EXXON MOBIL CORP MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-Q)
During the COVID-19 pandemic, industry investment to maintain and increase production capacity was restrained to preserve capital, resulting in underinvestment and supply tightness as demand for petroleum and petrochemical products recovered. In addition, industry rationalization of refining capacity resulted in more than 3 million barrels per day of capacity being taken offline. Across late 2021 and the first half of 2022, this dynamic, along with supply chain constraints, and a continuation of demand recovery led to a steady increase in oil and natural gas prices and refining margins. In the first half of 2022, tightness in the oil and natural gas markets was further exacerbated byRussia's invasion ofUkraine and subsequent sanctions imposed upon business and other activities inRussia . The price of Brent crude oil and certain regional natural gas indicators increased to levels not seen for several years, and both natural gas realizations and industry refining margins improved to levels well above the 10-year range. By the end of the second quarter, high prices had led to a tempering of demand for some products. Commodity and product prices are expected to remain volatile given the current global economic uncertainty and geopolitical events affecting supply and demand. In response toRussia's military action inUkraine , the Corporation announced in early 2022 that it plans to discontinue operations on the Sakhalin-1 project ("Sakhalin") and develop steps to exit the venture. The Corporation remains focused on protecting the safety of employees, operations, and the environment. The Corporation is complying with all applicable laws and sanctions and is currently engaged in transitioning Sakhalin-1 operating activities to another party. The Corporation's first quarter results included after-tax charges of$3.4 billion largely representing the impairment of its operations related to Sakhalin (see Note 2 to Condensed Consolidated Financial Statements). Efforts to transition operatorship to a third party and exit the venture are expected to result in minimal hydrocarbon sales and cash flows for the Corporation's account in future periods. For reference, excluding the impact of impairments and other charges, after-tax earnings related to the Corporation's interest in Sakhalin during the first half of 2022 were approximately$0.3 billion , and combined oil and gas production was approximately 45 thousand oil-equivalent barrels per day. The Corporation's exit from the project would result in quantities estimated at 150 million oil-equivalent barrels no longer qualifying as proved reserves, which represented less than one percent of the Corporation's 18.5 billion oil-equivalent barrels of proved reserves at year-end 2021. The Corporation holds a 25% interest inTengizchevroil, LLP (TCO), which operates the Tengiz and Korolev oil fields inKazakhstan , and holds a 16.8% working interest in the Kashagan field inKazakhstan . Oil production from those operations is exported through theCaspian Pipeline Consortium (CPC) pipeline, in which the Corporation holds a 7.5% interest. CPC traverses parts ofKazakhstan andRussia to tanker-loading facilities on the Russian coast of theBlack Sea . In the event that existing sanctions related toRussia's military actions inUkraine expand, new sanctions are imposed, countermeasures are employed by theRussian Federation , or other direct or indirect impacts arise, it is possible that the transportation ofKazakhstan oil through the CPC pipeline could be disrupted, curtailed, temporarily suspended, or otherwise restricted. In such a case, the Corporation could experience a loss of cash flows of uncertain duration. For reference, after-tax earnings related to the Corporation's interests inKazakhstan for the first half of 2022 were$1.5 billion , and its share of combined oil and gas production was approximately 250 thousand oil-equivalent barrels per day. EffectiveApril 1, 2022 , the Corporation streamlined its business structure by combining the Chemical and Downstream businesses into a single business, Product Solutions. The new business is focused on growing high-value products, improving competitiveness and leading in sustainability. Product Solutions consists of three operating segments: •Energy Products: Fuels, aromatics, and catalysts and licensing •Chemical Products: Olefins, polyethylene, polypropylene, and intermediates •Specialty Products: Finished lubricants, basestocks and waxes, synthetics, and elastomers and resins Further information on financial performance related to the new segments are disclosed in Management's Discussion and Analysis and Note 8 to the Condensed Consolidated Financial Statements. 18 --------------------------------------------------------------------------------
SUMMARY OF FUNCTIONAL GAINS
Earnings (loss) excluding Identified Items, are earnings (loss) excluding individually significant non-operational events with an absolute corporate total earnings impact of at least$250 million in a given quarter. The earnings (loss) impact of an Identified Item for an individual segment in a given quarter may be less than$250 million when the item impacts several segments or several periods. Management uses these figures to improve comparability of the underlying business across multiple periods by isolating and removing significant non-operational events from business results. The Corporation believes this view provides investors increased transparency into business results and trends, and provides investors with a view of the business as seen through the eyes of management. Earnings (loss) excluding Identified Items is not meant to be viewed in isolation or as a substitute for net income (loss) attributable toExxonMobil as prepared in accordance withU.S. GAAP. Three Months Ended Upstream Energy Products Chemical Products Specialty Products June 30, 2022 Corporate and Financing Total (millions of U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. dollars) Earnings (loss) (U.S. 3,749 7,622 2,655 2,617 625 450 232 185 (286) 17,850 GAAP) Identified Items Gain/(loss) on sale of 299 - - - - - - - - 299 assets Earnings (loss) excluding 3,450 7,622 2,655 2,617 625 450 232 185 (286) 17,551 Identified Items Three Months Ended Upstream Energy Products Chemical Products Specialty Products June 30, Corporate and Financing Total 2021 (millions of U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. dollars) Earnings (loss) (U.S. 663 2,522 (278) (578) 1,149 1,051 262 487 (588) 4,690 GAAP) Identified Items Severance - - - - - - - - (12) (12) charges Earnings (loss) excluding 663 2,522 (278) (578) 1,149 1,051 262 487 (576) 4,702 Identified Items Six Months Ended Upstream Energy Products Chemical Products Specialty Products June 30, 2022 Corporate and Financing Total (millions of U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. dollars) Earnings (loss) (U.S. 6,125 9,734 3,144 1,933 1,395 1,086 478 415 (980) 23,330 GAAP) Identified Items Impairments - (2,877) - - - - - - (98) (2,975) Gain/(loss) on sale of 299 - - - - - - - - 299 assets Other - Russia - (378) - - - - - - - (378) impacts Earnings (loss) excluding 5,826 12,989 3,144 1,933 1,395 1,086 478 415 (882) 26,384 Identified Items Six Months Ended Upstream Energy Products Chemical Products Specialty Products June 30, Corporate and Financing Total 2021 (millions of U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. dollars) Earnings (loss) (U.S. 1,026 4,713 (510) (1,267) 1,803 1,788 442 862 (1,437) 7,420 GAAP) Identified Items Severance - - - - - - - - (43) (43) charges Earnings (loss) excluding 1,026 4,713 (510) (1,267) 1,803 1,788 442 862 (1,394) 7,463 Identified Items References in this discussion to Corporate earnings (loss) mean net income (loss) attributable toExxonMobil (U.S. GAAP) from the Condensed Consolidated Statement of Income. Unless otherwise indicated, references to earnings (loss), Upstream, Energy Products, Chemical Products, Specialty Products, and Corporate and Financing segment earnings (loss), and earnings (loss) per share areExxonMobil's share after excluding amounts attributable to noncontrolling interests.
Due to rounding, numbers shown may not add up exactly to totals shown.
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REVIEW OF SECOND QUARTER 2022 RESULTS
Profit for the first six months of 2022 was
UPSTREAM
Upstream Financial
Results
(millions of dollars) Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Earnings (loss) (U.S.
GAAP)
United States 3,749 663 6,125 1,026
Non-U.S. 7,622 2,522 9,734 4,713
Total 11,371 3,185 15,859 5,739
Identified Items (1)
United States 299 - 299 -
Non-U.S. - - (3,255) -
Total 299 - (2,956) -
Earnings (loss)
excluding Identified
Items (1)
United States 3,450 663 5,826 1,026
Non-U.S. 7,622 2,522 12,989 4,713
Total 11,072 3,185 18,815 5,739
Upstream Second Quarter Earnings Factor Analysis
(millions of dollars)
[[Image Removed: xom-20220630_g2.jpg]]
Prizes – Higher Achievements increased income from
Volume/Mix – Higher volumes increased the profits of
Other – All other items decreased earnings by
Identified items (1) – 2Q 2022
(1) Refer to Functional Revenue Summary for definition of identified items and profit (loss) excluding identified items.
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Upstream Year-to-Date Earnings Factor Analysis
(millions of dollars)
[[Image Removed: xom-20220630_g3.jpg]]
Price - Higher realizations increased earnings by $13,830 million as average
realizations for crude oil increased 69% and natural gas realizations increased
161%.
Volume/Mix – Unfavorable volume and mix effects reduced the earnings of
Other – All other items decreased earnings by
Identified Items (1) - 2022$(2,956) million loss as a result of the company's plans to discontinue operations on the Russia Sakhalin-1 project, partly offset by a gain on the sale ofU.S. Barnett Shale assets.
(1) Refer to Functional Revenue Summary for definition of identified items and profit (loss) excluding identified items.
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Upstream Operational
Results
Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Net production of
crude oil, natural
gas liquids, bitumen
and synthetic oil
(thousands of
barrels daily)
United States 777 687 765 676
Canada/Other 556 529 516 552
Americas
Europe 4 16 4 25
Africa 224 254 240 254
Asia 691 669 714 680
Australia/Oceania 46 45 43 42
Worldwide 2,298 2,200 2,282 2,229
Net natural gas
production available
for sale
(millions of cubic
feet daily)
United States 2,699 2,804 2,738 2,786
Canada/Other 180 189 180 203
Americas
Europe 825 654 798 1,026
Africa 67 46 63 35
Asia 3,320 3,433 3,330 3,515
Australia/Oceania 1,515 1,168 1,421 1,166
Worldwide 8,606 8,294 8,530 8,731
Oil-equivalent
production (1)
(thousands of 3,732 3,582 3,704 3,684
oil-equivalent
barrels daily)
(1) Natural gas is converted to oil equivalent at six million cubic feet per thousand barrels.
2Q 2022 versus 2Q 2021 Liquids production - 2.3 million barrels per day increased 98 thousand barrels per day from 2Q 2021, reflecting growth in Permian andGuyana and easing government-mandated curtailments, partly offset by lower entitlements due to higher prices, higher downtime, and divestments.
Natural gas production available for sale – 8.6 billion cubic feet per day increased by 312 million cubic feet per day compared to 2Q 2021, reflecting reduced planned maintenance, partially offset by lower rights and fees. disposals.
YTD 2022 vs. YTD 2021
Liquids production - 2.3 million barrels per day increased 53 thousand barrels per day from 2021, reflecting growth in Permian andGuyana and easing government-mandated curtailments, partly offset by lower entitlements due to higher prices, higher downtime including the effects of weather in the first quarter of 2022, and divestments.
Natural gas production available for sale – 8.5 billion cubic feet per day decreased by 201 million cubic feet per day compared to 2021, reflecting the impacts of the Groningen production limit reduction, divestitures and Rights.
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Additional Upstream Information
Three Months
Semester completed
(thousands of barrels daily) Ended June 30 June 30
Reconciliation of volumes (oil equivalent
manufacturing) (1)
2021 3,582 3,684 Entitlements - Net Interest (27) (29) Entitlements - Price / Spend / Other (57) (48) Government Mandates 90 101 Divestments (28) (46) Other 172 42 2022 3,732 3,704
(1) Natural gas is converted into oil equivalent at six million cubic
feet per thousand barrels.
Below are descriptions of
Entitlements - Net Interest are changes toExxonMobil's share of production volumes caused by non-operational changes to volume-determining factors. These factors consist of net interest changes specified in Production Sharing Contracts (PSCs) which typically occur when cumulative investment returns or production volumes achieve defined thresholds, changes in equity upon achieving pay-out in partner investment carry situations, equity redeterminations as specified in venture agreements, or as a result of the termination or expiry of a concession. Once a net interest change has occurred, it typically will not be reversed by subsequent events, such as lower crude oil prices. Entitlements - Price, Spend and Other are changes toExxonMobil's share of production volumes resulting from temporary changes to non-operational volume-determining factors. These factors include changes in oil and gas prices or spending levels from one period to another. According to the terms of contractual arrangements or government royalty regimes, price or spending variability can increase or decrease royalty burdens and/or volumes attributable toExxonMobil . For example, at higher prices, fewer barrels are required forExxonMobil to recover its costs. These effects generally vary from period to period with field spending patterns or market prices for oil and natural gas. Such factors can also include other temporary changes in net interest as dictated by specific provisions in production agreements. Government Mandates are changes toExxonMobil's sustainable production levels as a result of temporary non-operational production limits or sanctions imposed by governments, generally upon a country, sector, type or method of production. Divestments are reductions inExxonMobil's production arising from commercial arrangements to fully or partially reduce equity in a field or asset in exchange for financial or other economic consideration. Other comprise all other operational and non-operational factors not covered by the above definitions that may affect volumes attributable toExxonMobil . Such factors include, but are not limited to, production enhancements from project and work program activities, acquisitions including additions from asset exchanges, downtime, market demand, natural field decline, and any fiscal or commercial terms that do not affect entitlements. 23 --------------------------------------------------------------------------------
ENERGY PRODUCTS Energy Products Financial Results (millions of Three Months Ended June 30, Six Months Ended June 30, dollars) 2022 2021 2022 2021 Earnings (loss) (U.S. GAAP) United States 2,655 (278) 3,144 (510) Non-U.S. 2,617 (578) 1,933 (1,267) Total 5,273 (856) 5,077 (1,777) Earnings (loss) excluding Identified Items (1) United States 2,655 (278) 3,144 (510) Non-U.S. 2,617 (578) 1,933 (1,267) Total 5,273 (856) 5,077 (1,777)
(1) Refer to Functional Revenue Summary for definition of identified items and revenue
(loss) excluding identified items.
Energy Products Second Quarter Earnings Factor Analysis
(millions of dollars)
[[Image Removed: xom-20220630_g4.jpg]]
Margins – Higher margins increased profit by
Volume/Mix – Favorable volume and mix effects increased earnings from
Other – All other items increased earnings by
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Energy Products Year-to-Date Earnings Factor Analysis
(millions of dollars)
[[Image Removed: xom-20220630_g5.jpg]]
Margins – Higher margins increased profit by
Volume/Mix – Favorable volume and mix effects increased earnings from
Other – All other items increased earnings by
Energy Products Operational Results (thousands of barrels Three Months Ended June 30, Six Months Ended June 30, daily) 2022 2021 2022 2021 Refinery throughput United States 1,686 1,532 1,686 1,532 Canada 413 332 406 348 Europe 1,164 1,223 1,179 1,188 Asia Pacific 532 607 534 576 Other 193 164 180 161 Worldwide 3,988 3,858 3,985 3,805 Energy Products sales (1) United States 2,452 2,230 2,358 2,153 Non-U.S. 2,858 2,776 2,853 2,766 Worldwide 5,310 5,006 5,211 4,920 Gasoline, naphthas 2,208 2,117 2,161 2,057 Heating oils, kerosene, diesel oils 1,755 1,704 1,739 1,698 Aviation fuels 350 201 319 192 Heavy fuels 228 275 238 266 Other energy products 769 709 753 707
(1) Data published net of purchase/sale contracts with the same counterparty.
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CHEMICAL PRODUCTS Chemical Products Financial Results (millions of Three Months Ended June 30, Six Months Ended June 30, dollars) 2022 2021 2022 2021 Earnings (loss) (U.S. GAAP) United 625 States 1,149 1,395 1,803 Non-U.S. 450 1,051 1,086 1,788 Total 1,076 2,200 2,481 3,591 Earnings (loss) excluding Identified Items (1) United States 625 1,149 1,395 1,803 Non-U.S. 450 1,051 1,086 1,788 Total 1,076 2,200 2,481 3,591
(1) Refer to Functional Revenue Summary for definition of identified items and revenue
(loss) excluding identified items.
Chemical Products Second Quarter Earnings Factor Analysis
(millions of dollars)
[[Image Removed: xom-20220630_g6.jpg]]
Margins – Lower margins reduced earnings from
Volume/Mix – Higher volumes increased the profits of
Other – All other items decreased earnings by
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Chemical Products Year-to-Date Earnings Factor Analysis
(millions of dollars)
[[Image Removed: xom-20220630_g7.jpg]]
Margins – Lower margins reduced earnings from
Volume/Mix – Higher volumes increased the profits of
Other - All other items decreased earnings by$330 million , primarily driven by higher growth-related expenses, increased planned maintenance, and unfavorable foreign exchange effects. Chemical Products Operational Results (thousands of Three Months Ended June 30, Six Months Ended June 30, metric tons) 2022 2021 2022 2021 Chemical Products sales (1) United States 1,998 1,782 4,030 3,403 Non-U.S. 2,812 2,949 5,798 6,093 Worldwide 4,811 4,731 9,829 9,496
(1) Data published net of purchase/sale contracts with the same counterparty.
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SPECIALTY PRODUCTS Specialty Products Financial Results (millions of Three Months Ended June 30, Six Months Ended June 30, dollars) 2022 2021 2022 2021 Earnings (loss) (U.S. GAAP) United States 232 262 478 442 Non-U.S. 185 487 415 862 Total 417 750 893 1,304 Earnings (loss) excluding Identified Items (1) United States 232 262 478 442 Non-U.S. 185 487 415 862 Total 417 750 893 1,304
(1) Refer to Functional Revenue Summary for definition of identified items and revenue
(loss) excluding Identified Items.
Specialty Products Second Quarter Earnings Factor Analysis
(millions of dollars)
[[Image Removed: xom-20220630_g8.jpg]]
Margins – Lower margins reduced earnings from
Volume/Mix – Unfavorable volume mix effects reduced the benefit of
Other – All other items decreased earnings by
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Specialty Products Year-to-Date Earnings Factor Analysis
(millions of dollars)
[[Image Removed: xom-20220630_g9.jpg]]
Margins – Lower margins reduced earnings from
Volume/Mix – Unfavorable volume mix effects reduced the benefit of
driven by higher scheduled maintenance.
Other – All other items increased earnings by
Specialty Products Operational Results (thousands of Three Months Ended June 30, Six Months Ended June 30, metric tons) 2022 2021 2022 2021 Specialty Products sales (1) United States 590 495 1,111 1,005 Non-U.S. 1,511 1,447 2,995 2,932 Worldwide 2,100 1,942 4,107 3,936 (1) Data reported net of purchases/sales contracts with the same counterparty. CORPORATE AND FINANCING Corporate and Financing Financial Results (millions of Three Months Ended June 30, Six Months Ended June 30, dollars) 2022 2021 2022 2021 Earnings (loss) (U.S. (286) (588) (980) (1,437) GAAP) Identified - (12) (98) (43) Items (1) Earnings (loss) excluding (286) (576) (882) (1,394) Identified Items (1)
(1) Refer to Functional Revenue Summary for definition of identified items and profit (loss) excluding identified items.
Corporate and Financing expenses were$286 million for the second quarter of 2022,$302 million lower than the second quarter of 2021, reflecting favorable one-time tax impacts.
General and financing costs were
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CASH AND CAPITAL RESOURCES
(millions of dollars) Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Net cash provided
by/(used in)
Operating activities 34,751 18,914
Investing activities (7,009) (5,071)
Financing activities (15,384) (14,807)
Effect of exchange (299) 65
rate changes
Increase/(decrease) in
cash and cash 12,059 (899)
equivalents
Cash and cash
equivalents (at end of 18,861 3,465
period)
Cash flow from
operations and asset
sales
Net cash provided by
operating activities 19,963 9,650 34,751 18,914
(U.S. GAAP)
Proceeds associated
with sales of
subsidiaries,
property, plant &
equipment, and sales
and returns of
investments 939 250 1,232 557
Cash flow from
operations and asset 20,902 9,900 35,983 19,471
sales
Due to the ongoing nature of our asset management and divestment program, we believe it is useful for investors to consider the proceeds associated with the sale of assets as well as the cash provided by investment activities. operations when assessing cash available for business investment and financing activities, including distributions to shareholders. .
Cash flow from operations and asset sales in the second quarter of 2022 was
Cash provided by operating activities totaled$34.8 billion for the first six months of 2022,$15.8 billion higher than 2021. Net income including noncontrolling interests was$24.3 billion , an increase of$16.7 billion from the prior year period. The adjustment for the noncash provision of$13.3 billion for depreciation and depletion was up$3.4 billion from 2021. Changes in operational working capital were a reduction of$1.7 billion , compared to a contribution of$1.6 billion in the prior year period. All other items net decreased cash flows by$1.2 billion in 2022 versus a reduction of$0.2 billion in 2021. See the Condensed Consolidated Statement of Cash Flows for additional details. Investing activities for the first six months of 2022 used net cash of$7.0 billion , an increase of$1.9 billion compared to the prior year. Spending for additions to property, plant and equipment of$7.7 billion was$2.6 billion higher than 2021. Proceeds from asset sales were$1.2 billion compared to$0.6 billion in the prior year period. Net investments and advances were essentially flat with prior year. Net cash used in financing activities was$15.4 billion in the first six months of 2022, including$6.1 billion for the purchase of 71.1 million shares ofExxonMobil stock, as part of the previously announced buyback program. This compares to net cash used in financing activities of$14.8 billion in the prior year, reflecting long-term debt repayments of$7.0 billion during the first six months of 2021. Total debt at the end of the second quarter of 2022 was$46.9 billion compared to$47.7 billion at year-end 2021. The Corporation's debt to total capital ratio was 20.3 percent at the end of the second quarter of 2022 compared to 21.4 percent at year-end 2021. The net debt to capital ratio was 13.2 percent at the end of the second quarter, a decrease of 5.7 percentage points from year-end 2021. The Corporation's capital allocation priorities continue to be investing in advantaged projects, strengthening the balance sheet and paying a reliable dividend. The Corporation has access to significant capacity of long-term and short-term liquidity. In addition to cash balances, commercial paper continues to provide short-term liquidity, and is reflected in "Notes and loans payable" on the Consolidated Balance Sheet. Cash and cash equivalents was$18.9 billion at the end of the second quarter of 2022. The Corporation had undrawn short-term committed lines of credit of$10.6 billion , of which$10 billion will expire without renewal in the third quarter, and undrawn long-term committed lines of credit of$0.4 billion as of second quarter 2022.
The Company distributed a total of
The Corporation, as part of its ongoing asset management program, continues to evaluate its mix of assets for potential upgrade. Because of the ongoing nature of this program, dispositions will continue to be made from time to time which will result in either gains or losses. Additionally, the Corporation continues to evaluate opportunities to enhance its business portfolio through acquisitions of assets or companies, and enters into such transactions from time to time. Key criteria for evaluating acquisitions include potential for future growth and attractive current valuations. Acquisitions may be made with cash, shares of the Corporation's common stock, or both.
Litigation and other contingencies are discussed in Note 3 to the unaudited condensed consolidated financial statements.
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TAXES
Three Months Six Months Ended June
(millions of dollars) Ended June 30, 30,
2022 2021 2022 2021
Income taxes 6,359 1,526 9,165 2,322
Effective income tax 31 % 30 % 34 % 31 %
rate
Total other taxes and 7,779 8,441 16,228 15,724
duties (1)
Total 14,138 9,967 25,393 18,046
(1) Includes “Other taxes and duties” plus taxes which are included in “Production and manufacturing expenses” and “Selling, general and administrative expenses”.
Total taxes were$14.1 billion for the second quarter of 2022, an increase of$4.2 billion from 2021. Income tax expense was$6.4 billion compared to$1.5 billion in the prior year reflecting higher commodity prices. The effective income tax rate of 31 percent compared to 30 percent in the prior year period. Total other taxes and duties decreased by$0.7 billion to$7.8 billion . Total taxes were$25.4 billion for the first six months of 2022, an increase of$7.3 billion from 2021. Income tax expense increased by$6.8 billion to$9.2 billion reflecting higher commodity prices. The effective income tax rate of 34 percent compared to 31 percent in the prior year period primarily due to a change in mix of results in jurisdictions with varying tax rates and the impact of one-time items. Total other taxes and duties increased by$0.5 billion to$16.2 billion . Inthe United States , the Corporation has various ongoingU.S. federal income tax positions at issue with the Internal Revenue Service (IRS) for tax years beginning in 2006. The Corporation filed a refund suit for tax years 2006-2009 inU.S. federal district court (District Court) with respect to the positions at issue for those years. OnFebruary 24, 2020 , the Corporation received an adverse ruling on this suit. TheIRS has asserted penalties associated with several of those positions. The Corporation has not recognized the penalties as an expense because the Corporation does not expect the penalties to be sustained under applicable law. OnJanuary 13, 2021 , the District Court ruled that no penalties apply to the Corporation's positions in this suit. The Corporation and the government have appealed the District Court's rulings to theU.S. Court of Appeals for the Fifth Circuit (Fifth Circuit). Proceedings in the Fifth Circuit are continuing. OnMarch 4, 2022 , the Corporation also filed a refund suit for tax years 2010-2011 in District Court with respect to the positions at issue for those years. The Corporation has not recognized asserted penalties for 2010-2011 as an expense because the Corporation does not expect the penalties to be sustained under applicable law. Unfavorable resolution of all positions at issue with theIRS would not have a material adverse effect on the Corporation's operations or financial condition. 31
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CAPITAL AND EXPLORATION EXPENSES
(millions of Three Months Ended June 30, Six Months Ended June 30, dollars) 2022 2021 2022 2021 Upstream (including 3,627 2,817 7,506 5,174 exploration expenses) Energy 506 429 1,072 878 Products Chemical 419 512 855 811 Products Specialty 56 44 79 72 Products Other 1 1 1 1 Total 4,609 3,803 9,513 6,936
Capital and exploration expenditures in the second quarter of 2022 were
Capital and exploration expenditures in the first six months of 2022 were$9.5 billion , up 37 percent from the first six months of 2021. The Corporation plans to invest in the range of$21 billion to$24 billion in 2022. Actual spending could vary depending on the progress of individual projects and property acquisitions. FORWARD-LOOKING STATEMENTS Statements related to outlooks; projections; descriptions of strategic, operating, and financial plans and objectives; statements of future ambitions and plans; and other statements of future events or conditions, are forward-looking statements. Actual future results, including financial and operating performance; total capital expenditures and mix, including allocations of capital to low carbon solutions; cost reductions and efficiency gains, including the ability to offset inflationary pressure; plans to reduce future emissions and emissions intensity; timing and outcome of projects to capture and store CO2, produced biofuels, and use of plastic waste as recycling feedstock; timing and outcome of hydrogen projects; cash flow, dividends and shareholder returns, including the timing and amounts of share repurchases; future debt levels and credit ratings; business and project plans, timing, costs, capacities and returns; and resource recoveries and production rates could differ materially due to a number of factors. These include global or regional changes in the supply and demand for oil, natural gas, petrochemicals, and feedstocks and other market conditions that impact prices and differentials for our products; variable impacts of trading activities on our margins and results each quarter; actions of competitors and commercial counterparties; the outcome of commercial negotiations, including final agreed terms and conditions; the ability to access debt markets; the ultimate impacts of COVID-19, including the extent and nature of further outbreaks and the effects of government responses on people and economies; reservoir performance, including variability and timing factors applicable to unconventional resources; the outcome of exploration projects and decisions to invest in future reserves; timely completion of development and other construction projects; final management approval of future projects and any changes in the scope, terms, or costs of such projects as approved; changes in law, taxes, or regulation including environmental regulations, trade sanctions, and timely granting of governmental permits and certifications; government policies and support and market demand for low carbon technologies; war, and other political or security disturbances; opportunities for potential investments or divestments and satisfaction of applicable conditions to closing, including regulatory approvals; the capture of efficiencies within and between business lines and the ability to maintain near-term cost reductions as ongoing efficiencies; unforeseen technical or operating difficulties and unplanned maintenance; the development and competitiveness of alternative energy and emission reduction technologies; the results of research programs and the ability to bring new technologies to commercial scale on a cost-competitive basis; and other factors discussed under Item 1A. Risk Factors ofExxonMobil's 2021 Form 10-K. Forward -looking and other statements regarding our environmental, social and other sustainability efforts and aspirations are not an indication that these statements are necessarily material to investors or requiring disclosure in our filing with theSEC . In addition, historical, current, and forward-looking environmental, social and sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future, including future rule-making. The term "project" as used in this report can refer to a variety of different activities and does not necessarily have the same meaning as in any government payment transparency reports. 32
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