01—Abstract
Summary
Summary of the 10-K filed February 25, 2011. Cited figures are marked; the original filing is the authoritative source.
Exxon Mobil's 2010 Form 10-K reports net income attributable to ExxonMobil of $30.46 billiona, up from $19.28 billion in 2009 (EPS $6.24 basic, $6.22 diluted), on total sales and other operating revenue of $370.1 billion (including $28.5 billion of sales-based taxes).
Upstream earnings rose to $24.1 billionb on higher realizations, with production up 13% on an oil-equivalent basis, largely from the June 2010 XTO Energy acquisition and Qatar LNG ramp-ups. Downstream earnings recovered to $3.6 billion on better refining margins, and Chemical posted record earnings of $4.9 billion. Return on average capital employed rose to 21.7% from 16.3%.
Balance sheet and capital allocation shifted meaningfully. The XTO merger was an all-stock deal valued at $24.7 billionc, with 416 million shares issued from treasury. Total debt rose to $15.0 billion from $9.6 billion, and cash fell to $8.5 billion.
Working capital turned negative at $(3.6) billion, with a current ratio of 0.94. Capital and exploration spending was $32.2 billiond, and management expects $33–37 billion annually over the next several years. The company repurchased $13.1 billion of stock and paid $8.5 billion in dividends ($1.74 per share for the year, with a $0.44 quarterly dividend declared for March 2011).
Proved reserves reached 24.8 billion oil-equivalent barrels, 69% of them proved developed. Key risks flagged in the filing include the Venezuela expropriation arbitration (Cerro Negro, with roughly $750 million of remaining net book investment), climate and greenhouse gas regulation, and the production decline of about 3% per year on existing fields that new projects must offset. Management expects refining margins to stay weak over the long term because of new global capacity.
02—Key points
Key Highlights
- Net income attributable to ExxonMobil rose 58% to $30.46 billion in 2010 (EPS $6.24), with no special items in 2010 earnings
- Upstream earnings reached $24.1 billion, up $7.0 billion, on higher realizations; oil-equivalent production rose 13% to 4.45 million barrels per day, helped by XTO and Qatar LNG
- Chemical earnings hit a record $4.9 billion and Downstream earnings recovered to $3.6 billion on improved margins
- The $24.7 billion all-stock XTO Energy acquisition added unconventional gas and oil shale reserves; total proved reserves reached 24.8 billion oil-equivalent barrels
- Total debt rose to $15.0 billion from $9.6 billion, and working capital moved to a $(3.6) billion deficit; the company still reports strong fixed-charge coverage of 42.2x
- Capital spending was $32.2 billion in 2010, with guidance of $33–37 billion per year, while $13.1 billion of buybacks and $8.5 billion of dividends were paid
- The dividend was $1.74 per share for 2010, up 5% from $1.66, and the company declared a $0.44 quarterly dividend for March 2011
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2010filed February 25, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $370.13B$301.50B | +22.8% |
| R&D Expenses | $1.01B$1.05B | −3.6% |
| SG&A Expenses | $14.68B$14.73B | −0.4% |
| Operating Expenses | $330.26B$275.81B | +19.7% |
| Interest Expense | $259.00M$548.00M | −52.7% |
| Net Income | $30.46B$19.28B | +58.0% |
| EPS (Basic) | $6.24$3.99 | +56.4% |
| EPS (Diluted) | $6.22$3.98 | +56.3% |
05—Questions
Frequently Asked Questions
How did the XTO Energy acquisition change Exxon Mobil's business?
The June 25, 2010 merger added XTO's unconventional gas and oil shale resources, booked as 2010 reserve additions. Exxon issued 416 million shares from treasury (about $24.7 billion of consideration) and assumed roughly $10.6 billion of long-term debt. XTO contributed $4.4 billion of revenue and $262 million of Upstream earnings from the acquisition date through year-end. Pro forma 2010 revenue would have been about $373 billion.
Is Exxon Mobil's financial position still strong after the deal and higher spending?
Leverage rose but remains modest: debt to capital was 9.0% and net debt to capital was 4.5%, versus negative net debt in 2008 and 2009. Cash and equivalents fell to $8.5 billion, and unused short-term credit lines were about $5.6 billion. Working capital was negative $3.6 billion, with a current ratio of 0.94, which management attributes to timing of receivables and payables. Internally generated cash covered most needs; operating cash flow was $48.4 billion.
What are the main risks flagged in the filing?
The filing highlights commodity price volatility and weak long-term refining margins from new global capacity. It also flags greenhouse gas regulation and alternative-energy subsidies that could reduce hydrocarbon demand. Political and legal risks include expropriation, including the Venezuela Cerro Negro arbitration, where about $750 million of net book investment remains. Existing fields decline at about 3% per year, so new projects must be executed on time to keep volumes growing.
How much is Exxon Mobil returning to shareholders?
In 2010 the company paid $8.5 billion in dividends ($1.74 per share, a 28% payout) and repurchased $13.1 billion of stock, mostly to offset dilution and reduce shares outstanding. Shares outstanding still rose 5.3% year over year to 4,979 million because of the XTO share issuance. Management said first-quarter 2011 buybacks would continue at a pace similar to the $5 billion of fourth-quarter 2010 spending.
06—Continue