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Exxon Mobil's (XOM) CEO Rex Tillerson Hosts Annual Shareholder Meeting (Transcrip... Page 4 of 25
I will start with a review of our financial and operating performance. In reviewing 2013, the corporation sustained solid financial
and operating performance despite global economic challenges at a wide range of uncertainties. We continued our strong
safety and environmental performance. We delivered earnings of $32.6 billion, a return on average capital employed of 17.2%,
and generated cash flow from operations and asset sales of $47.6 billion. We invested $42.5 billion in our various business
lines. Total shareholder distributions were $25.9 billion.
For the 20th consecutive year, we added more oil and natural gas reserves than we produced with our proved reserve
replacement ratio exceeding 100%. These results reflect the strength of our integrated business model and the diligence,
expertise and dedication of the 75,000 men and women who work for Exxon Mobil throughout the world. Exxon Mobil's
approach to business is built upon a commitment to integrity in all we do. Nowhere is that more evident than in our
commitment to safe operations with a continued emphasis on both personnel and process safety.
As this chart shows our safety performance continues to improve and remains very strong in the industry, we believe that
effectively managing risk will enable us to achieve our vision that nobody gets hurt. In 2013, Exxon Mobil was awarded the
Green Cross for Safety medal by the National Safety Council in recognition of our performance and leadership in safety. At
Exxon Mobil, we recognized that meeting the world's growing need for energy while managing the impacts on the environment
is one of society's great challenges. We have implemented rigorous environmental management programs and results of our
actions are significant, particularly in the area of energy efficiency and flare reduction.
As shown on this chart, we have reduced greenhouse gas emissions by nearly 11 million metric tons over the past five years.
This is equivalent to taking almost 2 million cars off the road in United States. The investment in highly efficient code
generation capacity to provide electric power and steam through our facilities is a key contributor to our efforts. We also
continued to progress initiatives to reduce hydrocarbon flaring bringing our results over the past 10 years to the total reduction
of 50%. We are also carefully managing freshwater consumption in our operations.
The chart on the left summarizes freshwater consumed in our upstream, downstream and chemicals segments. We
experienced a 25% reduction across all business lines since our acquisition of XTO in 2011 or a decrease of almost 600
million barrels or to put that in metrics it may be relevant to you 25 billion gallons. Exxon Mobil has been active in industry
initiatives to develop standards and tools for water resource management including mapping water use, screening potential
water stress or scarcity of major facilities and identifying use and risk mitigation steps. We are actively involved in a number of
research efforts individually as well as through partnerships to further enhance our understanding and capabilities to effectively
manage water.
Let's now take a look at our 2013 financial metrics. Exxon Mobil continues to lead our peer group with earnings of $32.6 billion
in 2013. The decrease of $12.3 billion compared to 2012 largely reflects the lower net gains from divestments of $8.6 billion
and lower earnings in our upstream and downstream segments which were in line with general industry conditions. Our
earnings performance continues to capture the value of our balance portfolio and our integrated business model. In 2013
Exxon Mobil's return on capital employed was 17.2% or about 3.5 percentage points higher than our nearest competitor. Over
the past five years return on capital employed averaged 21% or about 5 percentage points higher than our nearest competitor.
Our industry leading ROCE performance has been maintained even through the recent period of intensive upstream capital
investments which have been necessary to position the company to meet the world's growing energy needs. Our sustained
leadership and capital efficiency reflects our consistent disciplined investment approach, our industry leading project execution
capabilities as well as application of our innovative technologies.
In 2013 we invested $42.5 billion in capital expenditures to continue positioning the business for long-term growth and
sustainability. Over the past five years we have invested $178 billion utilizing the corporation's financial strength and flexibility
to invest through the business cycle and capture new opportunities.
As you can see on the graph most of the CapEx was associated with an intense recapitalization of our upstream business. We
progressed several major projects and completed strategic acquisitions to strengthen our portfolio. Our future plans reflect
ongoing significant albeit lower upstream spending and marginally higher spending in the downstream and chemical
businesses which are targeted at advantage return projects. I will provide an update on a few of these projects later in the
presentation. Our approach to investing is to advance all attractive opportunities that provide competitive returns when tested
across a broad range of industry and market conditions. Maintaining capital efficiency and discipline underpins our long-term
success.
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