Exxon Mobil Corp. (XOM)
Q4 2009 Earnings Call Transcript
February 1, 2010 11:00 a.m. ET

Executive

David S. Rosenthal – Vice President, Investor Relations and Secretary

Analysts

Paul Sankey – Deutsche Bank
Douglas Terreson – ISI Group
Neil McMahon – Sanford C. Bernstein & Company
Robert Kessler – Simmons & Company International
Paul Cheng – Barclays Capital
Faisel Khan – Citigroup
Doug Leggate – Banc of America/Merrill Lynch
Jason Gammel – Macquarie Research Equities
Mark Gilman – The Benchmark Company

Presentation

Operator

Good day and welcome to the ExxonMobil Corporation Fourth Quarter 2009 Earnings Conference Call. Today''s call is being recorded. At this time for opening remarks, I would like to turn the call over to the Vice President of Investor Relations and Secretary, Mr. David Rosenthal. Please go ahead, sir.

David S. Rosenthal

Good morning and welcome to ExxonMobil''s teleconference and webcast on our fourth quarter and full year 2009 financial and operating results. As you are aware from this morning''s press release, ExxonMobil''s fourth quarter earnings performance was strong. Our results reflect the soundness of our business model during a period of global economic weakness and significant volatility in commodity prices.

Before we go further, I would like to draw your attention to our cautionary statement. Please note that estimates, plans and expectations are forward-looking statements. Actual results, including resource recoveries, volume growth and project outcomes could differ materially due to factors I discussed and factors noted in our SEC filings. Please see factors affecting future results and the Form 8-K we furnished this morning, which are available through the Investor Section of our website. Please also see the frequently used terms, the supplements to this morning''s press release and the 2008 financial and operating review on our website. This material defines key terms I will use today, shows ExxonMobil''s net interest in specific projects and includes our SEC Regulation G disclosure.

Now, I am pleased to turn your attention to the fourth quarter results. ExxonMobil''s fourth quarter 2009 earnings were $6.1 billion, a reduction of 1.8 billion from the fourth quarter of 2008, mainly reflecting the challenging environment in the downstream. Compared to the third quarter of 2009, earnings were up $1.3 billion. Earnings per share were $1.27, down $0.27 from a year ago.

During the fourth quarter of 2009, ExxonMobil distributed a total of $4 billion to shareholders including dividends of $2 billion and share purchases to reduce shares outstanding of $2 billion. ExxonMobil''s full year 2009 earnings were $19.3 billion, down 25.9 billion from 2008, reflecting the weak economy, resulting in lower commodity prices, weaker margins and lower demand.

Full year 2009 earnings included a charge of $140 million for interest related to the Valdez litigation. Full year 2008 earnings included a gain of 1.6 billion on the sale of our German gas transportation business and a charge of 460 million related to the Valdez litigation. Earnings, excluding special items were $19.4 billion, down 24.6 billion from 2008.

As you are aware, on December 14, 2009, ExxonMobil and XTO Energy announced an agreement bringing together two organizations with highly complementary skills and capabilities. XTO has assembled a substantial high quality, unconventional natural gas and oil resource base in the U.S. They also have extensive technical capabilities and operating experience in unconventional resources.

These qualities, combined with ExxonMobil''s global unconventional gas portfolio, world class research and technology capabilities, industry-leading project management and operational skills and financial capacity will create a premier global unconventional resource organization. We expect to file the joint S-4 Registration Statement and proxy statement with the Securities and Exchange Commission shortly. Additionally, we anticipate submitting the Hart-Scott Rodino Act filing to the Federal Trade Commission by mid-February.

Turning now to our business line results and some of the milestones we achieved since the last earnings call. First, in the upstream. During the quarter, the second phase of the Al Khaleej Gas projects started up in Qatar. AKG Phase II has the capacity to supply 1.25 billion cubic feet of natural gas per day to meet Qatar''s growing domestic demand. Combined with Phase I, which has been operating since 2005, AKG Phase II has increased the project''s total gas supply capacity to 2 billion cubic feet of natural gas per day.

Including AKG Phase II, Qatargas 2, Trains 4 and 5 and RasGas Train 6 in Qatar, the South Hook LNG receiving terminal in the U.K., the Adriatic LNG terminal in Italy, Piceance Phase I in the U.S. and Tyrihans in Norway, ExxonMobil completed eight major product start-ups in 2009. These projects are forecast to provide a combined net production of nearly 400,000 oil equivalent barrels per day in 2010.

The final Qatar LNG train, RasGas Train 7, is completing commissioning. Gas is now flowing into the facility and we anticipate first LNG in the coming weeks. This will be the fourth 7.8 million tons per year train brought online by our joint ventures with Qatar Petroleum. Including this train, we will participate in approximately 62 million tons per year of LNG capacity in Qatar.

In December, ExxonMobil and our co-venture partners agreed to proceed with the Papua New Guinea LNG project. The project is an integrated development that includes gas production and processing facilities, onshore and offshore pipelines and liquefaction facilities with the capacity to produce 6.6 million tons of LNG per year. To date the project participants have executed sales and purchase agreements for 5.3 million tons per year of LNG with Sinopec, Tokyo Electric Power Company and Osaka Gas Company. The remaining sales and financing activities are well progressed and the project remains on track to complete these agreements in the first quarter of 2010. Major contracts associated with the development of the project have been awarded and project execution activity has commenced.