Financing The World’s Toughest Financing The World’s Toughest Energy ChallengesEnergy Challenges

Presentation forPresentation forRoss School of Business Corporate Finance ForumRoss School of Business Corporate Finance Forum

September 21, 2007

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Every 24 Hours . . .

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Size Matters

2006 Net Income $39.5 B– ROCE 32%– Assets $219 B– Shareholder’s Equity $114 B– Cash $33 B– Net Debt/Capital (20%)

Long-standing AAA rated company

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Source: Fortune, as of 3/23/07

Profit Ranking

1. Exxon Mobil ($39.5 B)

2. UAL ($22.8 B)

3. Citigroup ($21.5 B)

4. Bank of America ($21.1 B)

5. General Electric ($20.8 B)

Market Capitalization

1. Exxon Mobil ($426 B)

2. General Electric ($368 B)

3. Microsoft ($274 B)

4. Citigroup ($256 B)

5. AT&T ($243 B)

Source: Fortune, 2006

Proven Performance and Unmatched Scale

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Project Finance Overview: ConsiderationsProject Finance Overview: ConsiderationsWhat is project finance? Project financing is debt financing secured with future project cash flows plus, in many cases,

project assets or JV interests– Lender recourse directly to the project owners is generally limited to the pre-completion period

Project financing can provide substantial benefits: Enables cash-constrained partners to fund their share of expenditures

– Resolve budget constraints– Conserve available equity for funding of other / additional projects– Avoid project delays / interruptions and carries / guarantees that adversely impact project

economics Imposes discipline on host country governments in high risk locations

– Constrains governments from viewing contracts as “living” documents– Payments assured through offshore accounts and cash waterfall structure

Political risk mitigation afforded by the presence of certain lenders – Actions against certain lenders impact government access to future funding

Can serve as a potential means to reduce stake in project / country exposure Raises the borrower’s profile with lenders through project finance marketing process Can develop the local financial sector through the participation of local lenders

However there are potential drawbacks: Historically expensive source of funding versus centralized corporate borrowing Time consuming placement process that may result in project delay Loan administration / compliance often burdensome

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USAMaritimes NE

Pipeline $1,010 M

CanadaHibernia$1,350 M

VenezuelaCerro Negro

$900 M

NigeriaOso

$590 M

NGL I$330 M

NGL II$1,275 M

Satellite OilField Project

$600 M

AzerbaijanACG Early

Oil$285 M

Chad/Cameroon$600 M

QatarQatargas D/S

$1,995 M

Qatargas U/S$570 M

RasGas $2,550 M

Qatargas II U/S

$6,500 M

RasGas refin.

$665 M

Ras Gas II/3$10,000 M program($4,600 M

raised)

SingaporeSingaporeAromatics Complex

$600 M

Saudi ArabiaYanpet

Chemical Plant$2,300 M

KemyaChemical Plant

$700 M

UKSouth Hook

LNG Terminal$1,100 M

KazakhstanTCO Expansion

$4,400 M

EM’s Project Financings have Spanned the Globe

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NGL II

RasGas

Ref

inan

cing

RasGas

II/3

Qatar

gas II

2004/2005 Project Financings: TCO

Expan

sion

• ExxonMobil also has significant experience working with Multilateral Agencies such as the IFC, EBRD, IBRD, and the World Bank

Niger

ia

Satel

lites

Overview of Recent Deals

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Rank Project CountryDebt

(US$M) Participants

1 Qatargas II Qatar 6,500 Qatar Petroleum, ExxonMobil

2 Ras Gas II/3 Qatar 4,600 Qatar Petroleum, ExxonMobil

3 Tengiz Chevroil (TCO) Kazakhstan 4,400 ChevronTexaco, ExxonMobil, KMG

4 Qatargas 3 Qatar 4,341 CONOCOPHILLIPS, Qatar Petroleum

5 Baku-Tbilisi-Ceyhan (BTC) Pipeline

Azerbaijan 3,020 BP, SOCAR, TPAO, Statoil, Unocal, Itochu, Amerada Hess, Eni, TotalFinaElf, INPEX, ConocoPhillips

6 Mitsui O.S.K. Lines LNG Ships (Serve Ras Gas II/3)

Qatar 1,650 MITSUI & CO LIMITED, IINO KAIUN KAISHA LIMITED, NIPPON YUSEN KABUSHIKI KAISHA, KAWASAKI KISEN KAISHA LTD, MITSUI O.S.K LINES LIMITED

7 MPN Natural Gas Liquids Plant (NGL II)

Nigeria 1,275 ExxonMobil, NNPC

8 South Hook LNG Terminal UK 1,100 Qatar Petroleum, ExxonMobil

9 Gazprom Refinancing Russia 1,100 Gazpromneft

10 Dampier-to-Bunbury Natural Gas Pipeline

Australia 1,017 Alcoa World Alumina Australia, Alint, DUET

Total for ExxonMobil: 17,875

Overview of Recent Deals (cont.)

Top 10 Oil and Gas Financings 2004-2005

Source: Thomson Project Finance International- data includes project sponsor loans to the extent known and excludes bridge loans

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2004: #1 bank Citigroup $10.9 B as Lead Arranger / Manager compared to ExxonMobil $13.9 B

Unrivaled Scale

Source: HBS Project Finance Portal

2004 Amount 2004 Amount Rank Name Underwritten Rank Name Underwritten

1 Citigroup $6,414 1 Lehman Brothers $4,5482 BNP Paribas 4,272 2 Citigroup 4,5303 Credit Suisse First   Boston 4,178 3 Goldman Sachs 3,4534 Royal Bank of Scotland 3,785 4 Societe Generale 2,0195 Societe Generale 3,529 5 HSBC 1,6676 Sumitomo Mitsui 3,475 6 Credit Suisse First Boston 1,4517 Bank of Tokyo Mitsubishi  3,456 7 Calyon 1,4288 HSBC 3,391 8 Deutsche Bank 1,2039 Korea Development Bank 3,325 9 JP Morgan 1,128

10 ABN AMRO 3,155 10 Royal Bank of Canada 748Other   77,459 Other       6,472

Total Market $116,439 Total Market $28,647

Lead Arrangers - Bank Loans (US$ M) Lead Managers - Project Bonds (US$ M)

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Financing for 2 large (7.8 MTA each) LNG Trains and UK Receiving Terminal (EM 30%)

Raised $7.6 B in total (including UK South Hook Receiving Terminal)– $3.2 billion from commercial banks– $530 million in Shari’a-compliant Islamic financing – $800 million in ECA facilities (US Exim and Sace)– £420 million bank facility– $2.3 billion in ExxonMobil co-lending

Standard project financing with several step-out structural elements– Limited restrictions on project’s business

– Limited incremental loan compliance requirements

Largest ever energy project financing / 3rd largest project financing ever– First LNG project financed wellhead to terminal in an integrated financing – Largest long term Islamic project financing– Terminal financing is the longest pound sterling denominated bank energy transaction without

government or mono-line credit support

Qatargas IIQatargas II

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Financing for 5 LNG trains with a total capacity of 30 MTA (EM 30%)

$10 B rated debt facility put into place; $4.6 B raised to date from commercial banks, the international capital markets and ExxonMobil co-loans

– $2.25 billion from capital markets (15 and 22 year maturities)

– $970 million from commercial banks

– $1.38 billion in ExxonMobil co-lending

Excellent ratings achieved (A1/A+/A)

Hybrid structure resulted in extremely favorable loan terms:

– No guarantees, support commitments or completion guarantees required

– No restrictions or limits on project’s business or trade counterparties

– No incremental loan compliance requirements; no rating affirmation required

Bond portion was largest ever energy project financing in the capital markets

Attractive pricing

– Bonds priced below Qatar implied sovereign debt rates

– Lowest bank pricing for any long-term energy financing in recent years

Strong distribution across the US, Europe, the Middle East and Asia with significant number of new investors in Qatar

RasGas II/3 Financing

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Decrease in Qatar Debt Rate

Qatar borrowing rates fell as the RasGasII/3 financing was marketed

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Oil extraction and processing facilities expansion for TengizChevroil (EM 25%)

Raised $4.4 B in total– $1.1 B from capital markets (10 year maturity)– $2.2 B from Chevron co-loans– $1.1 B in ExxonMobil co-lending

Extremely favorable loan terms:– No completion guarantees, no recourse to partners, minimal compliance– No restrictions or limits related to permitted business or trade counterparties– TCO management of escrow accounts unless in default– No rating affirmation for new debt incurrence, distributions or expansions

Largest financing and lowest all-in cost of financing ever for Kazakhstan– Largest project financing bond offering in 2004

Co-lending resulted in all of the limited market capacity for TCO project financing being used by National Oil Company (KMG)

Successful financing provides Kazakhstan with enhanced market credibility and improves future financing prospects

– Road Show associated with project financing educated the lending community about Kazakhstan and its oil and gas projects resulting in an expanded pool of lenders

TCO ExpansionTCO Expansion

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Qatargas IIQatargas II 2004 Project Finance International EMEA Gas Deal of the Year2004 Project Finance EuroMoney

Global Deal of the Year

TCOTCO 2004 Project Finance EuroMoney Corporate Bond Finance of the Year

RasGas II/3RasGas II/3 2005 Project Finance EuroMoney EMEA Project Finance Deal of the YearGlobal Deal of the Year

NigeriaNigeria 2005 Trade Finance & 2005 Global TradeSatellitesSatellites Review

Deal of the Year Honors

Record of Success in our recent Project Financings

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Treasurer’s RoleTreasurer’s Role

Strategy– Work closely with the business to ensure that commercial agreements are ‘bankable’– Assess risks and develop finance plan to support EM’s business objectives at lowest cost

Financing Process– Represent EM on JV Finance Team and lead negotiation of all finance matters– Select and hire financial advisors, external counsel and all lender consultants / advisors– Develop financing term sheet and coordinate development of Information Memorandum, Offering

Circular, Rating Agency presentations, financial model and ESIA– Negotiate financing documentation and coordinate / manage lender due diligence and consultant

work– Participate in / coordinate bond road show, bank meetings, pricing and deal closing

Post Closing– Develop loan compliance processes / manual and define Treasurer’s, Business Line, Controller's,

Law and SHE roles– Coordinate / manage loan compliance effort and act as interface with lenders / third parties– Conduct lessons learned with advisors / counsel to capture best practices and enhance future

financings

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As a leader in Project Finance, a career with ExxonMobil Treasurer’s offers unparalleled experience and training in this field

Landscape constantly changing and innovation is always needed

The Finance Function can create an additional source of competitive advantage and bring value to the organization through excellence in Project Finance

SummarySummary