Chairman Rex W. Tillerson commented, "ExxonMobil's focus on operational excellence continues to deliver strong results. Second quarter earnings, excluding special items, of $7.6 billion, were up 85% from second quarter of last year reflecting higher crude oil realizations, improved downstream margins, and strong chemical results. First half earnings, excluding special items, of $13.9 billion increased by 60% over the first half of 2009.
"Oil-equivalent production increased by 8% over the second quarter of 2009 driven by contributions from our world-class assets in Qatar.
"We continued our focus on investing for the future with capital and exploration spending of $13.4 billion year to date, up 9% from the first half of last year.
"Over $3 billion was returned to shareholders in the second quarter through dividends and share purchases to reduce shares outstanding.
"The Corporation's second quarter 2010 earnings and production volumes included de minimis amounts for the period from June 25 to June 30 resulting from the merger with XTO Energy Inc. which closed on June 25, 2010."
SECOND QUARTER HIGHLIGHTS
Second Quarter 2010 vs. Second Quarter 2009
Upstream earnings were $5,336 million, up $1,524 million from the second quarter of 2009. Higher crude oil and natural gas realizations drove the improvement and increased earnings by $1.6 billion.
On an oil-equivalent basis, production increased 8% from the second quarter of 2009. Excluding the impacts of entitlement volumes, OPEC quota effects and divestments, production was up about 10%.
Liquids production totaled 2,325 kbd (thousands of barrels per day), down 21 kbd from the second quarter of 2009. Excluding the impacts of entitlement volumes, OPEC quota effects and divestments, liquids production was up 1%, as increased production from projects in Qatar and Kazakhstan more than offset net field decline.
Second quarter natural gas production was 10,025 mcfd (millions of cubic feet per day), up 1,984 mcfd from 2009, driven by project ramp-ups in Qatar and higher demand in Europe, partly offset by net field decline.
Earnings from U.S. Upstream operations were $865 million, $52 million higher than the second quarter of 2009. Non-U.S. Upstream earnings were $4,471 million, up $1,472 million from last year.
Downstream earnings of $1,220 million were up $708 million from the second quarter of 2009. Higher industry refining and marketing margins increased earnings by $780 million. Volumes and product mix effects increased earnings by $170 million while other factors, mainly unfavorable foreign exchange impacts, decreased earnings by $240 million. Petroleum product sales of 6,241 kbd were 246 kbd lower than last year's second quarter, mainly reflecting lower demand.
Earnings from the U.S. Downstream were $440 million, up $455 million from the second quarter of 2009. Non-U.S. Downstream earnings of $780 million were $253 million higher than last year.
Chemical earnings of $1,368 million were $1,001 million higher than the second quarter of 2009. Stronger margins improved earnings by $840 million and higher sales volumes increased earnings by $120 million. Second quarter prime product sales of 6,496 kt (thousands of metric tons) were 229 kt higher than the prior year primarily due to improved global demand.
Corporate and financing expenses excluding special items were $364 million, down $237 million due mainly to favorable tax items.
During the second quarter of 2010, Exxon Mobil Corporation purchased 24 million shares of its common stock for the treasury at a gross cost of $1.6 billion. These purchases included over $1 billion to reduce the number of shares outstanding, with the balance used to offset shares issued in conjunction with the company's benefit plans and programs. As a result of regulatory requirements, no open market purchases of shares were made during the proxy solicitation period for the XTO transaction. Including 416 million shares issued in connection with the XTO merger, shares outstanding increased from 4,698 million at the end of the first quarter to 5,092 million at the end of the second quarter. Share purchases to reduce shares outstanding are currently anticipated to equal $3 billion in the third quarter of 2010. Purchases may be made in both the open market and through negotiated transactions, and may be increased, decreased or discontinued at any time without prior notice.
First Half 2010 vs. First Half 2009
Earnings of $13,860 million ($2.93 per share) increased $5,360 million from 2009. Excluding special items, earnings for the first half of 2010 increased $5,220 million from 2009.
FIRST HALF HIGHLIGHTS
Upstream earnings were $11,150 million, up $3,835 million from 2009. Higher net realizations increased earnings approximately $4 billion. The favorable impact of higher volumes of $0.4 billion was partially offset by higher operating costs of $0.3 billion.
On an oil-equivalent basis, production was up 6% compared to the same period in 2009. Excluding the impacts of entitlement volumes, OPEC quota effects and divestments, production was up 8%.
Liquids production of 2,370 kbd decreased 41 kbd compared with 2009. Excluding the impacts of entitlement volumes, OPEC quota effects and divestments, liquids production was flat with 2009, as new volumes from project ramp-ups in Qatar and Kazakhstan were offset by net field decline.
Natural gas production of 10,852 mcfd increased 1,744 mcfd from 2009, driven by higher volumes from Qatar projects and higher demand in Europe.
Earnings from U.S. Upstream operations for 2010 were $1,956 million, an increase of $783 million. Earnings outside the U.S. were $9,194 million, up $3,052 million.
Downstream earnings of $1,257 million were $388 million lower than 2009. Lower refining margins decreased earnings by $0.5 billion. Unfavorable forex impacts of $0.4 billion were offset by improved marketing margins, and favorable sales volume mix and refining operations effects. Petroleum product sales of 6,193 kbd decreased 268 kbd, mainly reflecting lower demand.
U.S. Downstream earnings were $380 million, up $43 million from 2009. Non-U.S. Downstream earnings were $877 million, $431 million lower than last year.
Chemical earnings of $2,617 million increased $1,900 million from 2009. Stronger margins increased earnings by approximately $1.4 billion while higher volumes increased earnings about $0.3 billion. Prime product sales of 12,984 kt were up 1,190 kt from 2009.
Corporate and financing expenses excluding special items were $1,164 million, up $127 million from 2009 mainly due to a tax charge related to the U.S. health care legislation during the first half of 2010.
Gross share purchases through the first half of 2010 were $4.1 billion, reducing shares outstanding by 61 million shares, excluding the impact of the XTO transaction.
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