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
~~Six Months Ended~~

~~June 30,~~March 31,
~~June 30,~~

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

2019
2018
Revenues and other income

Sales and other operating revenue

~~71,456~~61,646

~~56,026~~65,436

~~136,892~~
~~112,500~~

Income from equity affiliates

~~1,729~~1,709

~~1,525~~1,910

~~3,639~~
~~3,235~~

Other income

~~316~~270

~~526~~865

~~1,181~~
~~1,013~~

Total revenues and other income

~~73,501~~63,625

~~58,077~~68,211

~~141,712~~
~~116,748~~
Costs and other deductions

Crude oil and product purchases

~~41,327~~34,801

~~30,194~~36,288

~~77,615~~
~~60,553~~

Production and manufacturing expenses

~~8,918~~8,970

~~8,060~~8,491

~~17,409~~
~~15,626~~

Selling, general and administrative expenses

~~2,993~~2,770

~~2,556~~2,747

~~5,740~~
~~5,061~~

Depreciation and depletion

~~4,589~~4,571

~~4,652~~4,470

~~9,059~~
~~9,171~~

Exploration expenses, including dry holes

~~332~~280

~~514~~287

~~619~~
~~803~~

Non-service pension and postretirement benefit expense

~~308~~358

~~419~~337

~~645~~
~~792~~

Interest expense

~~147~~181

~~158~~204

~~351~~
~~304~~

Other taxes and duties

~~8,375~~7,405

~~7,368~~8,147

~~16,522~~
~~14,364~~

Total costs and other deductions

~~66,989~~59,336

~~53,921~~60,971

~~127,960~~
~~106,674~~
Income before income taxes

~~6,512~~4,289

~~4,156~~7,240

~~13,752~~
~~10,074~~

Income taxes

~~2,526~~1,883

~~892~~2,457

~~4,983~~
~~2,720~~
Net income including noncontrolling interests

~~3,986~~2,406

~~3,264~~4,783

~~8,769~~
~~7,354~~

Net income attributable to noncontrolling interests

3656

~~(86)~~133

~~169~~
~~(6)~~
Net income attributable to ExxonMobil

~~3,950~~2,350

~~3,350~~4,650

~~8,600~~
~~7,360~~



Earnings per common share (dollars)

~~0.92~~0.55

~~0.78~~1.09

~~2.01~~
~~1.73~~


Earnings per common share - assuming dilution (dollars)

~~0.92~~0.55

~~0.78~~
~~2.01~~
~~1.73~~
~~Dividends per common share~~~~(dollars)~~
~~0.82~~
~~0.77~~
~~1.59~~
~~1.52~~
1.09

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

3

EXXON MOBIL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(millions of dollars)

Three Months Ended

Six Months Ended

June 30,

June 30,

2018

2017

2018

2017

Net income including noncontrolling interests

3,986

3,264

8,769

7,354
Other comprehensive income (net of income taxes)

Foreign exchange translation adjustment

(2,040)

1,674

(2,844)

3,082

Adjustment for foreign exchange translation (gain)/loss

included in net income

18

234

186

234

Postretirement benefits reserves adjustment

(excluding amortization)

43

(159)

(391)

(184)

Amortization and settlement of postretirement benefits reserves

adjustment included in net periodic benefit costs

229

283

466

539

Total other comprehensive income

(1,750)

2,032

(2,583)

3,671
Comprehensive income including noncontrolling interests

2,236

5,296

6,186

11,025

Comprehensive income attributable to

noncontrolling interests

(97)

169

(106)

328
Comprehensive income attributable to ExxonMobil

2,333

5,127

6,292

10,697
EXXON MOBIL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(millions of dollars)

Three Months Ended

March 31,

2019

2018

Net income including noncontrolling interests

2,406

4,783

Other comprehensive income (net of income taxes)

Foreign exchange translation adjustment

749

(804)

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

-

168

Postretirement benefits reserves adjustment (excluding amortization)

(26)

(434)

Amortization and settlement of postretirement benefits reserves adjustment

included in net periodic benefit costs

185

237

Total other comprehensive income

908

(833)

Comprehensive income including noncontrolling interests

3,314

3,950

Comprehensive income attributable to noncontrolling interests

182

(9)

Comprehensive income attributable to ExxonMobil

3,132

3,959

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)

June 30,

Dec. 31,

Mar. 31,

Dec. 31,

2018

2017

2019

2018

Assets
Assets

Assets

Current assets

Current assets

Cash and cash equivalents

3,430

3,177

Cash and cash equivalents

4,586

3,042

Notes and accounts receivable – net

26,993

25,597

Notes and accounts receivable – net

27,105

24,701

Inventories

Inventories

Crude oil, products and merchandise

14,373

12,871

Crude oil, products and merchandise

13,979

14,803

Materials and supplies

4,110

4,121

Materials and supplies

4,353

4,155

Other current assets

1,649

1,368

Other current assets

1,553

1,272

Total current assets

50,555

47,134

Total current assets

51,576

47,973

Investments, advances and long-term receivables

39,691

39,160

Investments, advances and long-term receivables

42,068

40,790

Property, plant and equipment – net

248,209

252,630

Property, plant and equipment – net

248,563

247,101

Other assets, including intangibles – net

10,335

9,767

Other assets, including intangibles – net

13,982

10,332

Total assets

348,790

348,691

Total assets

356,189

346,196

Liabilities
Liabilities

Liabilities

Current liabilities

Current liabilities

Notes and loans payable

20,500

17,930

Notes and loans payable

21,794

17,258

Accounts payable and accrued liabilities

38,490

36,796

Accounts payable and accrued liabilities

42,090

37,268

Income taxes payable

3,457

3,045

Income taxes payable

2,748

2,612

Total current liabilities

62,447

57,771

Total current liabilities

66,632

57,138

Long-term debt

20,720

24,406

Long-term debt

19,031

20,538

Postretirement benefits reserves

21,504

21,132

Postretirement benefits reserves

20,051

20,272

Deferred income tax liabilities

26,783

26,893

Deferred income tax liabilities

27,287

27,244

Long-term obligations to equity companies

4,575

4,774

Long-term obligations to equity companies

4,430

4,382

Other long-term obligations

19,228

19,215

Other long-term obligations

20,737

18,094

Total liabilities

155,257

154,191

Total liabilities

158,168

147,668

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)

15,086

14,656

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

15,476

15,258

Earnings reinvested

416,418

414,540

Earnings reinvested

420,498

421,653

Accumulated other comprehensive income

(18,609)

(16,262)

Accumulated other comprehensive income

(18,782)

(19,564)

Common stock held in treasury

Common stock held in treasury

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

(3,788 million shares at March 31, 2019 and

   3,780 million shares at December 31, 2017)

(225,673)

(225,246)

   3,782 million shares at December 31, 2018)

(225,970)

(225,553)

ExxonMobil share of equity

187,222

187,688

ExxonMobil share of equity

191,222

191,794

Noncontrolling interests

6,311

6,812

Noncontrolling interests

6,799

6,734

Total equity

193,533

194,500

Total equity

198,021

198,528

Total liabilities and equity

348,790

348,691

Total liabilities and equity

356,189

346,196

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)

Six Months Ended

Three Months Ended

June 30,

March 31,

2018

2017

2019

2018

Cash flows from operating activities
Cash flows from operating activities

Cash flows from operating activities

Net income including noncontrolling interests

8,769

7,354

Net income including noncontrolling interests

2,406

4,783

Depreciation and depletion

9,059

9,171

Depreciation and depletion

4,571

4,470

Changes in operational working capital, excluding cash and debt

(982)

(228)

Changes in operational working capital, excluding cash and debt

2,257

351

All other items – net

(547)

(1,177)

All other items – net

(896)

(1,085)

Net cash provided by operating activities

16,299

15,120

Net cash provided by operating activities

8,338

8,519

Cash flows from investing activities
Cash flows from investing activities

Cash flows from investing activities

Additions to property, plant and equipment

(8,276)

(5,988)

Additions to property, plant and equipment

(5,199)

(3,349)

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

1,748

841

equipment, and sales and returns of investments

107

1,441

Additional investments and advances

(704)

(1,793)

Additional investments and advances

(910)

(138)

Other investing activities including collection of advances

277

301

Other investing activities including collection of advances

209

187

Net cash used in investing activities

(6,955)

(6,639)

Net cash used in investing activities

(5,793)

(1,859)

Cash flows from financing activities
Cash flows from financing activities

Cash flows from financing activities

Additions to long-term debt

-

60

Reductions in short-term debt

(3,777)

(3,872)

Additions to short-term debt

-

1,735

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

Reductions in short-term debt

(4,256)

(2,722)

months or less maturity (1)

6,776

1,950

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

Cash dividends to ExxonMobil shareholders

(3,505)

(3,291)

months or less maturity (1)

2,902

(321)

Cash dividends to noncontrolling interests

(43)

(43)

Cash dividends to ExxonMobil shareholders

(6,793)

(6,423)

Changes in noncontrolling interests

(74)

(59)

Cash dividends to noncontrolling interests

(135)

(91)

Common stock acquired

(421)

(427)

Changes in noncontrolling interests

(275)

(29)

Net cash used in financing activities

(1,044)

(5,742)

Common stock acquired

(429)

(514)

Net cash used in financing activities

(8,986)

(8,305)

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

(105)

209

Effects of exchange rate changes on cash

43

30

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

253

385

Increase/(decrease) in cash and cash equivalents

1,544

948

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

3,042

3,177

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

3,430

4,042

Cash and cash equivalents at end of period

4,586

4,125

Supplemental Disclosures
Supplemental Disclosures

Supplemental Disclosures

Income taxes paid

4,426

3,247

Income taxes paid

1,793

2,117

Cash interest paid

477

587

Cash interest paid

Included in cash flows from operating activities

247

206

Capitalized, included in cash flows from investing activities

175

154

Total cash interest paid

422

360

~~2017 Noncash Transactions~~
In the first six 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 addition of commercial paper with a maturity of over three months of ~~$0.9~~$5.3 billion in ~~2018~~2019 and a net ~~addition~~reduction of ~~$0.2~~$0.3 billion in ~~2017.~~2018. The gross amount of commercial paper with a maturity of over three months issued was ~~$2.2~~$6.4 billion in ~~both~~2019 and $0.4 billion in 2018, ~~and 2017,~~ while the gross amount repaid was ~~$1.3~~$1.1 billion in ~~2018~~2019 and ~~$2.0~~$0.7 billion in ~~2017.~~2018.

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

6

EXXON MOBIL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(millions of dollars)

ExxonMobil Share of Equity

Accumulated

Other

Common

Compre-

Stock

ExxonMobil

Non-

Common

Earnings

hensive

Held in

Share of

controlling

Total

Stock

Reinvested

Income

Treasury

Equity

Interests

Equity

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

467

-

-

-

467

-

467

Other

(85)

-

-

-

(85)

(53)

(138)

Net income for the period

-

7,360

-

-

7,360

(6)

7,354

Dividends

-

(6,423)

-

-

(6,423)

(91)

(6,514)

Other comprehensive income

-

-

3,337

-

3,337

334

3,671

Acquisitions, at cost

-

-

-

(595)

(595)

(29)

(624)

Issued for acquisitions

2,078

-

-

5,711

7,789

-

7,789

Dispositions

-

-

-

3

3

-

3
Balance as of June 30, 2017

14,617

408,768

(18,902)

(225,305)

179,178

6,660

185,838

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

436

-

-

-

436

-

436

Other

(6)

-

-

-

(6)

(7)

(13)

Net income for the period

-

8,600

-

-

8,600

169

8,769

Dividends

-

(6,793)

-

-

(6,793)

(135)

(6,928)

Cumulative effect of accounting

change

-

71

(39)

-

32

15

47

Other comprehensive income

-

-

(2,308)

-

(2,308)

(275)

(2,583)

Acquisitions, at cost

-

-

-

(429)

(429)

(268)

(697)

Dispositions

-

-

-

2

2

-

2
Balance as of June 30, 2018

15,086

416,418

(18,609)

(225,673)

187,222

6,311

193,533

Six Months Ended June 30, 2018

Six Months Ended June 30, 2017

Held in

Held in

Common Stock Share Activity

Issued

Treasury

Outstanding

Issued

Treasury

Outstanding

(millions of shares)

(millions of shares)

Balance as of December 31

8,019

(3,780)

4,239

8,019

(3,871)

4,148

Acquisitions

-

(5)

(5)

-

(7)

(7)

Issued for acquisitions

-

-

-

-

96

96

Dispositions

-

-

-

-

-

-

Balance as of June 30

8,019

(3,785)

4,234

8,019

(3,782)

4,237

EXXON MOBIL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(millions of dollars)

ExxonMobil Share of Equity

Accumulated

Other

Common

Compre-

Stock

ExxonMobil

Non-

Common

Earnings

hensive

Held in

Share of

controlling

Total

Stock

Reinvested

Income

Treasury

Equity

Interests

Equity

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

Other

(5)

-

-

-

(5)

-

(5)

Net income for the period

-

4,650

-

-

4,650

133

4,783

Dividends - common shares

-

(3,291)

-

-

(3,291)

(43)

(3,334)

Cumulative effect of accounting

change

-

71

(39)

-

32

15

47

Other comprehensive income

-

-

(691)

-

(691)

(142)

(833)

Acquisitions, at cost

-

-

-

(427)

(427)

(59)

(486)

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 December 31, 2018

15,258

421,653

(19,564)

(225,553)

191,794

6,734

198,528

Amortization of stock-based awards

223

-

-

-

223

-

223

Other

(5)

-

-

-

(5)

-

(5)

Net income for the period

-

2,350

-

-

2,350

56

2,406

Dividends - common shares

-

(3,505)

-

-

(3,505)

(43)

(3,548)

Other comprehensive income

-

-

782

-

782

126

908

Acquisitions, at cost

-

-

-

(421)

(421)

(83)

(504)

Dispositions

-

-

-

4

4

9

13
Balance as of March 31, 2019

15,476

420,498

(18,782)

(225,970)

191,222

6,799

198,021

Three Months Ended March 31, 2019

Three Months Ended March 31, 2018

Held in

Held in

Common Stock Share Activity

Issued

Treasury

Outstanding

Issued

Treasury

Outstanding

(millions of shares)

(millions of shares)

Balance as of December 31

8,019

(3,782)

4,237

8,019

(3,780)

4,239

Acquisitions

-

(6)

(6)

-

(5)

(5)

Dispositions

-

-

-

-

-

-

Balance as of March 31

8,019

(3,788)

4,231

8,019

(3,785)

4,234

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~~2018 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~~2019, the Corporation adopted the Financial Accounting Standards Board’s ~~Update,~~ ~~Financial 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 June 30, 2018 and the carrying value of equity securities without readily determinable fair values at June 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 in Corporate and financing expenses of about $100 million for the second quarter and $200 million for the first six months of 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 of Income for the three months and six months ended June 30, 2017, is shown below.~~

Three Months Ended

Six Months Ended

June 30, 2017

June 30, 2017

As Reported

Change

As Adjusted

As Reported

Change

As Adjusted

(millions of dollars)

Production and manufacturing expenses
8,407

(347)

8,060

16,252

(626)

15,626
Selling, general and administrative expenses
2,628

(72)

2,556

5,227

(166)

5,061
Non-service pension and postretirement benefit expense
-

419

419

-

792

792
~~Effective January 1, 2019, ExxonMobil will adopt the Financial Accounting Standards Board’s standard,~~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 a right of use asset and a lease liability. The Corporation ~~acquired~~used a transition method that applies the new lease ~~accounting software~~standard at January 1, 2019. The Corporation applied a policy election to ~~facilitate implementation,~~exclude short-term leases from balance sheet recognition and ~~is currently installing, configuring and testing the software. Based on leases outstanding~~also elected certain practical expedients at ~~the end of 2017,~~adoption. As permitted, the Corporation ~~estimates~~did not reassess whether existing contracts are or contain leases, the lease classification for any existing leases, initial direct costs for any existing lease and whether existing land easements and rights of way, which were not previously accounted for as leases, are or contain a lease. At adoption on January 1, 2019, an operating lease liability of $3.3 billion was recorded and the operating lease right of use asset ~~and lease liability would have been in the range of $~~4 ~~billion to $~~5was $4.3 billion, atincluding $1.0 billion of previously recorded prepaid leases. There was no cumulative earnings effect adjustment.
Effective January 1, 2020, ExxonMobil will adopt the Financial Accounting Standards Board’s update, Financial Instruments – Credit Losses (Topic 326), as amended. The standard requires a valuation allowance for credit losses be recognized for certain financial assets that ~~time.~~reflects the current expected credit loss over the asset’s contractual life. The valuation allowance considers the risk of loss, even if remote, and considers past events, current conditions and expectations of the future. The Corporation is evaluating the standard and its effect on the Corporation’s 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 leasesfinancial statements. ~~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 ~~June 30, 2018,~~March 31, 2019, 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 June 30, 2018

Equity

Other

Company

Third Party

Obligations (1)

Obligations

Total

(millions of dollars)

Guarantees

Debt-related

408

58

466

Other

1,188

4,678

5,866

Total

1,596

4,736

6,332

(1) ExxonMobil share

98

As of March 31, 2019

Equity

Other

Company

Third Party

Obligations (1)

Obligations

Total

(millions of dollars)

Guarantees

Debt-related

612

79

691

Other

1,081

4,288

5,369

Total

1,693

4,367

6,060

(1)
ExxonMobil share

Additionally, the Corporation and its affiliates have numerous long-term sales and purchase commitments in their various business activities, all of which are expected to be fulfilled with no adverse consequences material to the Corporation’s operations or financial condition.

The operations and earnings of the Corporation and its affiliates throughout the world have been, and may in the future be, affected from time to time in varying degree by political developments and laws and regulations, such as forced divestiture of assets; restrictions on production, imports and exports; price controls; tax increases and retroactive tax claims; expropriation of property; cancellation of contract rights and environmental regulations. Both the likelihood of such occurrences and their overall effect upon the Corporation vary greatly from country to country and are not predictable.
In accordance with a 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 for Arbitration with the International Centre for Settlement of Investment Disputes (ICSID). The 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 against PdVSA under the rules of the International Chamber of ~~Commerce.~~
~~On February 2, 2015, Venezuela filed a Request~~Commerce in respect of an indemnity related to the Cerro Negro Project and $260 million in an arbitration 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~~under rules of ~~the~~International Centre for Settlement of Investment Disputes (ICSID). An ICSID arbitration 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. AsExxonMobil filed a ~~result, ExxonMobil retained an~~new claim seeking to restore the original award for $260 million (including accrued interest). In accordance with an agreement between ExxonMobil and Venezuela the $260 million has been fully paid. The agreement does not impact ExxonMobil’s ability to re-arbitrate the issue that was the basisof damages for the ~~annulment in a new~~Cerro Negro Project with ICSID ~~arbitration proceeding.~~on 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. 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.

109

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

2,849

(172)

2,677

Amounts reclassified from accumulated other

comprehensive income

140

520

660

Total change in accumulated other comprehensive income

2,989

348

3,337

Balance as of June 30, 2017

(11,512)

(7,390)

(18,902)

Balance as of December 31, 2017

(9,482)

(6,780)

(16,262)

Current period change excluding amounts reclassified

from accumulated other comprehensive income

(2,573)

(409)

(2,982)

Amounts reclassified from accumulated other

comprehensive income

186

449

635

Total change in accumulated other comprehensive income

(2,387)

40

(2,347)

Balance as of June 30, 2018

(11,869)

(6,740)

(18,609)

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, 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)

Balance as of December 31, 2018

(13,881)

(5,683)

(19,564)

Current period change excluding amounts reclassified

from accumulated other comprehensive income

627

(23)

604

Amounts reclassified from accumulated other

comprehensive income

-

178

178

Total change in accumulated other comprehensive income

627

155

782

Balance as of March 31, 2019

(13,254)

(5,528)

(18,782)

Three Months Ended

Six Months Ended

Amounts Reclassified Out of Accumulated Other

June 30,

June 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)
(18)

(234)

(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)
(290)

(406)

(610)

(765)

Three Months Ended

Amounts Reclassified Out of Accumulated Other

March 31,

Comprehensive Income - Before-tax Income/(Expense)

2019

2018

(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)
(237)

(320)

Three Months Ended

Six Months Ended

Income Tax (Expense)/Credit For

June 30,

June 30,

Components of Other Comprehensive Income

2018

2017

2018

2017

(millions of dollars)

Foreign exchange translation adjustment

5

(8)

5

(26)

Postretirement benefits reserves adjustment

(excluding amortization)

(58)

75

66

80

Amortization and settlement of postretirement benefits reserves

adjustment included in net periodic benefit costs

(61)

(123)

(144)

(226)

Total

(114)

(56)

(73)

(172)

Three Months Ended

Income Tax (Expense)/Credit For

March 31,

Components of Other Comprehensive Income

2019

2018

(millions of dollars)

Postretirement benefits reserves adjustment (excluding amortization)

10

124

Amortization and settlement of postretirement benefits reserves

adjustment included in net periodic benefit costs

(52)

(83)

Total

(42)

41

1110
5.     Earnings Per Share

Three Months Ended

Six Months Ended

June 30,

June 30,

2018

2017

2018

2017

Earnings per common share

Net income attributable to ExxonMobil (millions of dollars)

3,950

3,350

8,600

7,360



Weighted average number of common shares

outstanding (millions of shares)

4,271

4,271

4,270

4,244

Earnings per common share (dollars) (1)

0.92

0.78

2.01

1.73

Three Months Ended

March 31,

2019

2018

Earnings per common share

Net income attributable to ExxonMobil (millions of dollars)

2,350

4,650



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

4,270

4,270

Earnings per common share (dollars) (1)

0.55

1.09

Dividends paid per common share (dollars)

0.82

0.77

(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,

2019

2018

(millions of dollars)

Components of net benefit cost

Pension Benefits - U.S.

Service cost

175

209

Interest cost

193

180

Expected return on plan assets

(142)

(182)

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

77

91

Net pension enhancement and curtailment/settlement cost

54

63

Net benefit cost

357

361

Pension Benefits - Non-U.S.

Service cost

139

158

Interest cost

192

200

Expected return on plan assets

(197)

(252)

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

103

118

Net pension enhancement and curtailment/settlement cost

-

33

Net benefit cost

237

257

Other Postretirement Benefits

Service cost

33

36

Interest cost

79

75

Expected return on plan assets

(4)

(6)

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

3

17

Net benefit cost

111

122

Three Months Ended

Six Months Ended

June 30,

June 30,

2018

2017

2018

2017

(millions of dollars)

Components of net benefit cost

Pension Benefits - U.S.

Service cost

204

186

413

383

Interest cost

181

200

361

399

Expected return on plan assets

(181)

(194)

(363)

(388)

Amortization of actuarial loss/(gain) and prior

service cost

92

112

183

222

Net pension enhancement and

curtailment/settlement cost

63

158

126

263

Net benefit cost

359

462

720

879

Pension Benefits - Non-U.S.

Service cost

154

145

312

290

Interest cost

186

189

386

376

Expected return on plan assets

(237)

(244)

(489)

(483)

Amortization of actuarial loss/(gain) and prior

service cost

113

126

231

253

Net pension enhancement and

curtailment/settlement cost

-

-

33

(5)

Net benefit cost

216

216

473

431

Other Postretirement Benefits

Service cost

35

30

71

56

Interest cost

76

67

151

139

Expected return on plan assets

(6)

(5)

(12)

(11)

Amortization of actuarial loss/(gain) and prior

service cost

21

10

38

27

Net benefit cost

126

102

248

211

1211

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 ~~June 30,~~March 31, 2019 and December 31, 2018, and the related hierarchy level for the fair value measurement is as follows:

At June 30, 2018

At March 31, 2019

(millions of dollars)

(millions of dollars)

Carrying

Fair Value

Fair Value

Value

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total Gross Assets
&
Liabilities

Effect of Counterparty Netting

Effect of Collateral Netting

Difference in Carrying Value and Fair Value

Net Carrying Value
Assets
Assets

Assets

Derivative assets (included in the Balance Sheet line: Other

current assets)

98

98

-

-

98

Advances to/receivables from equity companies (included in

the Balance Sheet line: Investments, advances and

Derivative assets (1)

145

24

-

169

(145)

-

-

24

long-term receivables)

8,828

-

1,774

6,953

8,727
Advances to/receivables

Other long-term financial assets (included in the Balance

from equity companies (2)(7)

-

2,157

6,703

8,860

-

-

54

8,914

Sheet lines: Investments, advances and long-term receivables

Other long-term



and Other assets, including intangibles – net)

1,698

759

-

990

1,749

financial assets (3)

914

-

806

1,720

-

-

93

1,813

Liabilities
Liabilities

Liabilities

Derivative liabilities (included in the Balance Sheet line:

Derivative liabilities (4)

213

13

-

226

(145)

(68)

-

13

Accounts payable and accrued liabilities)

240

240

-

-

240
Long-term debt (5)

18,088

111

4

18,203

-

-

(473)

17,730

Long-term debt (excluding capitalized lease obligations)

19,282

19,065

117

4

19,186
Long-term obligations



Long-term obligations to equity companies

4,575

-

-

4,646

4,646

to equity companies (7)

-

-

4,526

4,526

-

-

(96)

4,430

Other long-term financial liabilities (included in the

Other long-term

Balance Sheet line: Other long-term obligations)

1,088

-

-

1,085

1,085

financial liabilities (6)

-

-

1,039

1,039

-

-

3

1,042

At December 31, 2018

(millions of dollars)

Fair Value

Level 1

Level 2

Level 3

Total Gross Assets
&
Liabilities

Effect of Counterparty Netting

Effect of Collateral Netting

Difference in Carrying Value and Fair Value

Net Carrying Value
Assets

Derivative assets (1)

297

-

-

297

(151)

(146)

-

-

Advances to/receivables

from equity companies (2)(7)

-

2,100

6,293

8,393

-

-

215

8,608

Other long-term



financial assets (3)

848

-

974

1,822

-

-

112

1,934

Liabilities

Derivative liabilities (4)

151

-

-

151

(151)

-

-

-

Long-term debt (5)

19,029

117

4

19,150

-

-

85

19,235

Long-term obligations



to equity companies (7)

-

-

4,330

4,330

-

-

52

4,382

Other long-term

financial liabilities (6)

-

-

1,046

1,046

-

-

(3)

1,043
(1) Included in the Balance Sheet line: Notes and accounts receivable, less estimated doubtful amounts
(2) Included in the Balance Sheet line: Investments, advances and long-term receivables
(3) Included in the Balance Sheet lines: Investments, advances and long-term receivables and Other assets, including intangibles, net
(4) Included in the Balance Sheet line: Accounts payable and accrued liabilities
(5) Excluding finance lease obligations
(6) Included in the Balance Sheet line: Other long-term obligations
(7) Advances to/receivables from equity companies and long-term obligations to equity companies are mainly designated as hierarchy level 3 inputs.
The fair value is calculated by discounting the remaining obligations by a rate consistent with the credit quality and industry of the equity company.

12
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,~~commodity prices, currency rates and ~~commodity prices.~~interest rates. In addition, the Corporation uses commodity-based contracts, including derivatives, to manage commodity price risk and for trading purposes. Commodity contracts held for trading purposes are presented in the Consolidated Statement of Income on a net basis in the line “Sales and other operating revenue.” The Corporation’s commodity derivatives are not accounted for under hedge accounting. At times, the Corporation also enters into forward currency and interest rate derivatives, none of which are material to the Corporation’s financial position as of March 31, 2019 and December 31, 2018, or results of operations for the periods ended March 31, 2019 and 2018.
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 :

June 30,

Dec. 31,

2018

2017

(millions of dollars)
Exchange Traded Futures and Swaps

Assets

98

25

Liabilities

(240)

(63)

Collateral receivable/(payable)

189

94

Total

47

56

At ~~June 30,~~March 31, 2019, the net notional long/(short) position of derivative instruments was (35) million barrels for crude oil, was (36 ) million barrels for products, and was (10 ) million MMBtus of natural gas. At December 31, 2018, the net notional long/(short) position of derivative instruments was ~~(22)~~(19 ) million barrels for crude oil and was ~~(7)~~(9) 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

Six Months Ended

Three Months Ended

June 30,

June 30,

March 31,

2018

2017

2018

2017

2019

2018

(millions of dollars)

(millions of dollars)

Sales and other operating revenue
Sales and other operating revenue

(11)

8

(3)

27
Sales and other operating revenue

(275)

8
Crude oil and product purchases
Crude oil and product purchases

(193)

25

(274)

43
Crude oil and product purchases

(18)

(81)

Total

(204)

33

(277)

70

Total

(293)

(73)

13

8.     Disclosures about Segments and Related Information

Three Months Ended

Six Months Ended

June 30,

June 30,

2018

2017

2018

2017

Earnings After Income Tax

(millions of dollars)

Upstream

United States

439

(183)

868

(201)

Non-U.S.

2,601

1,367

5,669

3,637

Downstream

United States

695

347

1,014

639

Non-U.S.

29

1,038

650

1,862

Chemical

United States

453

481

956

1,010

Non-U.S.

437

504

945

1,146

Corporate and financing (1)

(704)

(204)

(1,502)

(733)

Corporate total

3,950

3,350

8,600

7,360

Sales and Other Operating Revenue

Upstream

United States

2,548

2,349

4,909

4,673

Non-U.S.

3,587

3,444

7,215

6,953

Downstream

United States

19,658

14,528

36,653

29,110

Non-U.S.

37,406

28,867

71,778

57,911

Chemical

United States

3,019

2,746

6,008

5,529

Non-U.S.

5,226

4,078

10,304

8,296

Corporate and financing

12

14

��
25

28

Corporate total

71,456

56,026

136,892

112,500

Intersegment Revenue

Upstream

United States

2,071

1,282

4,133

2,572

Non-U.S.

7,381

4,723

14,252

10,622

Downstream

United States

5,749

3,841

10,693

7,487

Non-U.S.

7,611

4,968

14,700

10,182

Chemical

United States

2,350

1,845

4,544

3,615

Non-U.S.

1,973

1,104

3,816

2,294

Corporate and financing

50

47

99

103

Three Months Ended

March 31,

2019

2018

Earnings After Income Tax

(millions of dollars)

Upstream

United States

96

429

Non-U.S.

2,780

3,068

Downstream

United States

(161)

319

Non-U.S.

(95)

621

Chemical

United States

161

503

Non-U.S.

357

508

Corporate and financing

(788)

(798)

Corporate total

2,350

4,650

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

Upstream

United States

2,693

2,361

Non-U.S.

3,804

3,628

Downstream

United States

15,642

16,995

Non-U.S.

32,297

34,372

Chemical

United States

2,505

2,989

Non-U.S.

4,695

5,078

Corporate and financing

10

13

Corporate total

61,646

65,436

Intersegment Revenue

Upstream

United States

2,311

2,062

Non-U.S.

7,129

6,871

Downstream

United States

4,761

4,944

Non-U.S.

6,169

7,089

Chemical

United States

1,889

2,194

Non-U.S.

1,547

1,843

Corporate and financing

53

49

14

Geographic

Three Months Ended

Six Months Ended

June 30,

June 30,

Sales and Other Operating Revenue

2018

2017

2018

2017

(millions of dollars)

United States

25,225

19,623

47,570

39,312

Non-U.S.

46,231

36,403

89,322

73,188

Total

71,456

56,026

136,892

112,500

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

Canada

6,163

4,598

11,538

9,232

United Kingdom

4,771

4,117

9,443

8,252

Belgium

4,090

3,321

8,067

6,586

Singapore

3,458

2,625

6,885

5,376

France

3,572

2,738

6,817

5,306

Italy

3,214

2,735

6,368

5,404

Germany

2,435

2,069

4,666

4,073

Geographic

Three Months Ended

March 31,

Sales and Other Operating Revenue

2019

2018

(millions of dollars)

United States

20,840

22,345

Non-U.S.

40,806

43,091

Total

61,646

65,436

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

Canada

4,850

5,375

United Kingdom

4,421

4,672

Belgium

3,529

3,977

Singapore

3,121

3,427

France

3,074

3,245

Italy

2,645

3,154

Germany

1,897

2,231

(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

9. Leases
The Corporation and its consolidated affiliates generally purchase the property, plant and equipment used in operations, but there are situations where assets are leased, primarily for drilling equipment, tankers, office buildings, railcars, and other moveable equipment. Right of use assets and lease liabilities are established on the balance sheet for leases with an expected term greater than one year, by discounting the amounts fixed in the lease agreement for the duration of the lease which is reasonably certain, considering the probability of exercising any early termination and extension options. The portion of the fixed payment related to service costs for drilling equipment and tankers is excluded from the calculation of right of use assets and lease liabilities. Generally assets are leased only for a portion of their useful lives, and are accounted for as operating leases. In limited situations assets are leased for nearly all of their useful lives, and are accounted for as finance leases.
Variable payments under these lease agreements are not significant. Residual value guarantees, restrictions, or covenants related to leases, and transactions with related parties are also not significant. In general, leases are capitalized using the incremental borrowing rate of the leasing affiliate. The Corporation’s activities as a lessor are not significant.
At adoption of the lease accounting change (see Note 2), on January 1, 2019, an operating lease liability of $3.3 billion was recorded and the operating lease right of use asset was $4.3 billion, including $1.0 billion of previously recorded prepaid leases. There was no cumulative earnings effect adjustment.



Operating Leases

Drilling Rigs

and Related

Finance

Equipment
Other

Total

Leases

(millions of dollars)

Lease Cost

Three Months Ended March 31, 2019
Operating lease cost

40

255

295

Short-term and other (net of sublease rental income)

195

273

468

Amortization of right of use assets

31
Interest on lease liabilities

31

Total

235

528

763

62

Balance Sheet

March 31, 2019
Right of use assets

Included in Other assets, including intangibles - net

539

3,901

4,440

Included in Property, plant and equipment - net

1,554

Total right of use assets

539

3,901

4,440

1,554

Lease liability due within one year

Included in Accounts payable and accrued liabilities

167

699

866

34

Included in Notes and loans payable

174
Long-term lease liability

Included in Other long-term obligations

373

2,238

2,611

Included in Long-term debt

1,301

Included in Long-term obligations to equity companies

146

Total lease liability

540

2,937

3,477

1,655

16



Operating Leases

Drilling Rigs

and Related

Finance

Equipment
Other

Total

Leases

(millions of dollars)

Maturity Analysis of Lease Liabilities

March 31, 2019
2019 remaining months

137

608

745

293
2020

154

622

776

204
2021

96

441

537

180
2022

57

290

347

173
2023

40

253

293

171
2024

29

213

242

172
2025 and beyond

70

924

994

2,411

Total lease payments

583

3,351

3,934

3,604
Discount to present value

(43)

(414)

(457)

(1,949)

Total lease liability

540

2,937

3,477

1,655

Weighted average remaining lease term - years

5

8

7

25
Weighted average discount rate - percent

3.0%

3.2%

3.1%

9.7%

In addition to the operating lease liabilities in the table immediately above, at March 31, 2019, additional undiscounted commitments for leases not yet commenced totaled $2.6 billion. Included among these commitments is $1.7 billion for crude oil pipeline transportation that is expected to commence later in 2019. The underlying assets for these leases were primarily designed by, and are being constructed by, the lessors. These unrecorded lease commitments are the primary difference between the operating lease liabilities reflected in the table above and the $6.1 billion disclosed at December 31, 2018, for minimum lease commitments under the prior lease accounting standard.



Operating Leases

Drilling Rigs

and Related

Finance

Equipment
Other

Total

Leases

(millions of dollars)

Other Information

Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities

Cash flows from operating activities

228

228

14

Cash flows from investing activities

40

40

Cash flows from financing activities

16

Noncash right of use assets recorded for lease liabilities

For January 1 adoption of Topic 842

445

2,818

3,263

In exchange for new lease liabilities during the period

125

320

445

17
At December 31, 2018, the Corporation and its consolidated subsidiaries held noncancelable operating leases and charters covering drilling equipment, tankers and other assets with minimum undiscounted lease commitments totaling $6,112 million as indicated in the table. Estimated related sublease rental income from noncancelable subleases totals $22 million.

Lease Payments

Under Minimum Commitments


As of December 31, 2018

Drilling Rigs

and Related

Equipment
Other

Total

(millions of dollars)

2019

222

934

1,156
2020

166

819

985
2021

107

658

765
2022

43

506

549
2023

32

422

454
2024 and beyond

53

2,150

2,203
     Total

623

5,489

6,112
Net rental cost under both cancelable and noncancelable operating leases incurred during 2018, 2017 and 2016 were as follows:

For full year

2018

2017

2016

(millions of dollars)

Rental cost

Drilling rigs and related equipment

723

792

1,274

Other (net of sublease rental income)

1,992

1,826

1,817

Total

2,715

2,618

3,091

18
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

Second Quarter

First Six Months

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

2018

2017

2018

2017
Earnings (U.S. GAAP)

2019

2018

(millions of dollars)

(millions of dollars)
Upstream
Upstream

Upstream

United States

439

(183)

868

(201)
United States

96

429

Non-U.S.

2,601

1,367

5,669

3,637
Non-U.S.

2,780

3,068
Downstream
Downstream

Downstream

United States

695

347

1,014

639
United States

(161)

319

Non-U.S.

29

1,038

650

1,862
Non-U.S.

(95)

621
Chemical
Chemical

Chemical

United States

453

481

956

1,010
United States

161

503

Non-U.S.

437

504

945

1,146
Non-U.S.

357

508
Corporate and financing (1)

(704)

(204)

(1,502)

(733)
Corporate and financing
Corporate and financing

(788)

(798)

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

3,950

3,350

8,600

7,360
Net income attributable to ExxonMobil (U.S. GAAP)

2,350

4,650

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

0.92

0.78

2.01

1.73
Earnings per common share (dollars)

0.55

1.09

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

0.92

0.78

2.01

1.73
Earnings per common share - assuming dilution (dollars)

0.55

1.09

~~(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 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 ~~SECOND~~FIRST QUARTER ~~2018~~2019 RESULTS

ExxonMobil’s ~~second~~first quarter ~~2018~~2019 earnings were $4$2.4 billion, or ~~$0.92~~$0.55 per diluted share, compared with ~~$3.4~~$4.7 billion a year ~~earlier, as liquids realizations increased~~earlier. The decrease in earnings was primarily the result of lower Downstream and ~~refining~~Chemical margins ~~improved.~~
~~Earnings of $8.6 billion for the first six months of 2018 increased 17 percent from $7.4 billion in 2017.~~
~~Earnings per share assuming dilution were $2.01.~~
~~Capital~~ and ~~exploration expenditures were $11.5 billion, up 42 percent from 2017.~~higher scheduled maintenance activity.

Oil‑equivalent production was ~~3.8~~4.0 million barrels per day, ~~down 7~~up 2 percent from the prior year. Excluding entitlement effects and divestments, oil‑equivalent production was ~~down 4~~up 3 percent from the prior year.

The Corporation distributed ~~$6.8~~$3.5 billion in dividends to shareholders.


1619

Second Quarter

First Six Months

2018

2017

2018

2017

(millions of dollars)
Upstream earnings

United States

439

(183)

868

(201)

Non-U.S.

2,601

1,367

5,669

3,637

Total

3,040

1,184

6,537

3,436

First Three Months

2019

2018

(millions of dollars)
Upstream earnings

United States

96

429

Non-U.S.

2,780

3,068

Total

2,876

3,497

Upstream earnings were ~~$3,040~~$2,876 million in the ~~second~~first quarter of ~~2018, up $1,856~~2019, down $621 million from the ~~second~~first quarter of ~~2017.~~2018.
·         Realizations decreased earnings by $30 million due to lower liquids realizations of $360 million, partly offset by higher gas realizations of $330 million.
·Higher volume and mix effects increased earnings by ~~$2,380~~$80 million ~~mainly~~ due to higher liquids ~~realizations.~~
·~~Lower volume and mix effects decreased earnings~~volumes of $230 million, partly offset by ~~$270~~lower gas volumes of $150 million.
·         All other items decreased earnings by ~~$250~~$670 million ~~mainly~~ due to the absence of a gain on the Scarborough asset sale of $366 million, higher ~~expenses.~~growth-related expenses and asset impairment charges.
·         U.S. Upstream earnings were ~~$439~~$96 million, ~~up $622~~down $333 million from the prior year quarter.
·         Non‑U.S. Upstream earnings were ~~$2,601~~$2,780 million, ~~up $1,234~~down $288 million from the prior year quarter.
·         On an oil‑equivalent basis, production ~~decreased 7~~increased 2 percent from the ~~second~~first quarter of ~~2017.~~2018.
·         Liquids production totaled ~~2.2~~2.3 million barrels per day, ~~down 57,000~~up 111,000 barrels per day ~~as lower volumes from decline, divestments, lower entitlements~~due to U.S. growth and ~~scheduled maintenance, were partially~~improved reliability, partly offset by ~~growth in North America.~~decline.
·         Natural gas production was ~~8.6~~9.9 billion cubic feet per day, down ~~1,307~~114 million cubic feet per day ~~driven by decline largely in the U.S. aligned with value focus, higher downtime, lower entitlements and divestments.~~
~~Upstream earnings were $6,537 million in the first six months of 2018, up $3,101 million from the first six months of 2017.~~
·~~Realizations increased earnings by $3,830 million mainly~~ due to ~~higher liquids realizations.~~
·~~Lower volume~~lower demand, decline and ~~mix effects decreased earnings by $480 million.~~
·~~All other items decreased earnings by $250 million, mainly due to higher expenses,~~divestments, partly offset by ~~the gain on the Scarborough sale in Australia.~~
·~~U.S. Upstream earnings were $868 million, up $1,069 million from the first six months of prior year.~~
·~~Non-U.S. Upstream earnings were $5,669 million, up $2,032 million from the first six months of prior year.~~
·~~On an oil-equivalent basis, production decreased 7 percent from the first six months of 2017.~~
·~~Liquids production totaled 2.2 million barrels per day, down 87,000 barrels per day as~~ lower ~~volumes from decline, divestments~~maintenance and ~~entitlements, were partially offset by growth in North America.~~
·~~Natural gas production was 9.3 billion cubic feet per day, down 1,090 million cubic feet per day driven by lower volumes from downtime, decline and entitlements.~~growth.

1720

Second Quarter

First Six Months

First Quarter
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

3,922

4,036

2018
2018

3,889

Entitlements - Net Interest

(3)

(3)

Entitlements - Net Interest

-

Entitlements - Price / Spend / Other

(52)

(58)

Entitlements - Price / Spend / Other

10

Quotas

-

-

Quotas

-

Divestments

(68)

(61)

Divestments

(27)

Growth / Other

(152)

(146)

Growth / Other

109

2018

3,647

3,768

2019
2019

3,981

(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.


1821

Second Quarter

First Six Months

2018

2017

2018

2017

(millions of dollars)
Downstream earnings

United States

695

347

1,014

639

Non-U.S.

29

1,038

650

1,862

Total

724

1,385

1,664

2,501

First Three Months

2019

2018

(millions of dollars)
Downstream earnings

United States

(161)

319

Non-U.S.

(95)

621

Total

(256)

940

Downstream earnings were ~~$724~~($256) million in the ~~second~~first quarter of ~~2018,~~2019, down ~~$661~~$1,196 million from the ~~second~~first quarter of ~~2017.~~2018.
·         Margins ~~increased~~decreased earnings by ~~$260 million, as higher U.S. margins were partially offset by lower Non‑U.S. margins.~~$860 million.
·         ~~Lower volume~~Volume and mix effects ~~decreased earnings by $210 million, primarily~~remained essentially flat due to ~~downtime and maintenance.~~higher scheduled maintenance, offset by improved yield / sales mix impacts.
·         All other items decreased earnings by ~~$710~~$340 million ~~including~~due to higher scheduled maintenance and unfavorable ~~foreign exchange impacts of $240 million, lower divestment gains of $130 million, and other unfavorable impacts of $340 million.~~yield / sales mix impacts.
·         U.S. Downstream earnings were ~~$695~~($161) million, ~~up $348~~down $480 million from the prior year quarter.
·         Non‑U.S. Downstream earnings were ~~$29~~($95) million, down ~~$1,009~~$716 million from the prior year quarter.
·         Petroleum product sales of ~~5.5~~5.4 million barrels per day were ~~56,000~~17,000 barrels per day lower than the prior year quarter.
~~Downstream earnings were $1,664 million in the first six months of 2018, down $837 million from the first six months of 2017.~~
·~~Margins increased earnings by $230 million, as higher U.S. margins were partially offset by lower Non-U.S. margins.~~
·~~Lower volume and mix effects decreased earnings by $270 million, primarily due to downtime and maintenance.~~
·All other items decreased earnings by $800 million, including unfavorable foreign exchange impacts of $220 million, lower divestment gains of $220 million, and other unfavorable impacts of $360 million.
·~~U.S. Downstream earnings were $1,014 million, up $375 million from the first six months of prior year.~~
·~~Non-U.S. Downstream earnings were $650 million, down $1,212 million from the first six months of prior year.~~
·~~Petroleum product sales of 5.5 million barrels per day were 10,000 barrels per day lower than the first six months of prior year.~~

19

Second Quarter

First Six Months

2018

2017

2018

2017

(millions of dollars)
Chemical earnings

United States

453

481

956

1,010

Non-U.S.

437

504

945

1,146

Total

890

985

1,901

2,156

First Three Months

2019

2018

(millions of dollars)
Chemical earnings

United States

161

503

Non-U.S.

357

508

Total

518

1,011

Chemical earnings of ~~$890~~$518 million in the ~~second~~first quarter of ~~2018,~~2019 were ~~$95~~$493 million lower than the ~~second~~first quarter of ~~2017.~~2018.
·         ~~Weaker~~Lower margins decreased earnings by ~~$210~~$360 million.
·         Volume and mix effects increased earnings by ~~$120~~$60 million.
·         All other items decreased earnings by ~~$10~~$190 million, asmainly due to higher growth-related expenses ~~were partially offset by favorable~~and unfavorable foreign exchange impacts.
·         U.S. Chemical earnings were ~~$453~~$161 million, down ~~$28~~$342 million from the prior year quarter.
·         Non‑U.S. Chemical earnings were ~~$437~~$357 million, down ~~$67~~$151 million from the prior year quarter.
·         ~~Second~~First quarter prime product sales of ~~6.9~~6.8 million metric tons were ~~732,000~~104,000 metric tons higher than the prior year quarter due to ~~project growth and acquisitions.~~growth.
~~Chemical earnings were $1,901 million in the first six months of 2018, down $255 million from the first six months of 2017.~~
·~~Weaker margins decreased earnings by $460 million.~~
·~~Volume and mix effects increased earnings by $220 million.~~
·~~All other items decreased earnings by $20 million, as higher expenses were partially offset by favorable foreign exchange and tax impacts.~~
·~~U.S. Chemical earnings were $956 million, down $54 million from the first six months of prior year.~~
·~~Non-U.S. Chemical earnings were $945 million, down $201 million from the first six months of prior year.~~
·~~Prime product sales of 13.5 million metric tons in the first six months were 1.3 million metric tons higher than the first six months of prior year due to project growth and acquisitions.~~

Second Quarter

First Six Months

2018

2017

2018

2017

(millions of dollars)

Corporate and financing earnings

(704)

(204)

(1,502)

(733)

First Three Months

2019

2018

(millions of dollars)

Corporate and financing earnings

(788)

(798)

Corporate and financing expenses were ~~$704~~$788 million for the ~~second~~first quarter of ~~2018, up $500~~2019, down $10 million from the ~~second quarter of 2017, mainly due to the absence of favorable tax items, the impact of a lower U.S. tax rate, and higher pension-related costs.~~
Corporate and financing expenses were $1,502 million in the first six months of 2018, up $769 million from the first six months of 2017, mainly due to the absence of favorable tax items, the impact of a lower U.S. tax rate, and higher pension and financing related costs.prior year quarter.

2022

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

Second Quarter

First Six Months

First Three Months

2018

2017

2018

2017

2019

2018

(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

16,299

15,120
Operating activities

8,338

8,519

Investing activities

(6,955)

(6,639)
Investing activities

(5,793)

(1,859)

Financing activities

(8,986)

(8,305)
Financing activities

(1,044)

(5,742)
Effect of exchange rate changes
Effect of exchange rate changes

(105)

209
Effect of exchange rate changes

43

30
Increase/(decrease) in cash and cash equivalents
Increase/(decrease) in cash and cash equivalents

253

385
Increase/(decrease) in cash and cash equivalents

1,544

948

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

3,430

4,042
Cash and cash equivalents (at end of period)

4,586

4,125

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)

7,780

6,947

16,299

15,120
Net cash provided by operating activities (U.S. GAAP)

8,338

8,519

Proceeds associated with sales of subsidiaries, property,

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

plant & equipment, and sales and returns of investments

307

154

1,748

841

and sales and returns of investments

107

1,441

Cash flow from operations and asset sales

8,087

7,101

18,047

15,961
Cash flow from operations and asset sales

8,445

9,960

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 ~~second~~first quarter of ~~2018~~2019 was ~~$8.1~~$8.4 billion, including asset sales of ~~$0.3~~$0.1 billion, ~~an increase~~a decrease of ~~$1.0~~$1.5 billion from the comparable ~~2017~~2018 period primarily reflecting ~~higher earnings.~~lower asset sale proceeds.

Cash provided by operating activities totaled ~~$16.3~~$8.3 billion for the first ~~six~~three months of ~~2018, $1.2~~2019, $0.2 billion ~~higher~~lower than ~~2017.~~2018. The major source of funds was net income including noncontrolling interests of ~~$8.8~~$2.4 billion, ~~an increase~~a decrease of ~~$1.4~~$2.4 billion from the prior year period. The adjustment for the noncash provision of ~~$9.1~~$4.6 billion for depreciation and depletion was ~~down~~up $0.1 billion from ~~2017.~~2018. Changes in operational working capital ~~reduced cash flows by $1.0~~contributed $2.3 billion, ~~compared to a decrease of $0.2~~up $1.9 billion infrom the prior year period. All other items net decreased cash flows by ~~$0.5~~$0.9 billion in ~~2018~~2019 versus a reduction of ~~$1.2~~$1.1 billion in ~~2017.~~2018. See the Condensed Consolidated Statement of Cash Flows for additional details.

Investing activities for the first ~~six~~three months of ~~2018~~2019 used net cash of ~~$7.0~~$5.8 billion, an increase of ~~$0.3~~$3.9 billion compared to the prior year. Spending for additions to property, plant and equipment of ~~$8.3~~$5.2 billion was ~~$2.3~~$1.9 billion higher than ~~2017.~~2018. Proceeds from asset sales of ~~$1.7~~$0.1 billion ~~increased $0.9~~decreased $1.3 billion. Investments and advances ~~decreased $1.1~~increased $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 six months of 2018 was $18.0 billion, including asset sales of $1.7 billion, an increase of $2.1 billion from the comparable 2017 period primarily reflecting higher earnings and increased asset sale proceeds.$0.9 billion.

Net cash used by financing activities was ~~$9.0~~$1.0 billion in the first ~~six~~three months of ~~2018, an increase~~2019, a decrease of ~~$0.7~~$4.7 billion from ~~2017.~~2018. The net ~~reduction in short and long term~~addition to short-term debt was ~~$1.4~~$3.0 billion compared to ~~$1.2~~a net reduction of $1.9 billion in ~~2017.~~2018.

During the first ~~six~~three months of ~~2018,~~2019, 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~~4,237 million at year-end to ~~4,234~~4,231 million at the end of the ~~second~~first quarter of ~~2018.~~2019. 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 ~~$6.8~~$3.5 billion to shareholders in the first ~~six months~~quarter of ~~2018~~2019 through dividends.

21

Total cash and cash equivalents of ~~$3.4~~$4.6 billion at the end of the ~~second~~first quarter of ~~2018~~2019 compared to ~~$3.2~~$3.0 billion at year-end ~~2017.~~2018.

Total debt at the end of the ~~second~~first quarter of ~~2018~~2019 was ~~$41.2~~$40.8 billion compared to ~~$42.3~~$37.8 billion at year-end ~~2017.~~2018. The Corporation's debt to total capital ratio was ~~17.6~~17.1 percent at the end of the ~~second~~first quarter of ~~2018~~2019 compared to ~~17.9~~16.0 percent at year-end ~~2017.~~2018.

23

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

Second Quarter

First Six Months

First Three Months

2018

2017

2018

2017

2019

2018

(millions of dollars)

(millions of dollars)

Income taxes
Income taxes

2,526

892

4,983

2,720

Income taxes

1,883

2,457

Effective income tax rate

44
%

31
%

42
%

35
%
Effective income tax rate

53
%

40
%

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

9,003

7,960

17,818

15,589

Total other taxes and duties (1)

8,087

8,815

Total

11,529

8,852

22,801

18,309

Total

9,970

11,272

(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 ~~$11.5~~$10.0 billion for the ~~second~~first quarter of ~~2018, an increase~~2019, a decrease of ~~$2.7~~$1.3 billion from ~~2017.~~2018. Income tax expense ~~increased~~decreased by ~~$1.6~~$0.6 billion to ~~$2.5~~$1.9 billion reflecting ~~higher~~lower pre-tax income. The effective income tax rate was 4453 percent compared to 3140 percent in the prior year period. This increase mainly reflects ~~the absence of favorable one-time tax items and~~ a higher share of earnings in higher tax ~~jurisdictions.~~jurisdictions in the Non-U.S. Upstream segment. Total other taxes and duties ~~increased~~decreased by ~~$1.0~~$0.7 billion to ~~$9.0~~$8.1 billion.
Total taxes were $22.8 billion for the first six months of 2018, an increase of $4.5 billion from 2017. Income tax expense increased by $2.3 billion to $5.0 billion reflecting higher pre-tax income. The effective income tax rate was 42 percent compared to 35 percent in the prior year period due to a higher share of earnings in higher tax jurisdictions. Total other taxes and duties increased by $2.2 billion to $17.8 billion.
During the first six 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 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, guidance under U.S. GAAP, or other considerations. If significant changes occur, the Corporation will provide updated information in connection with future regulatory filings.

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.

2224

CAPITAL AND EXPLORATION EXPENDITURES CAPITAL AND EXPLORATION EXPENDITURES

CAPITAL AND EXPLORATION EXPENDITURES

��

Second Quarter

First Six Months

First Three Months

2018

2017

2018

2017

2019

2018

(millions of dollars)

(millions of dollars)

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

4,855

2,786

8,614

5,905

Upstream (including exploration expenses)

5,361

3,759

Downstream
Downstream

1,230

586

1,844

1,131

Downstream

829

614

Chemical
Chemical

533

535

998

1,032

Chemical

696

465

Other
Other

9

18

38

26

Other

4

29

Total

6,627

3,925

11,494

8,094

Total

6,890

4,867

Capital and exploration expenditures in the ~~second~~first quarter of ~~2018~~2019 were ~~$6.6 billion, up 69 percent from the second quarter of 2017.~~
~~Capital~~ ~~and~~ ~~exploration expenditures in the first six months of 2018 were $11.5~~$6.9 billion, up 42 percent from the first ~~six months~~quarter of ~~2017 due primarily to increased U.S. drilling activity.~~2018. The Corporation anticipates an investment level of ~~$24~~approximately $30 billion in ~~2018.~~2019. 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 have actively been in discussions with the government on the associated implementation measures which resulted in a signed Heads of Agreement (HoA – agreement on principles) on June 25, 2018. The HoA stipulates that additional agreements must be negotiated which will define further details, and the parties will endeavor to execute them by the end of September. In anticipation of a lower production outlook, the Corporation has reduced its estimate of proved reserves 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,~~2020, ExxonMobil will adopt the Financial Accounting Standards Board’s ~~standard,~~update, ~~Leases~~Financial Instruments – Credit Losses (Topic ~~842)~~326), as amended. The standard requires ~~all leases with an initial term greater than one year to~~a valuation allowance for credit losses be ~~recorded on~~recognized for certain financial assets that reflects the ~~balance sheet as a right~~current expected credit loss over the asset’s contractual life. The valuation allowance considers the risk of ~~use asset~~loss, even if remote, and ~~a lease liability.~~considers past events, current conditions and expectations of the future. The Corporation ~~acquired lease accounting software to facilitate implementation,~~is evaluating the standard and is currently installing, configuring and testing the software. Based on leases outstanding at the end of 2017, the 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. Theits effect on the Corporation’s 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 leasesfinancial statements. ~~during the year.~~

23
FORWARD-LOOKING STATEMENTS

Statements ~~relating~~related to ~~future~~outlooks, projections, goals, targets, descriptions of strategic plans and objectives, ~~projections,~~and other statements of future events or conditions are forward-looking statements. ~~Future~~Actual future results, including business and project plans, capacities, costs, ~~timing,~~ and ~~capacities; business growth; integration benefits;~~timing; resource ~~recoveries;~~recoveries and production rates; and the impact of new ~~technologies;~~technologies, including to increase capital efficiency and ~~share purchase levels,~~production and to reduce greenhouse gas emissions, could differ materially due to a number of factors. These include global or regional changes in supply and demand for oil, gas, orand petrochemicals orand other market conditions ~~affecting~~that impact prices and differentials; reservoir performance; the ~~oil, gas~~outcome of exploration projects and ~~petrochemical industries; reservoir performance;~~ timely completion of ~~new~~development and construction projects; the impact of fiscal and commercial terms and the outcome of commercial ~~negotiations;~~negotiations or acquisitions; changes in law, taxes, or ~~government~~ regulation, including environmental regulations, and timely granting of governmental permits; war and other political or security disturbances; the actions of competitors; the capture of efficiencies between business lines; unforeseen technical or operating difficulties; unexpected technological developments; the ability to bring new technologies to commercial scale on a cost-competitive basis; general economic conditions including the occurrence and duration of economic recessions; the results of research programs; and other factors discussed under the heading Factors Affecting Future Results on the Investors page of our website at www.exxonmobil.com and in Item 1A of ~~ExxonMobil's 2017~~ExxonMobil’s 2018 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.

25

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Information about market risks for the ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019, does not differ materially from that discussed under Item 7A of the registrant's Annual Report on Form 10-K for ~~2017.~~2018.

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 ~~June 30, 2018.~~March 31, 2019. 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.

2426

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

AsOn March 20, 2019, the State of California Air Resources Board (CARB) informed ExxonMobil Oil Corporation (EMOC) of its intention to attempt to settle an enforcement matter involving the formerly owned Torrance Refinery in California under the California Health and Safety Code. Specifically, CARB contends that the refinery failed to timely calibrate and inspect a greenhouse gas reporting meter as required by the applicable regulations and to accurately report greenhouse gas emissions from refinery operations in 2014 and 2015 in a manner consistent with applicable regulations. The alleged violations have been corrected, but CARB is seeking penalties in excess of $100,000 to resolve the matter. EMOC is in settlement discussions with CARB, and the parties have entered into a tolling agreement to facilitate settlement discussions.
In a matter last reported in the Corporation’s Form ~~10-K~~10-Q for ~~2017, on June 20,~~first quarter of 2017, the ~~United States~~U.S. Department of Justice (DOJ) and ~~the United States~~U.S. Environmental Protection Agency (EPA) ~~notified XTO Energy Inc. (XTO) concerning~~filed a complaint and proposed consent decree on March 6, 2019, to settle a pending enforcement action with EMOC regarding alleged violations ofat EMOC’s Beaumont Refinery in Texas under the Clean Air Act and various sections of the ~~Fort Berthold Indian Reservation Federal Implementation Plan regarding~~EPA’s Chemical Accident Prevention Provisions. The DOJ and EPA had contended that EMOC failed to identify hazards, failed to design and maintain a safe facility, and failed to mitigate the ~~alleged failure~~consequences of ~~vapor control systems~~a claimed accidental release related to ~~properly route tank vapors to control devices at well pads and tank farms~~a flash fire that occurred on ~~the Fort Berthold Indian Reservation. In January 2018, XTO,~~April 17, 2013. Additionally, based on an on-site inspection in 2013, the DOJ and ~~the~~ EPA ~~agreed~~claim that EMOC failed to ~~the terms of~~include all covered processes in its risk management program and failed to inspect certain process equipment in a Consent Decree concerning those alleged violations. XTO has agreed to pay a penalty of $320,000, install automatic tank gauging on 30 well sites, and monitor and report emissions for three years. The executed Consent Decree was approvedtimely fashion. Pending approval by the ~~United States Federal~~U.S. District Court for the Eastern District of ~~North Dakota – Western~~Texas, Beaumont Division, the parties have agreed to a civil penalty of $616,000, payment of $730,000 to a Supplemental Environmental Project, and additional corrective actions to resolve the matter.
As most recently reported in ~~Bismarck, North Dakota,~~the Corporation’s Form 10-Q for the second quarter of 2014, the DOJ contacted ExxonMobil Pipeline Company (EMPCo) concerning possible civil charges under the Clean Water Act arising in connection with the July 1, 2011, discharge of crude oil into the Yellowstone River from EMPCo’s Silvertip Pipeline near Laurel, Montana. In March 2019, EMPCo reached an agreement with the DOJ on ~~July 10, 2018.~~a Consent Decree to resolve the matter. The Consent Decree, once entered by the U.S. District Court in the District of Montana, will require EMPCo to pay a civil penalty to the United States in the amount of $1.05 million.

As last reported in the Corporation’s 2018 Form 10-Q for the third quarter of 2017, the company agreed with the DOJ and the EPA to resolve claims of non-compliance with the Clean Air Act related to flaring at its eight U.S. chemical facilities with flares. The EPA alleged the sites failed to properly operate and monitor flares. The company reached a settlement agreement with the DOJ, the EPA and the Louisiana Department of Environmental Quality to resolve these claims. The complaint and the consent decree were filed in the U.S. District Court for the Southern District of Texas on October 31, 2017, and became effective June 6, 2018. The company paid a total penalty of $2,500,000, and agreed to pay $2,572,000 to fund supplemental environmental projects. The company has also agreed to make investments in new equipment at the facilities.
On May 24, 2018, the State of Ohio Department of Natural Resources, Division of Oil & Gas Resources Management (ODNR) notified XTO of its interest in settling possible enforcement of alleged violations by XTO of the Ohio Revised Code, Ohio Administrative Code, and implementing regulations arising out of the Schnegg well incident in Belmont County, Ohio, in early 2018. The ODNR alleges the following violations by XTO: (1) causing brine to be discharged and contact the ground and/or surface water; (2) failure to place cement in the casing string per Ohio codes; (3) allowing a well to flow gas uncontrolled; (4) failure to construct, drill and operate a well in the manner as permitted and planned; and (5) failure to notify ODNR upon discovery the well had sustained annular pressure above the prescribed pressure. The ODNR is seeking a civil penalty in excess of $100,000 as well as injunctive relief, and XTO is working with the state to resolve the matter.
Also relating to the Schnegg well incident, on May 25, 2018, the State of Ohio Environmental Protection Agency (OEPA) notified XTO of its interest in settling possible enforcement of alleged violations by XTO of the Ohio Revised Code and implementing regulations, including but not limited to: (1) failure to maintain and operate its facility in a manner using good pollution control practices; (2) failure to provide a malfunction report; (3) failure to complete and properly report quarterly inspections; and (4) failure to submit site-specific work practice plans within applicable time limits. The OEPA is seeking a civil penalty in excess of $100,000 as well as injunctive relief, and XTO is working with the state to resolve the matter.
~~As last reported in the Corporation’s Form 10-Q for the first quarter of 2018,~~10-K, 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.

2527

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

Issuer Purchase of Equity Securities for Quarter Ended ~~June 30, 2018~~March 31, 2019

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

~~April 2018~~January 2019

-1,872,444

$71.48

-1,872,444

~~May 2018~~February 2019

-1,729,545

$76.57

-1,729,545

~~June 2018~~March 2019

-1,837,011

$80.32

-1,837,011

Total

-5,439,000

-5,439,000

(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.

2628

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.

2729

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: ~~August~~May 2, ~~2018~~2019
By:
/s/ DAVID S. ROSENTHAL

David S. Rosenthal

Vice President, Controller and

Principal Accounting Officer

2830

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

Class		Outstanding as of ~~June 30, 2018~~March 31, 2019
Common stock, without par value		~~4,233,810,348~~4,231,093,914

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
Condensed Consolidated Statement of Income Three ~~and six~~ months ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~	3
Condensed Consolidated Statement of Comprehensive Income Three ~~and six~~ months ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~	4
Condensed Consolidated Balance Sheet As of ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018	5

Condensed Consolidated Statement of Cash Flows ~~Six~~Three months ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~	6
	6
Condensed Consolidated Statement of Changes in Equity ~~Six~~Three months ended ~~June 30,~~March 31, 2019 and 2018 ~~and 2017~~	7
	7
Notes to Condensed Consolidated Financial Statements	8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	1619
Item 3. Quantitative and Qualitative Disclosures About Market Risk	2426
Item 4. Controls and Procedures	2426

PART II. OTHER INFORMATION
Item 1. Legal Proceedings	2527
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	2628
Item 6. Exhibits	2628
Index to Exhibits	2729
Signature	2830