Edgar Filing: EXXON MOBIL CORP

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017

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

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________to________

Commission File Number 1-2256

EXXON MOBIL CORPORATION

(Exact name of registrant as specified in its charter)

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

5959 LAS COLINAS BOULEVARD, IRVING, TEXAS 75039-2298

(Address of principal executive offices) (Zip Code)

(972) 444-1000

(Registrant's telephone number, including area code)

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

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

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

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

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

Class		Outstanding as of March 31, 2017
Common stock, without par value		4,237,265,503

EXXON MOBIL CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2017

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
Condensed Consolidated Statement of Income Three months ended March 31, 2017 and 2016	3
Condensed Consolidated Statement of Comprehensive Income Three months ended March 31, 2017 and 2016	4
Condensed Consolidated Balance Sheet As of March 31, 2017 and December 31, 2016	5

Condensed Consolidated Statement of Cash Flows Three months ended March 31, 2017 and 2016	6
Condensed Consolidated Statement of Changes in Equity Three months ended March 31, 2017 and 2016	7
Notes to Condensed Consolidated Financial Statements	8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3. Quantitative and Qualitative Disclosures About Market Risk	20
Item 4. Controls and Procedures	20

PART II. OTHER INFORMATION
Item 1. Legal Proceedings	21
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 6. Exhibits	22
Signature	23
Index to Exhibits	24

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

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

			Three Months Ended
			March 31,
			2017	2016
Revenues and other income
	Sales and other operating revenue (1)		61,090	47,105
	Income from equity affiliates		1,710	1,251
	Other income		487	351
		Total revenues and other income	63,287	48,707
Costs and other deductions
	Crude oil and product purchases		30,359	20,707
	Production and manufacturing expenses		7,845	7,561
	Selling, general and administrative expenses		2,599	2,593
	Depreciation and depletion		4,519	4,765
	Exploration expenses, including dry holes		289	355
	Interest expense		146	77
	Sales-based taxes (1)		5,342	4,815
	Other taxes and duties		6,270	6,104
		Total costs and other deductions	57,369	46,977
Income before income taxes			5,918	1,730
	Income taxes		1,828	(51)
Net income including noncontrolling interests			4,090	1,781
	Net income attributable to noncontrolling interests		80	(29)
Net income attributable to ExxonMobil			4,010	1,810


Earnings per common share (dollars)			0.95	0.43

Earnings per common share - assuming dilution (dollars)			0.95	0.43


Dividends per common share (dollars)			0.75	0.73


(1) Sales-based taxes included in sales and other operating revenue			5,342	4,815

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

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

					Three Months Ended
					March 31,
					2017	2016

	Net income including noncontrolling interests				4,090	1,781
	Other comprehensive income (net of income taxes)
		Foreign exchange translation adjustment			1,408	3,340
		Postretirement benefits reserves adjustment (excluding amortization)			(25)	(119)
		Amortization and settlement of postretirement benefits reserves adjustment
				included in net periodic benefit costs	256	289
			Total other comprehensive income		1,639	3,510
	Comprehensive income including noncontrolling interests				5,729	5,291
		Comprehensive income attributable to noncontrolling interests			159	354
	Comprehensive income attributable to ExxonMobil				5,570	4,937

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

EXXON MOBIL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(millions of dollars)

				Mar. 31,	Dec. 31,
				2017	2016
Assets
	Current assets
		Cash and cash equivalents		4,897	3,657
		Notes and accounts receivable – net		21,842	21,394
		Inventories
			Crude oil, products and merchandise	10,686	10,877
			Materials and supplies	4,187	4,203
		Other current assets		1,519	1,285
			Total current assets	43,131	41,416
	Investments, advances and long-term receivables			38,268	35,102
	Property, plant and equipment – net			253,147	244,224
	Other assets, including intangibles – net			9,663	9,572
			Total assets	344,209	330,314

Liabilities
	Current liabilities
		Notes and loans payable		18,483	13,830
		Accounts payable and accrued liabilities		32,069	31,193
		Income taxes payable		2,822	2,615
			Total current liabilities	53,374	47,638
	Long-term debt			25,124	28,932
	Postretirement benefits reserves			20,584	20,680
	Deferred income tax liabilities			34,772	34,041
	Long-term obligations to equity companies			5,175	5,124
	Other long-term obligations			21,409	20,069
			Total liabilities	160,438	156,484

Commitments and contingencies (Note 3)

Equity
	Common stock without par value
		(9,000 million shares authorized, 8,019 million shares issued)		14,415	12,157
	Earnings reinvested			408,707	407,831
	Accumulated other comprehensive income			(20,679)	(22,239)
	Common stock held in treasury
		(3,782 million shares at March 31, 2017 and
		3,871 million shares at December 31, 2016)		(225,292)	(230,424)
			ExxonMobil share of equity	177,151	167,325
	Noncontrolling interests			6,620	6,505
			Total equity	183,771	173,830
			Total liabilities and equity	344,209	330,314

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

EXXON MOBIL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(millions of dollars)

				Three Months Ended
				March 31,
				2017	2016
Cash flows from operating activities
	Net income including noncontrolling interests			4,090	1,781
	Depreciation and depletion			4,519	4,765
	Changes in operational working capital, excluding cash and debt			793	(399)
	All other items – net			(1,229)	(1,335)
			Net cash provided by operating activities	8,173	4,812

Cash flows from investing activities
	Additions to property, plant and equipment			(2,890)	(4,601)
	Proceeds associated with sales of subsidiaries, property, plant and
		equipment, and sales and returns of investments		687	177
	Additional investments and advances			(1,738)	(234)
	Other investing activities – net			180	309
			Net cash used in investing activities	(3,761)	(4,349)

Cash flows from financing activities
	Additions to long-term debt			60	11,963
	Additions to short-term debt			1,734	-
	Reductions in short-term debt			(2,669)	(28)
	Additions/(reductions) in commercial paper, and debt with three
			months or less maturity (1)	1,308	(7,594)
	Cash dividends to ExxonMobil shareholders			(3,134)	(3,054)
	Cash dividends to noncontrolling interests			(44)	(42)
	Common stock acquired			(501)	(726)
	Common stock sold			-	5
			Net cash used in financing activities	(3,246)	524
Effects of exchange rate changes on cash				74	154
Increase/(decrease) in cash and cash equivalents				1,240	1,141
Cash and cash equivalents at beginning of period				3,657	3,705
Cash and cash equivalents at end of period				4,897	4,846

Supplemental Disclosures
	Income taxes paid			1,970	749
	Cash interest paid			368	223

2017 Non-Cash Transactions

During the first quarter, 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 non-cash component. Additional information is provided in Note 9.

(1) Includes a net addition of commercial paper with a maturity of over three months of $0.1 billion in 2017 and $0.7 billion in 2016. The gross amount of commercial paper with a maturity of over three months issued was $1.1 billion in 2017 and $1.0 billion in 2016, while the gross amount repaid was $1.0 billion in 2017 and $0.3 billion in 2016.

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

	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, 2015				11,612		412,444			(23,511)		(229,734)		170,811		5,999		176,810
	Amortization of stock-based awards			211		-			-		-		211		-		211
	Tax benefits related to stock-based
		awards		4		-			-		-		4		-		4
	Other			(2)		-			-		-		(2)		-		(2)
	Net income for the period			-		1,810			-		-		1,810		(29)		1,781
	Dividends – common shares			-		(3,054)			-		-		(3,054)		(42)		(3,096)
	Other comprehensive income			-		-			3,127		-		3,127		383		3,510
	Acquisitions, at cost			-		-			-		(726)		(726)		-		(726)
	Dispositions			-		-			-		6		6		-		6
Balance as of March 31, 2016				11,825		411,200			(20,384)		(230,454)		172,187		6,311		178,498

Balance as of December 31, 2016				12,157		407,831			(22,239)		(230,424)		167,325		6,505		173,830
	Amortization of stock-based awards			264		-			-		-		264		-		264
	Other			(84)		-			-		-		(84)		-		(84)
	Net income for the period			-		4,010			-		-		4,010		80		4,090
	Dividends – common shares			-		(3,134)			-		-		(3,134)		(44)		(3,178)
	Other comprehensive income			-		-			1,560		-		1,560		79		1,639
	Acquisitions, at cost			-		-			-		(582)		(582)		-		(582)
	Issued for acquisitions			2,078		-			-		5,711		7,789		-		7,789
	Dispositions			-		-			-		3		3		-		3
Balance as of March 31, 2017				14,415		408,707			(20,679)		(225,292)		177,151		6,620		183,771



			Three Months Ended March 31, 2017									Three Months Ended March 31, 2016
					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		(3,871)			4,148				8,019		(3,863)		4,156
		Acquisitions		-		(7)			(7)				-		(9)		(9)
		Issued for acquisitions		-		96			96				-		-		-
		Dispositions		-		-			-				-		-		-
	Balance as of March 31			8,019		(3,782)			4,237				8,019		(3,872)		4,147

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

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 2016 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. Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board issued a new standard, Revenue from Contracts with Customers. The standard establishes a single revenue recognition model for all contracts with customers, eliminates industry specific requirements, and expands disclosure requirements. The standard is required to be adopted beginning January 1, 2018. “Sales and Other Operating Revenue” on the Consolidated Statement of Income includes sales, excise and value-added taxes on sales transactions. When the Corporation adopts the standard, revenue will exclude sales-based taxes collected on behalf of third parties. This change in reporting will not impact earnings. The Corporation expects to adopt the standard using the Modified Retrospective method, under which prior years’ results are not restated, but supplemental information on the impact of the new standard is provided for 2018 results. The Corporation continues to evaluate other areas of the standard, which are not expected to have a material effect on the Corporation’s financial statements.

In February 2016, the Financial Accounting Standards Board issued a new standard, Leases. The standard requires all leases with an initial term greater than one year be recorded on the balance sheet as an asset and a lease liability. ExxonMobil is evaluating the standard and its effect on the Corporation’s financial statements and plans to adopt it in 2019.

In March 2017, the Financial Accounting Standards Board issued an Accounting Standards Update, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The update requires that the service cost component of net benefit costs be reported in the same line in the income statement as other compensation costs and that the other components of net benefit costs be presented separately from the service cost component. Additionally, only the service cost component of net benefit costs will be eligible for capitalization. The update is required to be adopted beginning January 1, 2018. ExxonMobil is evaluating the standard and its effect on the Corporation’s financial statements.

3. Litigation and Other Contingencies

Litigation

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

Other Contingencies

The Corporation and certain of its consolidated subsidiaries were contingently liable at March 31, 2017, for guarantees relating to notes, loans and performance under contracts. Where guarantees for environmental remediation and other similar matters do not include a stated cap, the amounts reflect management’s estimate of the maximum potential exposure. These guarantees are not reasonably likely to have a material effect on the Corporation’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

As of March 31, 2017

Equity

Other

Company

Third Party

Obligations (1)

Obligations

Total

(millions of dollars)

Guarantees

Debt-related

117

147

Other

2,667

4,000

6,667

Total

2,784

4,030

6,814

(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 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. 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 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% compounded annually until the date of payment in full. The Tribunal also noted that one of the Cerro Negro Project agreements provides a mechanism to prevent double recovery between the ICSID award and all or part of an earlier award of $908 million to an ExxonMobil affiliate, Mobil Cerro Negro, Ltd., against PdVSA and a PdVSA affiliate, PdVSA CN, in an arbitration under the rules of the International Chamber of Commerce.

On February 2, 2015, Venezuela filed a Request for Annulment of the ICSID award. On March 9, 2017, the ICSID Committee hearing the Request for Annulment issued a decision partially annulling the award of the Tribunal issued on October 9, 2014. The Committee affirmed the compensation due for the La Ceiba project and for export curtailments at the Cerro Negro project, but annulled the portion of the award relating to the Cerro Negro Project’s expropriation ($1.4 billion) based on its determination that the prior Tribunal failed to adequately explain why the cap on damages in the indemnity owed by PdVSA did not affect or limit the amount owed for the expropriation of the Cerro Negro project. As a result, ExxonMobil retains an award for $260 million (including accrued interest). Under the ICSID rules, ExxonMobil may seek to re-arbitrate the issue that was the basis for the annulment in a new ICSID arbitration proceeding.

The United States District Court for the Southern District of New York entered judgment on the ICSID award on October 10, 2014. Motions filed by Venezuela to vacate that judgment on procedural grounds and to modify the judgment by reducing the rate of interest to be paid on the ICSID award from the entry of the court’s judgment, until the date of payment, were denied on February 13, 2015, and March 4, 2015, respectively. On March 9, 2015, Venezuela filed a notice of appeal of the court’s actions on the two motions. Oral arguments on this appeal were held before the United States Court of Appeals for the Second Circuit on January 7, 2016.

A stay of the District Court’s judgment has continued pending the completion of the Second Circuit appeal. The net impact of these matters on the Corporation’s consolidated financial results cannot be reasonably estimated. Regardless, the Corporation does not expect the resolution to have a material effect upon the Corporation’s operations or financial condition.

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

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, 2015			(14,170)	(9,341)	(23,511)
Current period change excluding amounts reclassified
	from accumulated other comprehensive income		2,962	(116)	2,846
Amounts reclassified from accumulated other
	comprehensive income		-	281	281
Total change in accumulated other comprehensive income			2,962	165	3,127
Balance as of March 31, 2016			(11,208)	(9,176)	(20,384)

Balance as of December 31, 2016			(14,501)	(7,738)	(22,239)
Current period change excluding amounts reclassified
	from accumulated other comprehensive income		1,342	(29)	1,313
Amounts reclassified from accumulated other
	comprehensive income		-	247	247
Total change in accumulated other comprehensive income			1,342	218	1,560
Balance as of March 31, 2017			(13,159)	(7,520)	(20,679)

Three Months Ended

Amounts Reclassified Out of Accumulated Other

March 31,

Comprehensive Income - Before-tax Income/(Expense)

2017

2016

(millions of dollars)

Amortization and settlement of postretirement benefits reserves

adjustment included in net periodic benefit costs (1)

(359)

(414)

(1) These accumulated other comprehensive income components are included in the computation of net periodic pension cost. (See Note 6 – Pension and Other Postretirement Benefits for additional details.)

		Three Months Ended
Income Tax (Expense)/Credit For		March 31,
Components of Other Comprehensive Income		2017	2016
		(millions of dollars)

Foreign exchange translation adjustment		(18)	(11)
Postretirement benefits reserves adjustment (excluding amortization)		5	80
Amortization and settlement of postretirement benefits reserves
	adjustment included in net periodic benefit costs	(103)	(125)
Total		(116)	(56)

5. Earnings Per Share

	Three Months Ended
	March 31,
	2017	2016

Earnings per common share

Net income attributable to ExxonMobil (millions of dollars)	4,010	1,810

Weighted average number of common shares outstanding (millions of shares)	4,223	4,178

Earnings per common share (dollars) (1)	0.95	0.43

(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,
			2017	2016
			(millions of dollars)
Components of net benefit cost
	Pension Benefits - U.S.
		Service cost	197	202
		Interest cost	199	198
		Expected return on plan assets	(194)	(182)
		Amortization of actuarial loss/(gain) and prior service cost	110	124
		Net pension enhancement and curtailment/settlement cost	105	111
		Net benefit cost	417	453


	Pension Benefits - Non-U.S.
		Service cost	145	149
		Interest cost	187	213
		Expected return on plan assets	(239)	(235)
		Amortization of actuarial loss/(gain) and prior service cost	127	148
		Net pension enhancement and curtailment/settlement cost	(5)	-
		Net benefit cost	215	275


	Other Postretirement Benefits
		Service cost	26	35
		Interest cost	72	89
		Expected return on plan assets	(6)	(6)
		Amortization of actuarial loss/(gain) and prior service cost	17	31
		Net benefit cost	109	149

7. Financial Instruments

The fair value of financial instruments is determined by reference to observable market data and other valuation techniques as appropriate. The only category of financial instruments where the difference between fair value and recorded book value is notable is long-term debt. The estimated fair value of total long-term debt, excluding capitalized lease obligations, was $24,219 million at March 31, 2017, and $27,968 million at December 31, 2016, as compared to recorded book values of $23,907 million at March 31, 2017, and $27,707 million at December 31, 2016.

The fair value of long-term debt by hierarchy level at March 31, 2017, is: Level 1 $24,028 million; Level 2 $185 million; and Level 3 $6 million. Level 1 represents quoted prices in active markets. Level 2 includes debt whose fair value is based upon a publicly available index. Level 3 involves using internal data augmented by relevant market indicators if available.

8. Disclosures about Segments and Related Information

			Three Months Ended
			March 31,
			2017	2016
Earnings After Income Tax			(millions of dollars)
	Upstream
		United States	(18)	(832)
		Non-U.S.	2,270	756
	Downstream
		United States	292	187
		Non-U.S.	824	719
	Chemical
		United States	529	581
		Non-U.S.	642	774
	All other		(529)	(375)
	Corporate total		4,010	1,810

Sales and Other Operating Revenue (1)
	Upstream
		United States	2,324	1,450
		Non-U.S.	3,593	3,019
	Downstream
		United States	15,365	11,513
		Non-U.S.	32,617	24,937
	Chemical
		United States	2,783	2,385
		Non-U.S.	4,394	3,799
	All other		14	2
	Corporate total		61,090	47,105

(1) Includes sales-based taxes

Intersegment Revenue
	Upstream
		United States	1,290	806
		Non-U.S.	5,899	3,453
	Downstream
		United States	3,646	2,390
		Non-U.S.	5,214	4,070
	Chemical
		United States	1,770	1,404
		Non-U.S.	1,190	952
	All other		56	58

9. InterOil Corporation and Permian Basin Properties Acquisitions

InterOil Corporation

On February 22, 2017, the Corporation completed the acquisition of InterOil Corporation (IOC) for $2.7 billion. The IOC acquisition was unproved properties in Papua New Guinea. Consideration included 28 million shares of Exxon Mobil Corporation common stock having a value on the acquisition date of $2.2 billion, a Contingent Resource Payment (CRP) with a fair value of $0.3 billion and cash of $0.2 billion. The CRP provides IOC shareholders $7.07 per share in cash for each incremental independently certified Trillion Cubic Feet Equivalent (TCFE) of resources above 6.2 TCFE, up to 11.0 TCFE. IOC’s assets include a contingent receivable related to the same resource base for volumes in excess of 3.5 TCFE at amounts ranging from $0.24 - $0.40 per thousand cubic feet equivalent. The fair value of the contingent receivable was $1.1 billion at the acquisition date. Fair values of contingent amounts were based on assumptions about the outcome of the resource certification, future business plans and appropriate discount rates. Amounts due to the Corporation related to the contingent receivable are expected to exceed those payable under the terms of the CRP.

Permian Basin Properties

On February 28, 2017, the Corporation completed the acquisition for $6.2 billion of a number of companies from the Bass family in Fort Worth, Texas, that indirectly own mostly unproved oil and gas properties in the Permian Basin and other assets. Consideration included 68 million shares of Exxon Mobil Corporation common stock having a value on the acquisition date of $5.5 billion, together with additional contingent cash payments tied to future drilling and completion activities (up to a maximum of $1.02 billion). The fair value of the contingent payment was $0.7 billion as of the acquisition date and is expected to be paid beginning in 2020 and ending no later than 2032 commensurate with the development of the resource. Fair value of the contingent payment was based on assumptions including drilling and completion activities, appropriate discount rates and tax rates.

Below is a summary of the net assets acquired for each acquisition.

	IOC	Permian
	(billions of dollars)

Current assets	0.6	-
Property, plant and equipment	2.9	6.3
Other	0.6	-
Total assets	4.1	6.3

Current liabilities	0.5	-
Long-term liabilities	0.9	0.1
Total liabilities	1.4	0.1

Net assets acquired	2.7	6.2

EXXON MOBIL CORPORATION

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

FUNCTIONAL EARNINGS SUMMARY

		First Three Months
Earnings (U.S. GAAP)		2017	2016
		(millions of dollars)
Upstream
	United States	(18)	(832)
	Non-U.S.	2,270	756
Downstream
	United States	292	187
	Non-U.S.