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Managing Risk for Superior Returns
Andrew P. SwigerSenior Vice President
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Cautionary Statement
Forward-Looking Statements. Statements of future events or conditions in this presentation or the subsequent discussion period are forward-looking statements. Actual future results, including demand growth and mix; project plans, costs, capacities, and schedules; earnings and shareholder returns; productivity gains and cost efficiencies; the effectiveness of risk management systems; and the outcome of research programs could differ materially due to a number of factors. These include changes in long-term oil or gas prices or other market conditions affecting the oil and gas industries; our ability to integrate XTO’s operations effectively; the effectiveness of risk assessment and training programs; changes in law or government regulation; the occurrence of technical difficulties and human errors; the outcome of commercial negotiations; unforeseen technological developments; actions taken by partners and co-venturers; and other factors discussed here and under the heading "Factors Affecting Future Results" in the Investors section of our Web site at exxonmobil.com. Statements in this presentation are based on management’s good faith belief at the time. We assume no duty to update these statements as of any future date.
Frequently Used Terms. References to “resources,” the “resource base,” “recoverable”volumes, and similar terms include quantities of discovered oil and gas that are not yet classified as proved reserves but that are expected to be ultimately recovered in the future. See the "Frequently Used Terms" posted on the Investors section of our Web site for more information concerning these and other terms used in this presentation. The Financial and Operating Review on our Web site also shows ExxonMobil's net interest in specific projects.
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The Energy Challenge
The scale of the challenge is enormous
Requires an integrated set of solutions
Demands a commitment to innovation and technology
Calls for unprecedented levels of investment
Requires sound, stable government policies
How to meet the world’s growing energy needs safely while minimizing the impact on the environment
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Growing Demand for Energy
Global energy demand in 2030 is expected to be 35% higher than 2005
0
100
200
300
1980 2005 2030
MBDOE
Gas
Oil
Wind, Solar & BiofuelsBiomass, Hydro & Geothermal
Nuclear
Coal
Source: The Outlook for Energy: A View to 2030, ExxonMobil, December 2009
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Global Liquids Supply and Demand
Global liquids demand in 2030 is expected to be 24% higher than 2005
0
30
60
90
120
1980 2005 2030
Canadian Oil Sands
Non-OPEC Crude & Condensate
Biofuels
Other Petroleum
Source: The Outlook for Energy: A View to 2030, ExxonMobil, December 2009
~27 MBDOE
~37 MBDOE
MBDOE
OPECCrude
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Regional Gas Supply and Demand
0
30
60
90
120
2000 2015 2030
Conventional
Unconventional
North America
BCFD
0
30
60
90
120
2000 2015 2030
Asia Pacific
BCFD
Natural gas is expected to be the fastest-growing major fuel source
0
30
60
90
120
2000 2015 2030
Pipeline
Europe
BCFD
LNG
Imports
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ExxonMobil
Proven business model
Disciplined and embedded approach to risk management
Asset quality and diversity
Superior financial strength and flexibility
Unwavering commitment to technology leadership
ExxonMobil is well positioned to meet the energy challenge
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Proven Business Model
Our business model is designed to capture strong margins in the up-cycle and outperform the competition and market in the down cycle
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Uncertainty and Risk
Uncertainty: a state of having limited knowledge where it is impossible to exactly describe the existing state or the future outcome.
Risk: a state of uncertainty where some possible outcomes have an undesired effect or significant loss.
We evaluate a broad range of uncertainties to identify and minimize associated risk factors
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Industry Risks
Safety, security, health and environment
Financial
Geopolitical
Technical
The oil and gas industry faces multiple uncertainties and risks
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Risks Can Be Managed - But Not Eliminated
Prevention relies upon disciplined processes, procedures and training
Response capability requires technology and effective planning / coordination
Prevention
Response
Focus on prevention with effective response in the event it is needed
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Risk Management Approach
Capable, committed workforce with clear accountability
Well developed and clearly defined policies and procedures
High standards of design to reduce or eliminate risk
Rigorously applied management systems
Employee and contractor training
Systematic approach to performance metrics and continuous improvement
ExxonMobil has established common worldwide expectations for addressing risks inherent in our business
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Operations Integrity Management System (OIMS)
A required framework of 11 elements with particular emphasis on design, construction and operations
Driver Evaluation
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Performance Improvement
OIMS is the foundation of our strong and improving safety, security, health, and environmental performance
0.0
0.1
0.2
0.3
0.4
'05 '06 '07 '08 '09
Corporate Lost Time Incident Rate
U.S. petroleum industrycontractor benchmark*
U.S. petroleum industryemployee benchmark*
EmployeeContractor
Incidents per 200K hours
0
2
4
6
8
'05 '06 '07 '08 '09
Hydrocarbon Flaring from Worldwide Upstream Oil and Gas Production
Million Metric Tons
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Multiple Risks - Multiple Frameworks
Facilities Integrity Management System (FIMS)
Controls Integrity Management System (CIMS)
ExxonMobil Capital Project Management System (EMCAPS)
OBO Management System
Global Energy Management System (GEMS)
ExxonMobil employs multiple frameworks to lower risk profiles across the business
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Risk Management
Safety / Environmental risks are minimized through the application of technology and processes, supported by the appropriate staff training
Financial risks are reduced through diversity of investments and strong aligned agreements
Geopolitical risks are managed through portfolio diversity
Technical risks are quantified through data collection and analysis
ExxonMobil brings experience from around the globe to manage risk
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ExxonMobil’s Resource Base
Diverse by resource type
Diverse by geography
Diverse by geology
Diverse by technology
ExxonMobil’s diverse resource base of over 80 billion oil equivalent barrels serves to mitigate geopolitical risk
Unconventional Gas and Oil
Arctic
0
30
60
90
YE 2009
Conventional
Heavy Oil / Oil Sands
Deepwater
Acid / Sour Gas
Liquefied Natural Gas
GOEB Resource Base*
* Combined resource base for ExxonMobil and XTO using YE 2009 data. The “Unconventional Gas and Oil” category also includes Bakken shale oil resources.
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New Opportunities
ExxonMobil has a diverse global portfolio of high-quality opportunities
Orphan
WestGreenland
Beaufort
Kuwait
Athabasca
Philippines
Libya
Brazil
Indonesia
AustraliaMadagascar
Turkey
GoMVietnamAbu Dhabi
Iraq
Arctic
Heavy OilAcid / Sour GasDeepwater
LNG
Conventional
Unconventional
Horn River
Poland
MarcellusHaynesville / Bossier
Germany
Tanzania
Eagle Ford
Nigeria
Angola
Guyana
Argentina
BakkenCardium
Romania
PNG
Ireland
Norway
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Significant Global Project Portfolio
0
20
40
60
80
100
120
140
project stage Geography
Number of Projects (YE '09)
Operating
Executing
Defining
Planning / Selecting
Middle East
Americas
Europe
Africa
Russia / Caspian
Asia Pacific
Project Stage Geography
ExxonMobil has a diverse portfolio of more than 130 projects, thereby reducing financial risks
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Kearl Oil Sands
Initial phase on schedule to commence operations by year end 2012
Construction ~25% complete
Tailings management plan revised in line with new regulatory directive
Tailings containment design updated to address specific local site conditions
Engineering studies continuing as planned for full field development
Superior quality oil sands deposit near Fort McMurray, Alberta
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0
100
200
300
400
Regulatory Approval @ 345 kbd
Initial Development
Expansion
Kearl Development Update
Original plan was to develop Kearl in 3 phases to produce >300 kbd
• Phased development to capture learnings and enhance execution, development and marketing
Reconfiguring plan to include debottlenecking and expansion to ~345 kbd
• Current focus on leveraging execution learnings, initial infrastructure and replication to minimize full field development costs
Same superior quality resource developed at attractive unit development costs
Original Development Plan
Current Outlook
Full field development studies progressing
0
100
200
300
400
Phase 1
Phase 2
Phase 3
Facility Performance Allowance
Regulatory Approval @ 345 kbd
kbd
kbd
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Unconventional Gas and Oil
70 TCFE unconventional resource base
Proven ability to consistently and profitably grow production
Opportunity to enhance performance
Long-term commitment to research will deliver advantaged technologies
XTO merger establishes the premier global unconventional resource company and further diversifies ExxonMobil’s portfolio
0
1000
2000
3000
2006 2007 2008 2009
XTO Average Daily Production
MCFE/D
Shale GasTight GasCoal Bed MethaneShale Oil
Bakken
Marcellus
Fayetteville
Haynesville/Bossier
Woodford
BarnettFreestone
San Juan
UintaPiceance
EagleFord
Raton
Gas
OilNGL
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US Gulf of Mexico - Hadrian
PfD process enabled fast-track project definition and selective appraisal drilling
Hadrian oil discovery appraisal is ongoing
Hadrian South gas discovery is fully appraised and moving to development
3
N
KC1008
KC875 KC876KC874
LuciusDiscovery
Hadrian-5(Planned)
2 Miles
KC964
Hadrian-2
Hadrian-4
KC962 KC963
KC920
Hadrian-1KC918
KC919
Hadrian-3
Gas Discovery
Oil Discovery
EM 50% (Operator)
Key
Technical risks are reduced through Planning for Development (PfD)
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Canada Horn River
Technical risks reduced through effective ‘sweet spot’ identification
Over 320,000 netacres
Multiple productive reservoir intervals
Well, seismic and test data supports ‘sweetspot’interpretation
Industry Production Pads
IOL / EM PlannedProduction
IOL/EMC Existing ShaleGas Tests/Wells3D Seismic Coverage
Existing and PlannedIndustry Gas Plants
Horn River Basin
Horn River Basin
FORT NELSON
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Upstream Operating Costs
ExxonMobil has lower unit operating costs than most competitors
ExxonMobil is focused on further improving productivity and unit cost performance while maintaining safety / environmental performance
Approach to risk management not compromised by lower unit costs
* Upstream technical costs normalized using 10-K/20-F information; beginning in 2009, equity companies and oil sands mining operations are included.
0
5
10
15
20
25
'05 '06 '07 '08 '09**
BP
RDS
XOM
CVX
Total Costs per OEB*$ per OEB
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Advantaged technologies and breakthrough research enable risk management
Research initiatives address safety / environmental, technical and financial risks
Developing high-reward, risk-reduction technologies for the future
Long-term Commitment to Research
Subsurface Imaging Shale Gas Drilling Heavy Oil Sour Gas
Exploration Development Production
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Next Generation Resources
Challenging arctic environments require continued technical innovation to access and produce resources
ExxonMobil investing in next generation biofuels research and development
Arctic Environment
Algae Research
Tomorrows resources will require a range of new technologies to lower the associated risk profile
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Conclusions
The world will need energy to fuel progress and development
ExxonMobil’s diverse portfolio and effective risk management approach can safely and responsibly provide the energy the world needs
ExxonMobil’s risk management systems are a key element in delivering superior shareholder returns over the long term
ExxonMobil is an industry leader in employing effective, systematic processes to manage risk