8-KOther Events

EXXON MOBIL CORP 8-K Report, Corporate Update (Sep 12, 2007)

Filed September 12, 2007For Securities:XOM

Summary

Exxon Mobil Corporation (XOM) has filed an 8-K report detailing the expropriation of its 41.67 percent interest in the Cerro Negro Heavy Oil Project in Venezuela. This action stems from a nationalization decree issued by Venezuela's President Chavez earlier in the year. Despite attempts to form a "mixed enterprise" structure with the Venezuelan National Oil Company (PdVsa), no agreement was reached, leading to the government seizing ExxonMobil's stake on June 27, 2007. ExxonMobil is now pursuing arbitration through the International Centre for Settlement of Investment Disputes (ICSID) to resolve the compensation for its expropriated assets. While the net impact on consolidated financial results is currently not estimable, the company does not anticipate a material effect on its overall operations or financial condition. The net book investment in the expropriated Cerro Negro producing assets at the time of seizure was approximately $750 million.

Key Highlights

  • 1ExxonMobil's 41.67% stake in the Cerro Negro Heavy Oil Project in Venezuela was expropriated by the Venezuelan government.
  • 2The expropriation follows a nationalization decree and failure to reach an agreement on a "mixed enterprise" structure with PdVsa.
  • 3ExxonMobil filed a Request for Arbitration with the International Centre for Settlement of Investment Disputes (ICSID) on September 6, 2007.
  • 4The net book investment in the expropriated Cerro Negro assets was approximately $750 million at the time of expropriation.
  • 5ExxonMobil states that the net impact on consolidated financial results cannot be reasonably estimated at this time.
  • 6The company does not expect a material effect on its overall operations or financial condition from this matter.

Frequently Asked Questions

ExxonMobil's 41.67 percent ownership interest in the Cerro Negro Heavy Oil Project in Venezuela was expropriated by the Venezuelan government. This occurred after negotiations to form a 'mixed enterprise' structure with the state-owned oil company, PdVsa, failed.

ExxonMobil has filed a Request for Arbitration with the International Centre for Settlement of Investment Disputes (ICSID) to seek compensation for its expropriated assets. Discussions with Venezuelan authorities regarding compensation have not yet resulted in an agreement.

At the time of expropriation, ExxonMobil's net book investment in the Cerro Negro producing assets was approximately $750 million. The company has stated that the net impact on its consolidated financial results cannot be reasonably estimated at this time but does not expect a material effect on its overall operations or financial condition.

While the nationalization decree was issued in February 2007 and PdVsa assumed operatorship by May 1, 2007, the government formally expropriated ExxonMobil's 41.67 percent interest in the Cerro Negro Project on June 27, 2007.