10-QPeriod: Q3 FY2001

EXXON MOBIL CORP Quarterly Report for Q3 Ended Sep 30, 2001

Filed November 13, 2001For Securities:XOM

Summary

Exxon Mobil Corporation's (XOM) third quarter and nine-month report for the period ending September 30, 2001, shows a notable decrease in revenue and net income compared to the same periods in the prior year. This decline is primarily attributed to a weakening economic environment and lower commodity prices, particularly for crude oil and natural gas. Despite these headwinds, the company demonstrated resilience in its downstream operations and maintained its commitment to capital expenditures, focusing on upstream growth. For investors, the key takeaway is the impact of the challenging macroeconomic conditions on XOM's top and bottom lines. While net income for the nine months remained relatively stable year-over-year due to strong operating cash flow and strategic share buybacks, the third quarter showed a more significant decline. The company also incurred merger-related expenses and reported gains from asset divestitures, which impacted the comparability of results. Management's focus on operational efficiencies and long-term capacity growth in upstream segments suggests a strategic approach to navigating the current market downturn.

Key Highlights

  • 1Total revenue for the nine months ended September 30, 2001, was $165.6 billion, a decrease from $168.6 billion in the prior year, reflecting lower commodity prices.
  • 2Net income for the nine months ended September 30, 2001, was $12.64 billion, a slight increase from $12.50 billion in the prior year, indicating stable earnings despite revenue decline.
  • 3Third quarter 2001 net income was $3.18 billion, a significant decrease from $4.49 billion in the third quarter of 2000, driven by lower crude oil and natural gas realizations.
  • 4Capital and exploration expenditures increased to $8.45 billion for the first nine months of 2001, up from $7.29 billion in the prior year, signaling continued investment in future growth, particularly in upstream segments.
  • 5The company repurchased approximately 101.8 million shares of common stock for $4.27 billion during the first nine months of 2001 to offset dilution and reduce outstanding shares.
  • 6Merger-related expenses for the nine months were $325 million after tax, a decrease from $705 million in the prior year, and the company continued to benefit from merger synergy initiatives.
  • 7The company is managing significant legal proceedings, including the Exxon Valdez case, with the punitive damage award being vacated and remanded for redetermination, and other litigation where outcomes are not expected to be materially adverse.

Frequently Asked Questions

The decrease in revenue for the third quarter of 2001, compared to the same period in 2000, was primarily due to lower crude oil and natural gas realizations, tracking widely quoted price markers that experienced significant declines, especially in the latter half of September. Overall revenue fell from $58.6 billion to $52.1 billion.

For the nine months ended September 30, 2001, merger-related expenses totaled $325 million after tax, a decrease from $705 million in the same period of 2000. The company also reported a net after-tax gain of $40 million from required asset divestitures in the first quarter of 2001, a significant decrease compared to the $1.415 billion gain in the prior year. These gains from divestitures were treated as extraordinary items.

ExxonMobil continued its investment program, with capital and exploration expenditures of $8.45 billion for the first nine months of 2001, an increase from $7.29 billion in the prior year. The company expects capital and exploration investments to increase by approximately 15 percent in 2001 versus 2000. The focus remains on increasing capacity and achieving an annual average of 3 percent growth in upstream segments over the next several years.

The Exxon Valdez litigation is ongoing. The United States Court of Appeals for the Ninth Circuit vacated the $5 billion punitive damage award as excessive and remanded the case back to the federal district court to determine a new amount. The compensatory award was upheld. The ultimate cost to ExxonMobil from these lawsuits is unpredictable and may not be resolved for years.