an initial term greater than one year to be recorded on the balance sheet as ana right of use asset and a lease liability. We expect to use a transition method that applies the new lease standard at January 1, 2019, and recognizes any cumulative-effect adjustments to the opening balance of 2019 retained earnings.
The Corporation ~~is gathering and evaluating data and recently~~ acquired ~~a system~~lease accounting software to facilitate ~~implementation. We are progressing an assessment~~implementation, and is currently configuring and testing the software. Based on leases outstanding at the end of 2017, the ~~magnitude~~Corporation estimates the operating lease right of use asset and lease liability would have been in the range of $4 billion to $5 billion at that time. The effect on the Corporation’s ~~financial statements.~~balance sheet as a result of implementing the standard on January 1, 2019, could differ considerably depending on operating leases commenced in 2018 as well as interest rates and other factors such as the expiry or renewal of leases during the year.

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,~~September 30, 2018, 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. 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.

As of March 31, 2018

Equity

Other

Company

Third Party

Obligations (1)

Obligations

Total

(millions of dollars)

Guarantees

Debt-related

96

328

424

Other

1,558

4,887

6,445

Total

1,654

5,215

6,869

(1) ExxonMobil share

As of September 30, 2018

Equity

Other

Company

Third Party

Obligations (1)

Obligations

Total

(millions of dollars)

Guarantees

Debt-related

461

63

524

Other

1,008

4,046

5,054

Total

1,469

4,109

5,578

(1) ExxonMobil share

9

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 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.

9
In accordance with a Venezuelan nationalization decree issued ~~by Venezuela’s president~~ in February ~~2007, 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 holding a 41.67 percent ownership interest in the~~ Project. The decree also required conversion of the Cerro Negro Project into a “mixed enterprise” and an increase in PdVSA’s or one of its affiliate’s ownership interest in the Project, with the stipulation that if ExxonMobil refused to accept the terms for the formation of the mixed enterprise within a specified period of time, the government would “directly assume the activities” carried out by the joint venture.Project. ExxonMobil refused to accede to the terms proffered by the government, and on June 27, 2007, the government expropriated ExxonMobil’s 41.67 percent interest in the Cerro Negro Project.

~~On September 6, 2007, affiliates~~ExxonMobil collected awards of ~~ExxonMobil filed a Request~~$908 million in an arbitration against PdVSA under the rules of the International Chamber of Commerce in respect of an indemnity related to the Cerro Negro Project and $260 million in an arbitration for ~~Arbitration with~~compensation due for the La Ceiba Project and for export curtailments at the Cerro Negro Project under rules of International Centre for Settlement of Investment Disputes (ICSID). ~~The~~An ICSID Tribunal issued a decision on June 10, 2010, finding that it had jurisdiction to proceed on the basis of the Netherlands-Venezuela Bilateral Investment Treaty. On October 9, 2014, the ICSID Tribunal issued its final award finding in favor of the ExxonMobil affiliates and awarding $1.6 billion as of the date of expropriation, June 27, 2007, and interest from that date at 3.25 percent compounded annually until the date of payment in full. The Tribunal also noted that one of the Cerro Negro Project agreements provides a mechanism to prevent double recovery between the ICSID award and all or part of an earlier award of $908 million to an ExxonMobil affiliate, Mobil Cerro Negro, Ltd., against PdVSA and a PdVSA affiliate, PdVSA CN, in an arbitration ~~under the rules of the International Chamber of Commerce.~~
On February 2, 2015, Venezuela filed a Request for Annulment of the ICSID award. On March 9, 2017, the ICSID Committee hearing the Request for Annulment issued a decision partially annulling the award of the Tribunal issued on October 9, 2014. The Committee affirmed the compensation due for the La Ceiba project and for export curtailments at the Cerro Negro project, but annulled the portion of the award relating to the Cerro Negro Project’s expropriation ($1.4 billion) was annulled based on ~~its~~a determination that ~~the~~a prior Tribunal failed to adequately explain why the cap on damages in the indemnity owed by PdVSA did not affect or limit the amount owed for the expropriation of the Cerro Negro ~~project. As~~Project. ExxonMobil filed a ~~result, ExxonMobil retains an~~new claim seeking to restore the original award ~~for $260 million (including accrued interest). ExxonMobil reached an agreement with Venezuela for full payment~~ of ~~the $260 million. To date, Venezuela continues to meet its payment obligations. The agreement does not impact ExxonMobil’s ability to re-arbitrate the issue that was the basis~~damages for the ~~annulment in a new~~Cerro Negro Project with ICSID ~~arbitration proceeding.~~
~~The United States District Court for the Southern District of New York entered judgment~~ on the ICSID award on October 10, 2014. On July 11, 2017, the United States Court of Appeals for the Second Circuit rendered its opinion overturning the District Court’s decision and vacating the judgment on the grounds that a different procedure should have been used to reduce the award to judgment. The Corporation did not seek a writ of certiorari and the court case is now concluded.September 26, 2018.

The net impact of ~~these matters~~this matter on the Corporation’s consolidated financial results cannot be reasonably estimated. Regardless, the Corporation does not expect the resolution to have a material effect upon the Corporation’s operations or financial condition.

An affiliate of ExxonMobil is one of the Contractors under a Production Sharing Contract (PSC) with the Nigerian National Petroleum Corporation (NNPC) covering the Erha block located in the offshore waters of Nigeria. ExxonMobil's affiliate is the operator of the block and owns a 56.25 percent interest under the PSC. The Contractors are in dispute with NNPC regarding NNPC's lifting of crude oil in excess of its entitlement under the terms of the PSC. In accordance with the terms of the PSC, the Contractors initiated arbitration in Abuja, Nigeria, under the Nigerian Arbitration and Conciliation Act. On October 24, 2011, a three-member arbitral Tribunal issued an award upholding the Contractors' position in all material respects and awarding damages to the Contractors jointly in an amount of approximately $1.8 billion plus $234 million in accrued interest. The Contractors petitioned a Nigerian federal court for enforcement of the award, and NNPC petitioned the same court to have the award set aside. On May 22, 2012, the court set aside the award. The Contractors appealed that judgment to the Court of Appeal, Abuja Judicial Division. On July 22, 2016, the Court of Appeal upheld the decision of the lower court setting aside the award. On October 21, 2016, the Contractors appealed the decision to the Supreme Court of Nigeria. In June 2013, the Contractors filed a lawsuit against NNPC in the Nigerian federal high court in order to preserve their ability to seek enforcement of the PSC in the courts if necessary. Following dismissal by this court, the Contractors appealed to the Nigerian Court of Appeal in June 2016. In October 2014, the Contractors filed suit in the United States District Court for the Southern District of New York to enforce, if necessary, the arbitration award against NNPC assets residing within that jurisdiction. NNPC has moved to dismiss the lawsuit. ~~The stay in the proceedings in the Southern District of New York has been lifted.~~ At this time, the net impact of this matter on the Corporation's consolidated financial results cannot be reasonably estimated. However, regardless of the outcome of enforcement proceedings, the Corporation does not expect the proceedings to have a material effect upon the Corporation's operations or financial condition.

10

4.     Other Comprehensive Income Information

Cumulative

Post-

Foreign

retirement

Exchange

Benefits

ExxonMobil Share of Accumulated Other

Translation

Reserves

Comprehensive Income

Adjustment

Adjustment

Total

(millions of dollars)

Balance as of December 31, 2016

(14,501)

(7,738)

(22,239)

Current period change excluding amounts reclassified

from accumulated other comprehensive income

1,342

(29)

1,313

Amounts reclassified from accumulated other

comprehensive income

-

247

247

Total change in accumulated other comprehensive income

1,342

218

1,560

Balance as of March 31, 2017

(13,159)

(7,520)

(20,679)

Balance as of December 31, 2017

(9,482)

(6,780)

(16,262)

Current period change excluding amounts reclassified

from accumulated other comprehensive income

(686)

(440)

(1,126)

Amounts reclassified from accumulated other

comprehensive income

168

228

396

Total change in accumulated other comprehensive income

(518)

(212)

(730)

Balance as of March 31, 2018

(10,000)

(6,992)

(16,992)

Cumulative

Post-

Foreign

retirement

Exchange

Benefits

ExxonMobil Share of Accumulated Other

Translation

Reserves

Comprehensive Income

Adjustment

Adjustment

Total

(millions of dollars)

Balance as of December 31, 2016

(14,501)

(7,738)

(22,239)

Current period change excluding amounts reclassified

from accumulated other comprehensive income

4,925

(300)

4,625

Amounts reclassified from accumulated other

comprehensive income

140

823

963

Total change in accumulated other comprehensive income

5,065

523

5,588

Balance as of September 30, 2017

(9,436)

(7,215)

(16,651)

Balance as of December 31, 2017

(9,482)

(6,780)

(16,262)

Current period change excluding amounts reclassified

from accumulated other comprehensive income

(2,551)

(406)

(2,957)

Amounts reclassified from accumulated other

comprehensive income

186

663

849

Total change in accumulated other comprehensive income

(2,365)

257

(2,108)

Balance as of September 30, 2018

(11,847)

(6,523)

(18,370)

Three Months Ended

Nine Months Ended

Amounts Reclassified Out of Accumulated Other

September 30,

September 30,

Comprehensive Income - Before-tax Income/(Expense)

2018

2017

2018

2017

(millions of dollars)

Foreign exchange translation gain/(loss) included in net income

(Statement of Income line: Other income)
-

-

(186)

(234)

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)
(287)

(450)

(897)

(1,215)

Three Months Ended

Amounts Reclassified Out of Accumulated Other

March 31,

Comprehensive Income - Before-tax Income/(Expense)

2018

2017

(millions of dollars)

Foreign exchange translation gain/(loss) included in net income

(Statement of Income line: Other income)

(168)

-

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)

(320)

(359)

Three Months Ended

Nine Months Ended

Income Tax (Expense)/Credit For

September 30,

September 30,

Components of Other Comprehensive Income

2018

2017

2018

2017

(millions of dollars)

Foreign exchange translation adjustment

8

17

13

(9)

Postretirement benefits reserves adjustment

(excluding amortization)

-

74

66

154

Amortization and settlement of postretirement benefits reserves

adjustment included in net periodic benefit costs

(64)

(139)

(208)

(365)

Total

(56)

(48)

(129)

(220)

Three Months Ended

Income Tax (Expense)/Credit For

March 31,

Components of Other Comprehensive Income

2018

2017

(millions of dollars)

Foreign exchange translation adjustment

-

(18)

Postretirement benefits reserves adjustment (excluding amortization)

124

5

Amortization and settlement of postretirement benefits reserves

adjustment included in net periodic benefit costs

(83)

(103)

Total

41

(116)

11

5.     Earnings Per Share

Three Months Ended

March 31,

2018

2017

Earnings per common share

Net income attributable to ExxonMobil (millions of dollars)

4,650

4,010



Weighted average number of common shares outstanding (millions of shares)

4,270

4,223

Earnings per common share (dollars) (1)

1.09

0.95

(1) The calculation of earnings per common share and earnings per common share – assuming dilution are the same in

       each period shown.

Three Months Ended

Nine Months Ended

September 30,

September 30,

2018

2017

2018

2017

Earnings per common share

Net income attributable to ExxonMobil (millions of dollars)

6,240

3,970

14,840

11,330



Weighted average number of common shares

outstanding (millions of shares)

4,271

4,271

4,271

4,252

Earnings per common share (dollars) (1)

1.46

0.93

3.47

2.66

Dividends paid per common share (dollars)

0.82

0.77

2.41

2.29

(1) The calculation of earnings per common share and earnings per common share – assuming dilution are the same in each period shown.
6.     Pension and Other Postretirement Benefits

Three Months Ended

March 31,

2018

2017

(millions of dollars)

Components of net benefit cost

Pension Benefits - U.S.

Service cost

209

197

Interest cost

180

199

Expected return on plan assets

(182)

(194)

Amortization of actuarial loss/(gain) and prior service cost

91

110

Net pension enhancement and curtailment/settlement cost

63

105

Net benefit cost

361

417

Pension Benefits - Non-U.S.

Service cost

158

145

Interest cost

200

187

Expected return on plan assets

(252)

(239)

Amortization of actuarial loss/(gain) and prior service cost

118

127

Net pension enhancement and curtailment/settlement cost

33

(5)

Net benefit cost

257

215

Other Postretirement Benefits

Service cost

36

26

Interest cost

75

72

Expected return on plan assets

(6)

(6)

Amortization of actuarial loss/(gain) and prior service cost

17

17

Net benefit cost

122

109

Three Months Ended

Nine Months Ended

September 30,

September 30,

2018

2017

2018

2017

(millions of dollars)

Components of net benefit cost

Pension Benefits - U.S.

Service cost

203

200

616

583

Interest cost

179

199

540

598

Expected return on plan assets

(182)

(194)

(545)

(582)

Amortization of actuarial loss/(gain) and prior

service cost

93

110

276

332

Net pension enhancement and

curtailment/settlement cost

63

187

189

450

Net benefit cost

356

502

1,076

1,381

Pension Benefits - Non-U.S.

Service cost

149

155

461

445

Interest cost

185

198

571

574

Expected return on plan assets

(233)

(260)

(722)

(743)

Amortization of actuarial loss/(gain) and prior

service cost

113

135

344

388

Net pension enhancement and

curtailment/settlement cost

-

-

33

(5)

Net benefit cost

214

228

687

659

Other Postretirement Benefits

Service cost

40

36

111

92

Interest cost

75

88

226

227

Expected return on plan assets

(5)

(6)

(17)

(17)

Amortization of actuarial loss/(gain) and prior

service cost

19

18

57

45

Net benefit cost

129

136

377

347

12

7.     Financial Instruments and Derivatives

Financial Instruments.Effective January 1, 2018, ExxonMobil adopted the Financial Accounting Standards Board’s Update, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.  The estimated fair value of financial instruments at ~~March 31,~~September 30, 2018, and the related hierarchy level for the fair value measurement is as follows:

At March 31, 2018

At September 30, 2018

(millions of dollars)

(millions of dollars)

Carrying

Fair Value

Carrying

Fair Value

Value

Level 1

Level 2

Level 3

Total

Value

Level 1

Level 2

Level 3

Total
Assets
Assets

Assets

Advances to/receivables from equity companies (included in

Derivative assets (included in the Balance Sheet line: Other

the Balance Sheet line: Investments, advances and

current assets)

104

104

-

-

104

long-term receivables)

9,240

-

2,221

7,171

9,392
Advances to/receivables from equity companies (included in

Other long-term financial assets (included in the Balance

the Balance Sheet line: Investments, advances and

Sheet lines: Investments, advances and long-term receivables

long-term receivables)

8,969

-

1,763

7,072

8,835

and Other assets, including intangibles – net)

1,695

742

-

976

1,718
Other long-term financial assets (included in the Balance

Sheet lines: Investments, advances and long-term receivables

and Other assets, including intangibles – net)

1,748

764

-

1,041

1,805

Liabilities
Liabilities

Liabilities

Long-term debt (excluding capitalized lease obligations)

19,315

19,266

152

4

19,422
Derivative liabilities (included in the Balance Sheet line:

Long-term obligations to equity companies

4,818

-

-

5,058

5,058

Accounts payable and accrued liabilities)

248

248

-

-

248

Other long-term financial liabilities (included in the

Long-term debt (excluding capitalized lease obligations)

19,275

19,020

110

4

19,134

Balance Sheet line: Other long-term obligations)

1,066

-

-

1,059

1,059
Long-term obligations to equity companies

4,625

-

-

4,728

4,728

Other long-term financial liabilities (included in the

Balance Sheet line: Other long-term obligations)

1,114

-

-

1,121

1,121

Derivative Instruments. The Corporation’s size, strong capital structure, geographic diversity and the complementary nature of the Upstream, Downstream and Chemical businesses reduce the Corporation’s enterprise-wide risk from changes in interest rates, currency rates and commodity prices. In addition, the Corporation uses commodity-based contracts, including derivatives, to manage commodity price risk and for trading purposes. 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 believes that there are no material market or credit risks to the Corporation’s financial position, results of operations or liquidity as a result of the derivatives. The Corporation maintains a system of controls that includes the authorization, reporting and monitoring of derivative activity. Derivative instruments are currently not subject to a master netting agreement, and the Corporation has not offset collateral against the carrying value. The carrying value of derivative instruments, none of which are designated as hedging instruments, is as follows :

Sept. 30,

Dec. 31,

2018

2017

(millions of dollars)
Exchange Traded Futures and Swaps

Assets

104

25

Liabilities

(248)

(63)

Collateral receivable/(payable)

272

94

Total

128

56
At September 30, 2018, the net notional long/(short) position of derivative instruments was (16) million barrels for crude oil and was (11) million barrels for products.

13

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

Three Months Ended

Nine Months Ended

September 30,

September 30,

2018

2017

2018

2017

(millions of dollars)

Sales and other operating revenue

(68)

(11)

(72)

16
Crude oil and product purchases

(107)

(80)

(380)

(37)

Total

(175)

(91)

(452)

(21)
8.     Disclosures about Segments and Related Information

Three Months Ended

March 31,

2018

2017

Earnings After Income Tax

(millions of dollars)

Upstream

United States

429

(18)

Non-U.S.

3,068

2,270

Downstream

United States

319

292

Non-U.S.

621

824

Chemical

United States

503

529

Non-U.S.

508

642

Corporate and financing (1)

(798)

(529)

Corporate total

4,650

4,010

Sales and Other Operating Revenue

Upstream

United States

2,361

2,324

Non-U.S.

3,628

3,509

Downstream

United States

16,995

14,582

Non-U.S.

34,372

29,044

Chemical

United States

2,989

2,783

Non-U.S.

5,078

4,218

Corporate and financing

13

14

Corporate total

65,436

56,474

Intersegment Revenue

Upstream

United States

2,062

1,290

Non-U.S.

6,871

5,899

Downstream

United States

4,944

3,646

Non-U.S.

7,089

5,214

Chemical

United States

2,194

1,770

Non-U.S.

1,843

1,190

Corporate and financing

49

56

Three Months Ended

Nine Months Ended

September 30,

September 30,

2018

2017

2018

2017

Earnings After Income Tax

(millions of dollars)

Upstream

United States

606

(238)

1,474

(439)

Non-U.S.

3,623

1,805

9,292

5,442

Downstream

United States

961

391

1,975

1,030

Non-U.S.

681

1,141

1,331

3,003

Chemical

United States

404

403

1,360

1,413

Non-U.S.

309

689

1,254

1,835

Corporate and financing (1)

(344)

(221)

(1,846)

(954)

Corporate total

6,240

3,970

14,840

11,330

Sales and Other Operating Revenue

Upstream

United States

2,728

2,282

7,637

6,955

Non-U.S.

4,129

3,633

11,344

10,586

Downstream

United States

19,963

15,423

56,616

44,533

Non-U.S.

39,077

30,955

110,855

88,866

Chemical

United States

3,152

2,589

9,160

8,118

Non-U.S.

5,125

4,455

15,429

12,751

Corporate and financing

13

13

38

41

Corporate total

74,187

59,350

211,079

171,850

Intersegment Revenue

Upstream

United States

2,203

1,365

6,336

3,937

Non-U.S.

8,536

5,734

22,788

16,356

Downstream

United States

5,834

3,134

16,527

10,621

Non-U.S.

8,275

5,866

22,975

16,048

Chemical

United States

2,408

1,675

6,952

5,290

Non-U.S.

1,841

1,482

5,657

3,776

Corporate and financing

54

51

153

154

(1) See Note 2 for additional details regarding the change in segmentation of Non-service pension and postretirement benefit expense.

14

Geographic

Three Months Ended

March 31,

Sales and Other Operating Revenue

2018

2017

(millions of dollars)

United States

22,345

19,689

Non-U.S.

43,091

36,785

Total

65,436

56,474

Significant Non-U.S. revenue sources include: (1)

Canada

5,375

4,634

United Kingdom

4,672

4,135

Belgium

3,977

3,265

Singapore

3,427

2,751

France

3,245

2,568

Italy

3,154

2,669

Germany

2,231

2,004

Geographic

Three Months Ended

Nine Months Ended

September 30,

September 30,

Sales and Other Operating Revenue

2018

2017

2018

2017

(millions of dollars)

United States

25,843

20,294

73,413

59,606

Non-U.S.

48,344

39,056

137,666

112,244

Total

74,187

59,350

211,079

171,850

Significant Non-U.S. revenue sources include: (1)

Canada

6,214

5,260

17,752

14,492

United Kingdom

4,797

4,057

14,240

12,309

Belgium

3,996

3,247

12,063

9,833

France

3,588

2,984

10,405

8,290

Singapore

3,502

2,888

10,387

8,264

Italy

3,316

2,913

9,684

8,317

Germany

2,518

2,210

7,184

6,283

(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.

9.     Additional Information on Revenue Recognition
Accounting Policy for Revenue Recognition
The Corporation generally sells crude oil, natural gas and petroleum and chemical products under short-term agreements at prevailing market prices. In some cases (e.g., natural gas), products may be sold under long-term agreements, with periodic price adjustments to reflect market conditions. Revenue is recognized at the amount the Corporation expects to receive when the customer has taken control, which is typically when title transfers and the customer has assumed the risks and rewards of ownership. The prices of certain sales are based on price indexes that are sometimes not available until the next period. In such cases, estimated realizations are accrued when the sale is recognized, and are finalized when the price is available. Such adjustments to revenue from performance obligations satisfied in previous periods are not significant. Payment for revenue transactions is typically due within 30 days. Future volume delivery obligations that are unsatisfied at the end of the period are expected to be fulfilled through ordinary production or purchases. These performance obligations are based on market prices at the time of the transaction and are fully constrained due to market price volatility.

“Sales and other operating revenue” and “Notes and accounts receivable” primarily arise from contracts with customers. Long-term receivables are primarily from non-customers. Contract assets are mainly from marketing assistance programs and are not significant. Contract liabilities are mainly customer prepayments and accruals of expected volume discounts and are not significant.

15

EXXON MOBIL CORPORATION

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

FUNCTIONAL EARNINGS SUMMARY
FUNCTIONAL EARNINGS SUMMARY
FUNCTIONAL EARNINGS SUMMARY

First Three Months

Third Quarter

First Nine Months
Earnings (U.S. GAAP)
Earnings (U.S. GAAP)

2018

2017
Earnings (U.S. GAAP)

2018

2017

2018

2017

(millions of dollars)

(millions of dollars)
Upstream
Upstream

Upstream

United States

429

(18)
United States

606

(238)

1,474

(439)

Non-U.S.

3,068

2,270
Non-U.S.

3,623

1,805

9,292

5,442
Downstream
Downstream

Downstream

United States

319

292
United States

961

391

1,975

1,030

Non-U.S.

621

824
Non-U.S.

681

1,141

1,331

3,003
Chemical
Chemical

Chemical

United States

503

529
United States

404

403

1,360

1,413

Non-U.S.

508

642
Non-U.S.

309

689

1,254

1,835
Corporate and financing (1)
Corporate and financing (1)

(798)

(529)
Corporate and financing (1)

(344)

(221)

(1,846)

(954)

Net income attributable to ExxonMobil (U.S. GAAP)

4,650

4,010
Net income attributable to ExxonMobil (U.S. GAAP)

6,240

3,970

14,840

11,330

Earnings per common share (dollars)
Earnings per common share (dollars)

1.09

0.95
Earnings per common share (dollars)

1.46

0.93

3.47

2.66

Earnings per common share - assuming dilution (dollars)
Earnings per common share - assuming dilution (dollars)

1.09

0.95
Earnings per common share - assuming dilution (dollars)

1.46

0.93

3.47

2.66

(1) See Note 2 to the financial statements for additional details regarding the change in segmentation of Non-service pension and postretirement benefit expense.

References in this discussion to ~~corporate~~Corporate earnings mean net income attributable to ExxonMobil (U.S. GAAP) from the consolidated income statement. Unless otherwise indicated, references to earnings, Upstream, Downstream, Chemical and Corporate and financing segment earnings, and earnings per share are ExxonMobil's share after excluding amounts attributable to noncontrolling interests.


REVIEW OF ~~FIRST~~THIRD QUARTER 2018 RESULTS

ExxonMobil’s ~~first~~third quarter 2018 earnings were ~~$4.7~~$6.2 billion, or ~~$1.09~~$1.46 per diluted share, ~~assuming dilution,~~ compared with $4 billion a year ~~earlier. Increased commodity prices, coupled with a focus on operating efficiently and strengthening~~earlier, as liquids realizations increased.
Earnings of $14.8 billion for the ~~portfolio, resulted~~first nine months of 2018 increased 31 percent from $11.3 billion in ~~higher earnings and the highest cash flow from operations and asset sales since 2014.~~2017.

~~Through new discoveries~~Earnings per share assuming dilution were $3.47.
Capital and ~~acquired acreage,~~exploration expenditures were $18.1 billion, up 28 percent from 2017.
Oil‑equivalent production was 3.8 million barrels per day, down 5 percent from the ~~Corporation has positioned its Upstream portfolio well for future growth.~~ prior year. Excluding entitlement effects and divestments, oil‑equivalent production was down 2 percent from the prior year.
The Corporation ~~also made good progress on plans~~distributed $10.3 billion in dividends to ~~improve the production mix and grow premium product sales in the Downstream and Chemical businesses.~~shareholders.

16

First Three Months

2018

2017

(millions of dollars)
Upstream earnings

United States

429

(18)

Non-U.S.

3,068

2,270

Total

3,497

2,252

Third Quarter

First Nine Months

2018

2017

2018

2017

(millions of dollars)
Upstream earnings

United States

606

(238)

1,474

(439)

Non-U.S.

3,623

1,805

9,292

5,442

Total

4,229

1,567

10,766

5,003

Upstream earnings were ~~$3,497~~$4,229 million in the ~~first~~third quarter of 2018, up ~~$1,245~~$2,662 million from the ~~first~~third quarter of 2017.
·         ~~Higher~~Realizations increased earnings by $2,580 million due to higher liquids and gas ~~realizations increased earnings by $1,430 million.~~realizations.
·         ~~Lower~~Higher volume and mix effects ~~including the impact from the Papua New Guinea earthquake, decreased~~increased earnings by ~~$190~~$50 million.
·         All other items increased earnings by ~~$10~~$30 million ~~as the $366 million gain on the Scarborough sale in Australia was partially~~including favorable one-time tax impacts, partly offset by higher production expenses.
·         U.S. Upstream earnings were ~~$429~~$606 million, up ~~$447~~$844 million from the prior ~~year.~~year quarter.
·         Non‑U.S. Upstream earnings were ~~$3,068~~$3,623 million, up ~~$798~~$1,818 million from the prior ~~year.~~year quarter.
·         On an oil‑equivalent basis, production decreased 62 percent from the third quarter of 2017.
·Liquids production totaled 2.3 million barrels per day, up 6,000 barrels per day as growth more than offset lower volumes from entitlements, divestments, decline, and downtime.
·Natural gas production was 9 billion cubic feet per day, down 584 million cubic feet per day driven by decline largely in the U.S. aligned with value focus, lower volumes from divestments and lower demand.
Upstream earnings were $10,766 million in the first nine months of 2018, up $5,763 million from the first nine months of 2017.
·Realizations increased earnings by $6,400 million mainly due to higher liquids realizations.
·Lower volume and mix effects decreased earnings by $430 million.
·All other items decreased earnings by $210 million, mainly due to higher production expenses and unfavorable tax impacts, partly offset by favorable one-time tax items and higher divestment gains.
·U.S. Upstream earnings were $1,474 million, up $1,913 million from the first nine months of prior year.
·Non-U.S. Upstream earnings were $9,292 million, up $3,850 million from the first nine months of prior year.
·On an oil-equivalent basis, production decreased 5 percent from the first ~~quarter~~nine months of 2017.
·         Liquids production totaled 2.2 million barrels per day, down ~~117,000~~56,000 barrels per day as growth in North America was more than offset by lower volumes from decline, entitlements, and ~~divestments, were partially offset by growth in North America.~~divestments.
·         Natural gas production was 109.2 billion cubic feet per day, down ~~870~~920 million cubic feet per day driven by decline in the U.S. aligned with value focus, higher downtime ~~including impacts~~and lower volumes from ~~the Papua New Guinea earthquake, lower~~ entitlements and ~~base decline.~~divestments.

17

First Quarter

Third Quarter

First Nine Months
Upstream additional information
Upstream additional information

(thousands of barrels daily)
Upstream additional information

(thousands of barrels daily)

Volumes reconciliation (Oil-equivalent production) (1)
Volumes reconciliation (Oil-equivalent production) (1)

Volumes reconciliation (Oil-equivalent production)(1)

2017
2017

4,151

2017

3,878

3,983

Entitlements - Net Interest

(3)

Entitlements - Net Interest

(3)

(3)

Entitlements - Price / Spend / Other

(70)

Entitlements - Price / Spend / Other

(84)

(68)

Quotas

-

Quotas

-

-

Divestments

(53)

Divestments

(69)

(64)

Growth / Other

(136)

Growth / Other

64

(74)

2018
2018

3,889

2018

3,786

3,774

(1) Gas converted to oil-equivalent at 6 million cubic feet = 1 thousand barrels.
(1) Gas converted to oil-equivalent at 6 million cubic feet = 1 thousand barrels.
(1) Gas converted to oil-equivalent at 6 million cubic feet = 1 thousand barrels.

Listed below are descriptions of ExxonMobil’s volumes reconciliation factors which are provided to facilitate understanding of the terms.

Entitlements - Net Interest are changes to ExxonMobil’s share of production volumes caused by non-operational changes to volume-determining factors. These factors consist of net interest changes specified in Production Sharing Contracts (PSCs) which typically occur when cumulative investment returns or production volumes achieve defined thresholds, changes in equity upon achieving pay-out in partner investment carry situations, equity redeterminations as specified in venture agreements, or as a result of the termination or expiry of a concession. Once a net interest change has occurred, it typically will not be reversed by subsequent events, such as lower crude oil prices.

Entitlements - Price, Spend and Other are changes to ExxonMobil’s share of production volumes resulting from temporary changes to non-operational volume-determining factors. These factors include changes in oil and gas prices or spending levels from one period to another. According to the terms of contractual arrangements or government royalty regimes, price or spending variability can increase or decrease royalty burdens and/or volumes attributable to ExxonMobil. For example, at higher prices, fewer barrels are required for ExxonMobil to recover its costs. These effects generally vary from period to period with field spending patterns or market prices for oil and natural gas. Such factors can also include other temporary changes in net interest as dictated by specific provisions in production agreements.

Quotas are changes in ExxonMobil’s allowable production arising from production constraints imposed by countries which are members of the Organization of the Petroleum Exporting Countries (OPEC). Volumes reported in this category would have been readily producible in the absence of the quota.

Divestments are reductions in ExxonMobil’s production arising from commercial arrangements to fully or partially reduce equity in a field or asset in exchange for financial or other economic consideration.

Growth and Other factors comprise all other operational and non-operational factors not covered by the above definitions that may affect volumes attributable to ExxonMobil. Such factors include, but are not limited to, production enhancements from project and work program activities, acquisitions including additions from asset exchanges, downtime, market demand, natural field decline, and any fiscal or commercial terms that do not affect entitlements.


18

First Three Months

2018

2017

(millions of dollars)
Downstream earnings

United States

319

292

Non-U.S.

621

824

Total

940

1,116

Third Quarter

First Nine Months

2018

2017

2018

2017

(millions of dollars)
Downstream earnings

United States

961

391

1,975

1,030

Non-U.S.

681

1,141

1,331

3,003

Total

1,642

1,532

3,306

4,033

Downstream earnings were ~~$940~~$1,642 million ~~down $176~~in the third quarter of 2018, up $110 million from the ~~first~~third quarter of 2017.
·         Margins decreased earnings ~~$30~~by $110 million, as lower ~~Non‑U.S.~~Non-U.S. margins were partially offset by higher U.S. margins.
·         ~~Lower volumes~~Higher volume and mix effects increased earnings by $210 million, primarily ~~reflecting~~due to improved refinery operations.
·All other items increased earnings by $10 million, mainly due to favorable tax impacts and divestment gains, partly offset by higher maintenance expenses.
·U.S. Downstream earnings were $961 million, up $570 million from the prior year quarter.
·Non‑U.S. Downstream earnings were $681 million, down $460 million from the prior year quarter.
·Petroleum product sales of 5.6 million barrels per day were 74,000 barrels per day higher than the prior year quarter.
Downstream earnings were $3,306 million in the first nine months of 2018, down $727 million from the first nine months of 2017.
·Margins increased earnings by $110 million, as higher U.S. margins were partially offset by lower ~~throughput at the Joliet refinery in Illinois,~~Non-U.S. margins.
·Lower volume and mix effects decreased earnings by ~~$60 million.~~$40 million, primarily due to downtime and maintenance partly offset by improved refinery mix/ yield and higher sales.
·         All other items decreased earnings by ~~$90~~$800 million, asmainly due to unfavorable foreign exchange impacts of $250 million, lower divestment gains of $180 million, and other unfavorable impacts of $370 million including higher expenses ~~were partially offset by lower turnaround costs in the U.S.~~from downtime / maintenance.
·         U.S. Downstream earnings were ~~$319~~$1,975 million, up ~~$27~~$945 million from the first nine months of prior year.
·         ~~Non‑U.S.~~Non-U.S. Downstream earnings were ~~$621~~$1,331 million, down ~~$203~~$1,672 million from the first nine months of prior year.
·         Petroleum product sales of ~~5.4~~5.5 million barrels per day were ~~37,000~~18,000 barrels per day higher than ~~last year’s~~the first ~~quarter.~~nine months of prior year.



First Three Months

2018

2017

(millions of dollars)
Chemical earnings

United States

503

529

Non-U.S.

508

642

Total

1,011

1,171

19

Third Quarter

First Nine Months

2018

2017

2018

2017

(millions of dollars)
Chemical earnings

United States

404

403

1,360

1,413

Non-U.S.

309

689

1,254

1,835

Total

713

1,092

2,614

3,248

Chemical earnings of ~~$1,011~~$713 million in the third quarter of 2018, were ~~$160~~$379 million lower than the ~~first~~third quarter of 2017.
·         Weaker margins decreased earnings by ~~$270~~$140 million.
·         Volume and mix effects increased earnings by ~~$120~~$20 million.
·         All other items decreased earnings by ~~$10~~$260 million, asmainly due to higher ~~growth‑related expenses were partially offset by favorable foreign exchange impacts.~~ expenses.
·         U.S. Chemical earnings were ~~$503~~$404 million, ~~down $26~~up $1 million from the prior ~~year.~~year quarter.
·         Non‑U.S. Chemical earnings were ~~$508~~$309 million, down ~~$134~~$380 million from the prior ~~year.~~year quarter.
·         ~~First~~Third quarter prime product sales of 6.7 million metric tons were ~~596,000~~231,000 metric tons ~~or 10 percent,~~ higher than the prior year quarter due to project growth and acquisitions.
Chemical earnings were $2,614 million in the first nine months of 2018, down $634 million from the first nine months of 2017.
·Weaker margins decreased earnings by $640 million.
·Volume and mix effects increased earnings by $250 million.
·All other items decreased earnings by $240 million, as higher expenses were partially offset by favorable foreign exchange and tax impacts.
·U.S. Chemical earnings were $1,360 million, down $53 million from the first nine months of prior year.
·Non-U.S. Chemical earnings were $1,254 million, down $581 million from the first nine months of prior year.
·Prime product sales of 20.2 million metric tons in the first nine months were 1.6 million metric tons higher than the first nine months of prior year due to project growth and acquisitions.

First Three Months

2018

2017

(millions of dollars)

Corporate and financing earnings

(798)

(529)

Third Quarter

First Nine Months

2018

2017

2018

2017

(millions of dollars)

Corporate and financing earnings

(344)

(221)

(1,846)

(954)

Corporate and financing expenses were ~~$798~~$344 million for the ~~first~~third quarter of 2018, up ~~$269~~$123 million from the ~~first~~third quarter of 2017, mainly due to the impact of a lower U.S. tax rate.
Corporate and financing expenses were $1,846 million in the first nine months of 2018, up $892 million from the first nine months of 2017, mainly due to lower net favorable tax items, the impact of a lower U.S. tax rate, and higher pension and financing related costs.

1920

LIQUIDITY AND CAPITAL RESOURCES
LIQUIDITY AND CAPITAL RESOURCES
LIQUIDITY AND CAPITAL RESOURCES

First Three Months

Third Quarter

First Nine Months

2018

2017

2018

2017

2018

2017

(millions of dollars)

(millions of dollars)
Net cash provided by/(used in)
Net cash provided by/(used in)

Net cash provided by/(used in)

Operating activities

8,519

8,173
Operating activities

27,407

22,655

Investing activities

(1,859)

(3,761)
Investing activities

(10,862)

(9,194)

Financing activities

(5,742)

(3,246)
Financing activities

(13,945)

(13,293)
Effect of exchange rate changes
Effect of exchange rate changes

30

74
Effect of exchange rate changes

(108)

441
Increase/(decrease) in cash and cash equivalents
Increase/(decrease) in cash and cash equivalents

948

1,240
Increase/(decrease) in cash and cash equivalents

2,492

609

Cash and cash equivalents (at end of period)
Cash and cash equivalents (at end of period)

4,125

4,897
Cash and cash equivalents (at end of period)

5,669

4,266

Cash flow from operations and asset sales
Cash flow from operations and asset sales

Cash flow from operations and asset sales

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

8,519

8,173
Net cash provided by operating activities (U.S. GAAP)

11,108

7,535

27,407

22,655

Proceeds associated with sales of subsidiaries, property, plant & equipment,

Proceeds associated with sales of subsidiaries, property,

and sales and returns of investments

1,441

687

plant & equipment, and sales and returns of investments

1,491

854

3,239

1,695

Cash flow from operations and asset sales

9,960

8,860
Cash flow from operations and asset sales

12,599

8,389

30,646

24,350

Because of the ongoing nature of our asset management and divestment program, we believe it is useful for investors to consider proceeds associated with asset sales together with cash provided by operating activities when evaluating cash available for investment in the business and financing activities, including shareholder distributions.

Cash flow from operations and asset sales in the ~~first~~third quarter of 2018 was ~~$10.0~~$12.6 billion, including asset sales of ~~$1.4~~$1.5 billion, an increase of ~~$1.1~~$4.2 billion from the comparable 2017 period primarily ~~due to~~reflecting higher earnings and ~~increased proceeds from asset management activity.~~favorable working capital effects.

Cash provided by operating activities totaled ~~$8.5~~$27.4 billion for the first ~~quarter~~nine months of 2018, ~~$0.3~~$4.8 billion higher than 2017. The major source of funds was net income including noncontrolling interests of ~~$4.8~~$15.2 billion, an increase of ~~$0.7~~$3.8 billion from the prior year period. The adjustment for the noncash provision of ~~$4.5~~$13.7 billion for depreciation and depletion was ~~essentially in line with~~down $0.3 billion from 2017. Changes in operational working capital ~~increased cash flows by $0.4~~were essentially flat, compared to a decrease of $0.5 billion ~~down $0.4 billion from~~in the prior year period. All other items net decreased cash flows by ~~$1.1~~$1.5 billion in 2018 ~~compared to~~versus a reduction of ~~$1.2~~$2.3 billion in 2017. See the Condensed Consolidated Statement of Cash Flows for additional details.

Investing activities for the first ~~quarter~~nine months of 2018 used net cash of ~~$1.9~~$10.9 billion, ~~a decrease~~an increase of ~~$1.9~~$1.7 billion compared to the prior year. Spending for additions to property, plant and equipment of ~~$3.3~~$13.5 billion was ~~$0.5~~$2.6 billion higher than 2017. Proceeds from asset sales of ~~$1.4~~$3.2 billion increased ~~$0.8~~$1.5 billion. Investments and advances decreased ~~$1.6~~$0.8 billion, principally reflecting the absence of the deposit into escrow of the maximum potential contingent consideration payable as a result of the acquisition of InterOil Corporation in 2017. This was partly offset by cash outflows in 2018 related to the acquisition of a Downstream business in Indonesia.
Cash flow from operations and asset sales in the first nine months of 2018 was $30.6 billion, including asset sales of $3.2 billion, an increase of $6.3 billion from the comparable 2017 period primarily reflecting higher earnings and increased asset sale proceeds.

Net cash used by financing activities was ~~$5.7~~$13.9 billion in the first ~~quarter~~nine months of 2018, an increase of ~~$2.5~~$0.7 billion from 2017. The net reduction in short and long term debt was ~~$1.9~~$2.7 billion compared to ~~a net addition of $0.4~~$2.8 billion in 2017.

During the first ~~quarter~~nine months of 2018, Exxon Mobil Corporation purchased 5 million shares of its common stock for the treasury at a gross cost of $0.4 billion. These purchases were made to offset shares or units settled in shares issued in conjunction with the company’s benefit plans and programs. Shares outstanding decreased from 4,239 million at year-end to 4,234 million at the end of the ~~first~~third quarter of 2018. Purchases may be made both in 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 ~~$3.3~~$10.3 billion to shareholders in the first ~~quarter~~nine months of 2018 through dividends.

21

Total cash and cash equivalents of ~~$4.1~~$5.7 billion at the end of the ~~first~~third quarter of 2018 compared to $3.2 billion at year-end 2017.

Total debt at the end of the ~~first~~third quarter of 2018 was ~~$40.6~~$40 billion compared to $42.3 billion at year-end 2017. The Corporation's debt to total capital ratio was ~~17.2~~16.9 percent at the end of the ~~first~~third quarter of 2018 compared to 17.9 percent at year-end 2017.

20

The Corporation has access to significant capacity of long-term and short-term liquidity. Internally generated funds are generally expected to cover financial requirements, supplemented by short-term and long-term debt as required.

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. Additionally, the Corporation continues to evaluate opportunities to enhance its business portfolio through acquisitions of assets or companies, and enters into such transactions from time to time. Key criteria for evaluating acquisitions include potential for future growth and attractive current valuations. Acquisitions may be made with cash, shares of the Corporation’s common stock, or both.

Litigation and other contingencies are discussed in Note 3 to the unaudited condensed consolidated financial statements.

TAXES
TAXES

TAXES

First Three Months

Third Quarter

First Nine Months

2018

2017

2018

2017

2018

2017

(millions of dollars)

(millions of dollars)

Income taxes
Income taxes

2,457

1,828

Income taxes

2,634

1,498

7,617

4,218

Effective income tax rate

40
%

38
%

Effective income tax rate

34
%

33
%

39
%

34
%
Total other taxes and duties (1)
Total other taxes and duties (1)

8,815

7,629

Total other taxes and duties (1)

8,939

8,287

26,757

23,876

Total

11,272

9,457

Total

11,573

9,785

34,374

28,094

(1) Includes “Other taxes and duties” plus taxes that are included in “Production and manufacturing expenses” and “Selling, general and administrative expenses.”

Total taxes were ~~$11.3~~$11.6 billion for the ~~first~~third quarter of 2018, an increase of $1.8 billion from 2017. Income tax expense increased by ~~$0.6~~$1.1 billion to ~~$2.5~~$2.6 billion reflecting higher pre-tax income. The effective income tax rate was 4034 percent compared to 3833 percent in the prior year period. This increase mainly reflects a higher share of earnings in higher tax jurisdictions, partly offset by the impact of favorable one-time tax items. Total other taxes and duties increased by $0.7 billion to $8.9 billion.
Total taxes were $34.4 billion for the first nine months of 2018, an increase of $6.3 billion from 2017. Income tax expense increased by $3.4 billion to $7.6 billion reflecting higher pre-tax income. The effective income tax rate was 39 percent compared to 34 percent in the prior year period due to a higher share of earnings in higher tax jurisdictions. Total other taxes and duties increased by ~~$1.2~~$2.9 billion to ~~$8.8~~$26.8 billion.

~~During~~Non-U.S. Upstream earnings included a $270 million tax credit resulting from an updated estimate of the impact of U.S. tax reform and from clarifications provided in proposed transition tax regulations issued by the Treasury in the third quarter of 2018. The adjustment restores a portion of the U.S. tax reform deferred income tax expense reported in the non-U.S. Upstream segment in the fourth quarter of 2017. There were no other significant changes during the first ~~three~~nine months of 2018 ~~there were no significant changes~~ to the Corporation’s reasonable estimates of the income tax effects reflected in 2017 for the changes in tax law and tax rate from ~~the enactment of the~~ U.S. ~~Tax Cuts and Jobs Act~~tax reform and following guidance outlined in the SEC Staff Accounting Bulletin No. 118. The impact of tax law changes on the Corporation’s financial statements could differ from its estimates due to further analysis of the new law, regulatory guidance, technical corrections legislation, or guidance under U.S. ~~GAAP.~~GAAP, or other considerations. If significant changes occur, the Corporation will provide updated information in connection with ~~future regulatory filings.~~its Form 10-K for 2018.

In the United States, the Corporation has various ongoing U.S. federal income tax positions at issue with the Internal Revenue Service (IRS) for tax years beginning in 2006. The IRS has asserted penalties associated with several of those positions. The Corporation has not recognized the penalties as an expense because the Corporation does not expect the penalties to be sustained under applicable law. The Corporation has filed a refund suit for tax years 2006-2009 in a U.S. federal district court with respect to the positions at issue for those years. Unfavorable resolution of all positions at issue with the IRS would not have a materially adverse effect on the Corporation’s net income or liquidity.

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CAPITAL AND EXPLORATION EXPENDITURES CAPITAL AND EXPLORATION EXPENDITURES

CAPITAL AND EXPLORATION EXPENDITURES

First Three Months

Third Quarter

First Nine Months

2018

2017

2018

2017

2018

2017

(millions of dollars)

(millions of dollars)

Upstream (including exploration expenses)
Upstream (including exploration expenses)

3,759

3,119

Upstream (including exploration expenses)

5,330

3,175

13,944

9,080

Downstream
Downstream

614

545

Downstream

719

611

2,563

1,742

Chemical
Chemical

465

497

Chemical

526

2,183

1,524

3,215

Other
Other

29

8

Other

11

18

49

44

Total

4,867

4,169

Total

6,586

5,987

18,080

14,081

Capital and exploration expenditures in the ~~first~~third quarter of 2018 were ~~$4.9~~$6.6 billion, up 1710 percent from the third quarter of 2017.
Capital and exploration expenditures in the first nine months of 2018 were $18.1 billion, up 28 percent from the first ~~quarter~~nine months of ~~2017.~~2017 due primarily to increased U.S. drilling activity and acreage acquisitions in Brazil. The Corporation anticipates an investment level of ~~$24~~approximately $25 billion in 2018. Actual spending could vary depending on the progress of individual projects and property acquisitions.

In 2013 and 2014, the Corporation and Rosneft established various entities to conduct exploration and research activities. In 2014, the European Union and United States imposed sanctions relating to the Russian energy sector. ExxonMobil continues to comply with all sanctions and regulatory licenses applicable to its affiliates’ investments in the Russian Federation. See Part II. Other Information, Item 1. Legal Proceedings in this report for information concerning a civil penalty assessment related to this matter which the Corporation is contesting. The Corporation withdrew from the aforementioned joint ventures with Rosneft, effective April 30, 2018.

The Groningen field is operated by Nederlandse Aardolie Maatschappij (NAM), a Netherlands company owned 50 percent by affiliates of the Corporation. NAM has a 60 percent interest in the Groningen field. On March 29, 2018, the Dutch Cabinet notified Parliament of its intention to further reduce previously legislated Groningen gas extraction in response to seismic events over the last several years. Affiliates of the Corporation and their partners ~~are~~have actively been in discussions with the government on the associated implementation ~~measures. If~~measures which resulted in a signed Heads of Agreement (HoA – agreement on principles) on June 25, 2018 and the ~~Cabinet’s intentions are implemented,~~execution of additional implementation agreements in September. In anticipation of a lower production outlook, the ~~reduction to the Corporation’s~~Corporation has reduced its estimate of proved reserves ~~could be up to~~by 0.8 billion oil-equivalent barrels. In addition, the seismic activity has yielded various claims. Where losses are probable and reasonably estimable, liabilities have been recorded. The Corporation does not expect these matters to have a material effect on the Corporation’s operations or financial condition. While the future production profile and other considerations related to the Groningen field could vary depending on a wide variety of factors, reduced gas extraction in the future is expected to result in lower reported production, earnings and cash flows than in recent years for the Corporation’s share of NAM.

RECENTLY ISSUED ACCOUNTING STANDARDS

Effective January 1, 2019, ExxonMobil will adopt the Financial Accounting Standards Board’s standard, Leases (Topic 842), as amended. The standard requires all leases with an initial term greater than one year to be recorded on the balance sheet as ana right of use asset and a lease liability. We expect to use a transition method that applies the new lease standard at January 1, 2019, and recognizes any cumulative-effect adjustments to the opening balance of 2019 retained earnings.
The Corporation ~~is gathering and evaluating data and recently~~ acquired ~~a system~~lease accounting software to facilitate ~~implementation. We are progressing an assessment~~implementation, and is currently configuring and testing the software. Based on leases outstanding at the end of 2017, the ~~magnitude~~Corporation estimates the operating lease right of use asset and lease liability would have been in the range of $4 billion to $5 billion at that time. The effect on the Corporation’s ~~financial statements.~~balance sheet as a result of implementing the standard on January 1, 2019, could differ considerably depending on operating leases commenced in 2018 as well as interest rates and other factors such as the expiry or renewal of leases during the year.

2223

FORWARD-LOOKING STATEMENTS

Statements relating to future plans and objectives, projections, events or conditions are forward-looking statements. Future results, including ~~project plans,~~new projects, growth strategies, costs, timing, and capacities; business growth; integration benefits; resource recoveries; and the impact of new ~~technologies; and share purchase levels,~~technologies, could differ materially due to ~~factors including:~~a number of factors. These include changes in supply and demand for oil, gas or ~~petrochemical prices~~petrochemicals or other market ~~or economic~~ conditions affecting the oil, gas orand petrochemical ~~industries, including the scope and duration of economic recessions; the outcome of exploration and development efforts;~~industries; reservoir performance; timely completion of new projects; ~~changes in law or government regulation, including tax and environmental requirements;~~ the impact of fiscal and commercial terms and the outcome of commercial negotiations; changes in law, taxes, or government regulation and timely granting of governmental permits; war and other political or security disturbances; the actions of competitors; unforeseen technical or operating difficulties; unexpected technological developments; general economic conditions including the occurrence and duration of economic recessions; commodity cycles within the general economy; the results of research programs; ~~changes in technical or operating conditions; actions of competitors;~~ and other factors discussed under the heading ~~“Factors~~Factors Affecting Future ~~Results” in~~Results on the ~~“Investors” section~~Investors page of our website at www.exxonmobil.com and in Item 1A of ExxonMobil's 2017 Form 10-K. We assume no duty to update these statements as of any future date.

The term “project” as used in this report can refer to a variety of different activities and does not necessarily have the same meaning as in any government payment transparency reports.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Information about market risks for the ~~three~~nine months ended ~~March 31,~~September 30, 2018, does not differ materially from that discussed under Item 7A of the registrant's Annual Report on Form 10-K for 2017.

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 ~~March 31,~~September 30, 2018. 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.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

As last reported in the Corporation’s Form 10-K for 2017, in April 2017, the State of North Dakota Department of Health (NDDOH) and the North Dakota State Office of the Attorney General notified XTO Energy Inc. (XTO) of their interest in settling alleged violations of the North Dakota Century Code and implementing regulations regarding the alleged failure of vapor control systems to properly route tank vapors to control devices at well pads and tank farms outside the Fort Berthold Indian Reservation. On ~~January 25,~~February 1, 2018, ~~ExxonMobil Oil Corporation (EMOC) received a letter setting forth a potential settlement of a previously issued notice of violation from~~ the South ~~Coast Air Quality Management~~Central Judicial District ~~(SCAQMD) regarding EMOC’s former Torrance Refinery~~Court in ~~California. The SCAQMD contends that~~Bismarck, North Dakota, approved a Consent Decree between XTO and NDDOH concerning those alleged violations. Under the ~~refinery failed to adequately identify and meet the requirements concerning pumps, sumps and other equipment subject to SCAQMD leak detection, repair and reporting requirements over an extended period~~Consent Decree, XTO paid a civil penalty of time prior to EMOC’s sale of the refinery, in violation of SCAQMD rules and the California Health and Safety Code provisions dealing with air quality. The SCAQMD is seeking in excess of $100,000 to resolve the matter. EMOC is in settlement discussions with the SCAQMD, and the parties have entered into a tolling agreement to facilitate settlement discussions.
~~On March 26, 2018, the Corporation received a proposed agreed order from the Texas Commission~~$575,000 on Environmental Quality (TCEQ), dated March 15, 2018, related to routine Title V air operating permit investigations conducted by the TCEQ in 2017 of the Baytown Refinery in Texas. The proposed agreed order alleges that the refinery failed to authorize, monitor, or keep records on certain equipment and to comply with certain flare or fuel gas monitoring system availability requirements or concentration limits. The administrative penalty proposed by the TCEQ is in excess of $100,000. ExxonMobil is evaluating the proposal and alleged violations.September 21, 2018.

As last reported in the Corporation’s Form 10-Q for the third quarter of 2017, in a matter related to the discharge of crude oil from the Pegasus Pipeline in Mayflower, Faulkner County, Arkansas, the Pipeline and Hazardous Materials Safety Administration (PHMSA) on October 1, 2015, issued a Final Order arising from a November 2013 Notice of Probable Violation alleging that ExxonMobil Pipeline Company (EMPCo) violated multiple federal Pipeline Safety Regulations. The Final Order imposed a penalty of $2,630,400, which EMPCo paid on April 21, 2016. On June 27, 2016, EMPCo filed an appeal with the U.S. Court of Appeals for the Fifth Circuit, contesting six of the nine regulatory violations found by PHMSA and seeking a refund of the penalty paid associated with the six contested violations ($2,417,400 of the total penalty paid in April 2016). On August 14, 2017, the Fifth Circuit dismissed five of the six violations EMPCo challenged from PHMSA’s final administrative order, and vacated $1,634,100 in associated penalties. The Fifth Circuit also remanded the remaining violation back to PHMSA for re-calculation of the civil penalty previously imposed. On August 7, 2018, PHMSA issued the Order on Remand, assessing a reduced civil penalty of $61,900 for the remanded sixth violation (down from $783,300). As a result, in September 2018, EMPCo received a refund of $2,355,500 for penalties that had been paid.
As last reported in the Corporation’s Form 10-Q for the second quarter of ~~2017,~~2018, on July 20, 2017, the United States Department of Treasury, Office of Foreign Assets Control (OFAC) assessed a civil penalty against Exxon Mobil Corporation, ExxonMobil Development Company and ExxonMobil Oil Corporation for violating the Ukraine-Related Sanctions Regulations, 31 C.F.R. part 589. The assessed civil penalty is in the amount of $2,000,000. ExxonMobil and its affiliates have been and continue to be in compliance with all sanctions and disagree that any violation has occurred. ExxonMobil and its affiliates filed a complaint on July 20, 2017, in the United States Federal District Court, Northern District of Texas seeking judicial review of, and to enjoin, the civil penalty under the Administrative Procedures Act and the United States Constitution, including on the basis that it represents an arbitrary and capricious action by OFAC and a violation of the Company’s due process rights.

Refer to the relevant portions of Note 3 of this Quarterly Report on Form 10-Q for further information on legal proceedings.

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

Issuer Purchase of Equity Securities for Quarter Ended ~~March 31,~~September 30, 2018

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

~~January~~July 2018

~~1,856,228~~-

~~$87.26~~

~~1,856,228~~-

~~February~~August 2018

~~1,663,186~~-

~~$78.00~~

~~1,663,186~~-

~~March~~September 2018

~~1,792,886~~-

~~$74.56~~

~~1,792,886~~-

Total

~~5,312,300~~-

~~$80.08~~

~~5,312,300~~-

(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. In its earnings release dated February 2, 2016, the Corporation stated it will continue to acquire shares to offset dilution in conjunction with benefit plans and programs, but had suspended making purchases to reduce shares outstanding effective beginning the first quarter of 2016.

Item 6. Exhibits

See Index to Exhibits of this report.

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INDEX TO EXHIBITS

Exhibit

Description

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.
101

Interactive Data Files.

2627

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: ~~May 3,~~November 7, 2018
By:
/s/ DAVID S. ROSENTHAL

David S. Rosenthal

Vice President, Controller and

Principal Accounting Officer

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