01—Abstract
Summary
Summary of the 10-K/A filed February 28, 2011. Cited figures are marked; the original filing is the authoritative source.
ExxonMobil's 2010 10-K shows a strong rebound in earnings and cash generation.
Net income attributable to ExxonMobil rose to $30.46 billiona (EPS $6.24 basic, $6.22 diluted) from $19.28 billion in 2009, with no special items in 2010 versus a $140 million Valdez-related charge in 2009. Upstream earnings were $24.1 billion, up about $7.0 billion, driven mainly by higher realizations, while Downstream ($3.6 billion) and Chemical ($4.9 billion, a record) also improved. Cash flow from operations and asset sales reached $51.7 billion, funding $32.2 billion of capital and exploration spending and $8.5 billion of dividends, plus $13.1 billion of share repurchases.
The defining event of the year was the June 2010 acquisition of XTO Energy, an all-stock deal valued at $24.7 billionb that added unconventional gas and oil shale resources. It lifted proved reserves to 24.8 billion oil-equivalent barrels (about 31% proved undeveloped) and pushed total debt up to $15.0 billion from $9.6 billion. Liquidity remains solid: the debt-to-capital ratio is 9.0% and the fixed-charge coverage ratio is 42.2x, though working capital turned negative at -$3.6 billion and the current ratio fell to 0.94.
The filing also flags forward-looking risks: management expects annual capital spending of $33 to $37 billionc, expects refining margins to stay weak, and notes ongoing exposure to Venezuelan expropriation arbitration (Cerro Negro) and climate-related regulation. Shareholder distributions and buybacks remain central to the capital allocation story.
02—Key points
Key Highlights
- Net income attributable to ExxonMobil rose 58% to $30.46 billion in 2010 from $19.28 billion in 2009; diluted EPS was $6.22 versus $3.98, with no special items in 2010.
- Upstream earnings reached $24.1 billion (up $7.0 billion), driven by higher realizations; oil-equivalent production rose 13% to 4,447 kboe/d, partly from the XTO acquisition.
- The XTO Energy acquisition (closed June 25, 2010) was an all-stock deal valued at $24.7 billion, adding unconventional gas and shale assets and about 1.0 GOEB of new proved undeveloped reserves.
- Proved reserves reached 24.8 billion oil-equivalent barrels at year-end 2010, of which 69% were proved developed, and the reserve replacement profile remained strong.
- Cash flow from operations and asset sales was $51.7 billion; capital and exploration spending was $32.2 billion, and the company expects $33-37 billion annually in coming years.
- Shareholder returns: dividends rose to $1.74 per share ($8.5 billion total) and the company repurchased 199 million shares for $13.1 billion, while ExxonMobil share of equity rose to $146.8 billion.
- Total debt increased to $15.0 billion (from $9.6 billion), largely from debt assumed in the XTO merger; the debt-to-capital ratio is 9.0% and fixed-charge coverage is 42.2x. Working capital turned negative at -$3.6 billion.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-K/AFY2010filed February 28, 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
What drove ExxonMobil's earnings increase in 2010?
Earnings rose $11.2 billion to $30.46 billion, mainly from Upstream (up $7.0 billion on higher oil and gas realizations, with volume gains adding $1.2 billion), Chemical (record $4.9 billion on improved margins), and Downstream (up $1.8 billion on higher refining margins). Corporate and financing expenses increased $200 million, partly due to a U.S. health care tax charge.
How did the XTO Energy acquisition change ExxonMobil's financial profile?
The $24.7 billion all-stock acquisition added unconventional gas and oil shale resources and roughly 1.0 billion oil-equivalent barrels of proved undeveloped reserves. It increased total debt by about $5.4 billion, mostly from assumed XTO debt, and issued 416 million shares from treasury stock. XTO contributed $4.4 billion in revenue and $262 million in Upstream earnings from the acquisition date through year-end, and pro forma figures show 2010 EPS of $6.03 had the deal closed at the start of the year.
Is ExxonMobil's balance sheet still strong, and what are the liquidity risks?
Credit metrics remain strong: the debt-to-capital ratio is 9.0%, net debt-to-capital is 4.5%, and fixed-charge coverage is 42.2x. Cash and equivalents were $8.5 billion, with about $5.6 billion of unused short-term credit lines. Watch-points include negative working capital of $3.6 billion, a current ratio of 0.94, and the rise in total debt to $15.0 billion, while the company's large capital program is expected to be funded mainly from internal cash flow.
What are the main risks flagged in the 10-K?
Key risks include commodity price and refining margin volatility, government and fiscal risk (including retroactive tax or royalty claims and expropriation), climate-change and greenhouse gas regulation, and project execution. The company cites the Venezuelan Cerro Negro arbitration (about $750 million of remaining net book investment, with a hearing scheduled for 2012), and it says the outcome is not expected to be material. Management also notes that it generally does not hedge market exposures.
How much is ExxonMobil returning to shareholders?
In 2010 the company paid $8.5 billion in dividends ($1.74 per share, a 28% payout ratio) and repurchased $13.1 billion of stock, for total cash returns of about $21.6 billion. Management stated that first-quarter 2011 buybacks would continue at a pace consistent with fourth-quarter 2010 spending of about $5 billion, and it declared a $0.44 quarterly dividend in January 2011.
06—Continue