8-KOther Events

EXXON MOBIL CORP 8-K Report, Corporate Update (Jul 2, 2007)

Filed July 2, 2007For Securities:XOM

Summary

Exxon Mobil Corporation (XOM) filed an 8-K on July 2, 2007, reporting the nationalization of its 41.67 percent interest in the Cerro Negro heavy oil project in Venezuela. This action followed a nationalization decree issued in February 2007, which mandated the conversion of the project into a "mixed enterprise" and an increased ownership stake for Petróleos de Venezuela, S.A. (PdVSA). Despite efforts to reach an agreement on the mixed enterprise structure, an accord was not finalized, leading to the Venezuelan government taking over ExxonMobil's stake on June 27, 2007. The company stated that its net investment in the affected producing assets was approximately $750 million, representing less than 0.7 percent of its total property, plant, and equipment as of March 31, 2007. While discussions regarding compensation are ongoing, ExxonMobil does not currently expect the resolution of this matter to have a material impact on its consolidated financial results or overall operations.

Key Highlights

  • 1ExxonMobil's 41.67% interest in the Cerro Negro heavy oil project in Venezuela has been nationalized by the Venezuelan government.
  • 2The nationalization occurred on June 27, 2007, after an inability to reach an agreement on forming a 'mixed enterprise' structure as required by a presidential decree.
  • 3ExxonMobil's net investment in the Cerro Negro producing assets was approximately $750 million.
  • 4This investment represents a small fraction, less than 0.7%, of ExxonMobil's total worldwide property, plant, and equipment as of March 31, 2007.
  • 5Discussions with Venezuelan authorities regarding compensation are currently underway.
  • 6ExxonMobil does not anticipate a material impact on its consolidated financial results or operations from this event.

Frequently Asked Questions

The Venezuelan government nationalized ExxonMobil's 41.67 percent ownership interest in the Cerro Negro heavy oil project. This action was taken on June 27, 2007, after an agreement could not be reached on the formation of a 'mixed enterprise' as mandated by a nationalization decree.

ExxonMobil's net investment in the affected assets was approximately $750 million. This amount is considered minor in the context of the company's overall financial size, representing less than 0.7% of its total property, plant, and equipment. The company currently does not expect a material impact on its consolidated financial results or operations.

ExxonMobil is currently in discussions with Venezuelan authorities regarding the compensation to be paid for its stake in the Cerro Negro project. The details and finalization of this compensation are still pending.