Published
# ExxonMobil (XOM) — Business, Risks and Management's Discussion Sources: the annual report on Form 10-K for the fiscal year ended December 31, 2025 (accession 0000034088-26-000045, filed February 18, 2026) and the quarterly report on Form 10-Q for the quarter ended June 30, 2026 (accession 0000034088-26-000093, filed August 3, 2026). A note on the reporting entity. The annual report was filed by Exxon Mobil Corporation, a New Jersey corporation, and describes that entity. On July 1, 2026 — after the annual report and before the second-quarter report — ExxonMobil Holdings Corporation, a Texas corporation, became the publicly traded parent of the ExxonMobil group and the successor registrant, with the common stock continuing to trade on the New York Stock Exchange under the ticker "XOM." The company states the reorganization did not change the consolidated business, operations, assets, liabilities or financial reporting basis, so the business described below is unchanged. Details are under "Subsequent events." ## Business From the Form 10-K for the fiscal year ended December 31, 2025 (accession 0000034088-26-000045). Exxon Mobil Corporation was incorporated in New Jersey in 1882. Its principal business is exploration for and production of crude oil and natural gas; the manufacture, trade, transport and sale of crude oil, natural gas, petroleum products, petrochemicals and a wide variety of specialty products; and the pursuit of lower-emission and other new business opportunities, including carbon capture and storage, hydrogen and ammonia, lower-emission fuels, Proxxima resin systems, carbon materials, low-carbon data centers and lithium. Divisions and affiliates operate or market in the United States and most other countries, under names including ExxonMobil, Exxon, Esso, Mobil and XTO. **Segments and organization.** There are four reportable segments — Upstream, Energy Products, Chemical Products and Specialty Products. Internally the company runs three businesses: Upstream; Product Solutions (which contains Energy Products, Chemical Products and Specialty Products); and Low Carbon Solutions, which is reported inside Corporate and Financing until it is established with a material level of assets and revenue. Centralized service groups — Global Projects, Technology and Engineering, Global Operations, Sustainability, Global Trading, Supply Chain and Global Business Solutions — support all three. **Upstream.** The strategy is an industry-leading portfolio underpinned by advantaged growth projects with low cost of supply. In 2025 production averaged 4.7 million oil-equivalent barrels per day, the highest in more than 40 years. Roughly two thirds of global production comes from the Permian, Guyana and LNG, a proportion the company expects to grow. Permian production averaged a record 1.6 million oil-equivalent barrels per day in 2025, about 0.4 million higher than the prior year, with a target of approximately 2.5 million by 2030. In Guyana, the Liza Destiny, Liza Unity, Prosperity and Yellowtail floating production vessels produced a combined gross rate above 870 thousand barrels per day in the fourth quarter of 2025 and record annual production of 715 thousand barrels per day; Uaru and Whiptail, each of approximately 250 thousand barrels per day investment-basis capacity, are on schedule, a final investment decision on Hammerhead was taken in September 2025 for start-up in 2029, and eight vessels are anticipated on the Stabroek Block by year-end 2030. Other positions include Canada (519 thousand oil-equivalent barrels per day of net production, including the Kearl oil sands joint venture — 70.96% held by Imperial Oil and 29.04% by ExxonMobil Canada Properties, with average net production of about 264 thousand barrels per day in 2025 — and the Syncrude venture, ExxonMobil's share of net synthetic crude production about 68 thousand barrels per day); Brazil, where the Bacalhau Phase 1 vessel started up; Kazakhstan (Tengiz expansion completed and ramped to nameplate, plus Kashagan); Qatar, where ExxonMobil participates in 45.7 million tonnes per year of gross LNG capacity; the United Arab Emirates (Upper Zakum); Nigeria, Angola and Mozambique; and Australia and Papua New Guinea, accounting for 22.5 million tonnes per year of LNG. Exxon Mobil Corporation holds a 69.6% interest in Imperial Oil Limited. **Reserves.** Proved reserves were 19.3 billion oil-equivalent barrels at year-end 2025, of which 7.0 billion (36%) were proved undeveloped, against 7.4 billion proved undeveloped at year-end 2024. During 2025 approximately 1.4 billion oil-equivalent barrels transferred from proved undeveloped to proved developed, extensions and discoveries (primarily the United States and Guyana) added approximately 2.0 billion, and approximately 1.0 billion was reclassified as no longer meeting the SEC definition of proved reserves, primarily in the United States. The company invested $19.0 billion during 2025 to progress development of reported proved undeveloped reserves, including $18.8 billion for oil and gas producing activities. Proved undeveloped reserves held five years or more sit largely in Australia (Gorgon Jansz compression) and the United Arab Emirates (Upper Zakum). Worldwide the company is contractually committed to deliver approximately 73 million barrels of oil and 2.9 trillion cubic feet of natural gas over 2026 through 2028. Exploration net acreage in countries without established production totaled 15.8 million acres at year-end 2025. **Energy Products.** The largest refining footprint among international oil companies, spanning refining, logistics, trading and marketing, plus the fuels, aromatics and NGL value chains and catalysts and licensing. Refinery throughput was 3,979 thousand barrels daily in 2025. Earnings are closely tied to industry refining margins — the spread between raw material cost and product prices — which are set globally and are volatile. Refining and chemical sites span the United States (Joliet, Baton Rouge, Baytown, Beaumont, Corpus Christi, Mont Belvieu), Canada (Strathcona, Nanticoke, Sarnia), Europe (Antwerp, Meerhout, Karlsruhe, Rotterdam, Fawley, Fife), Asia Pacific (Fujian, Huizhou, Singapore) and the Middle East (Al Jubail, Yanbu). **Chemical Products.** Olefins, polyolefins and intermediates, competing on scale, refinery integration and proprietary technology. In 2025 the company started up a petrochemical complex in the Dayawan Petrochemical Industrial Park in Huizhou, Guangdong — the first wholly foreign-owned petrochemical complex built in China — with three polyethylene and two polypropylene lines totaling over 2.5 million metric tons per year of capacity, and added two advanced recycling units at Baytown, tripling site capacity, against an aim of 1 billion pounds per year of global recycling capacity. **Specialty Products.** Lubricants, basestocks, waxes, synthetics, elastomers and resins, including the Mobil 1 brand. The Singapore Resid Upgrade project started up in 2025, upgrading fuel oil to Group II basestock and diesel and introducing the EHC 340 MAX basestock; the company describes itself as the largest basestock producer in the world. Proxxima resin blending capacity was more than tripled in 2025 with plans to reach 200,000 tons per year by 2030. **People and technology.** Regular employees numbered 58 thousand at year-end 2025, against 61 thousand in 2024 and 62 thousand in 2023. Over 59% of employees are outside the U.S. and more than 160 nationalities are represented; average length of service for career employees is about 30 years. ExxonMobil held over 8 thousand active patents worldwide at the end of 2025. **Recent portfolio history.** The company acquired Pioneer Natural Resources Company on May 3, 2024 by issuing 545 million shares with a fair value of $63 billion and assuming debt with a fair value of $5 billion, of which $84 billion was assigned to property, plant and equipment and $1 billion to goodwill allocated to Upstream. It acquired Denbury Inc. in 2023 through the issuance of 46 million shares with a fair value of $4.8 billion. On the disposal side, 2025 divestments realized approximately $3.2 billion of proceeds and approximately $1.1 billion of net after-tax earnings, and included the Singapore retail fuels business, Mobil Argentina S.A., Product Solutions affiliates in France (Esso Société Anonyme Française SA and ExxonMobil Chemical France SAS, including the refinery, completed November 2025), and certain conventional and unconventional U.S. assets. The company exited Thailand operations in 2025. ## Risk factors From the Form 10-K for the fiscal year ended December 31, 2025 (accession 0000034088-26-000045). Condensed to the substantive items. **Commodity exposure runs both ways.** Oil, gas and petrochemicals are commodity businesses, so earnings move with prices and refined-product margins. A material decline in oil or gas prices could materially hurt operations, results, financial condition and proved reserves, especially Upstream; a material increase could materially hurt Energy Products, Chemical Products and Specialty Products. Demand is tied to broad economic activity and is also affected by efficiency gains, weather, policy support for alternatives, energy-storage and other technology change, government strategic reserve actions, growing demand from artificial intelligence and data centers, and consumer preference shifts including toward electric transport and away from plastics. Supply is affected by new resource development and recovery technology, refining and petrochemical capacity additions, government policies that accelerate or open access to reserves, and new shipping routes. Interest rates, inflation, currency moves and the role of the U.S. dollar in global trade add further exposure, as do losses on commodity derivatives used to hedge or to trade. **Government and political factors.** Countries restrict access to resources through leasing, licensing and permitting, and may put resources off limits entirely; sanctions and other legal regimes can bar business with certain countries or counterparties or block asset purchases and sales, sometimes advantaging competitors not subject to them. Some jurisdictions lack developed or stable legal systems, raising the risk of unpredictable official action and weak contract enforcement. Even in developed legal systems the company faces tax increases and retroactive claims, windfall profit taxes and global minimum taxes, price controls, environmental and product regulation, permit denials or delays, standards and mandates that disfavor its products, disclosure rules the company regards as competitively harmful, and government action to cancel contracts, expropriate assets or force production changes. It is exposed to litigation, class actions and arbitration — notably including proceedings brought by state and local governments and other entities seeking relief for alleged climate-change injuries — and to government investigations. Security concerns, from civil unrest and military conflict to sabotage, piracy, terrorism, cyberattack and national-security restrictions, can disrupt facilities or shut them down. **Climate change and the energy transition.** Governments and international frameworks are adopting regimes to report on or cut greenhouse gas emissions, including cap and trade, carbon taxes, carbon-based import duties, renewable usage minimums, restrictive permitting, mileage and efficiency standards, electric vehicle mandates and mandated transition plans, all of which can raise compliance costs, lengthen project timelines, make hydrocarbon products more expensive or less competitive and reduce demand. The company's own ambition to reach net zero for Scope 1 and 2 emissions from operated assets depends on technology development and supportive government policy, and it states plainly that society's progress in these areas continues to lag and that without supportive policies net zero will remain out of reach. Political actors and non-governmental organizations also work indirectly to reduce the availability or raise the cost of financing and investment in the sector, including by blocking infrastructure and using shareholder governance mechanisms. The returns of the Low Carbon Solutions business — carbon capture and storage, hydrogen and ammonia, lower-emission fuels, Proxxima resin systems, carbon materials, low-carbon data centers and lithium — depend on markets and policies that may not materialize or persist. Restricting hydrocarbon supply without a matching demand reduction can itself produce price volatility, inflationary pressure and regional energy shortages. **Operational and other factors.** Maintaining and growing production depends on exploration and development success. Long-lived, capital-intensive projects require negotiating with joint venturers, partners and governments, protecting contractual rights, modeling reservoir performance, developing markets for project output, managing third-party equipment and service costs and supply-chain and inflation pressure, and handling technical difficulties that delay start-up. Where the company is not the operator it depends on co-venturers it does not control. Portfolio management carries its own risk: assets may not be bought or sold at the price or on the timeline contemplated, and liabilities can revert following a divestment on a successor's bankruptcy or default. Operating efficiency — cost control, yield improvement and integrating and realizing synergies from acquisitions — is central to competitive performance. Other named risks are the pace of technological change including AI; safety, business controls and risk management across operations and trading; cybersecurity, where the company is regularly subject to attempted disruptions including from state-sponsored actors and has limited ability to influence the controls of partners, suppliers and cloud providers; preparedness for severe weather and natural disasters; limits on the availability and cost of insurance; competition from private firms, from state-owned companies that may pursue national objectives with less focus on returns, and from alternative energy sources; and reputation, which can be damaged by an operating incident, by a perception of insufficient progress on the energy transition, or by a perception that pursuing it diverts capital to lower-return investments. **Kazakhstan transportation.** ExxonMobil holds a 25% interest in Tengizchevroil, a 16.8% working interest in Kashagan and a 7.5% interest in the Caspian Pipeline Consortium, which carries production across Kazakhstan and Russia to the Black Sea. Escalating geopolitical issues could disrupt, curtail or suspend that route and cost the company cash flows of uncertain duration. After-tax earnings from Kazakhstan interests were approximately $1.1 billion in 2025 on a share of combined oil and gas production of approximately 320 thousand oil-equivalent barrels per day. ## Management's discussion — fiscal year 2025 From the Form 10-K for the fiscal year ended December 31, 2025 (accession 0000034088-26-000045). **Business environment.** Crude prices stayed near the middle of the pre-COVID ten-year range (2010-2019) as record demand was met by increasing industry supply, leaving prices modestly lower. Natural gas prices rose to the top of that range on robust demand. Industry refining margins improved on record full-year demand and increased supply disruptions. Chemical margins stayed at bottom-of-cycle on global oversupply despite record demand. On the trade actions and retaliatory tariffs announced during 2025, the company said that despite the uncertainty it did not anticipate any material near-term financial impacts. **Results.** Net income attributable to ExxonMobil was $28,844 million in 2025, against $33,680 million in 2024 and $36,010 million in 2023. Return on average capital employed was 9.3% against 12.7%, on average capital employed of $305,775 million against $278,102 million; cash capital expenditures were $28,997 million against $25,647 million. By segment, earnings after income taxes were: Upstream $21,354 million (2024: $25,390 million); Energy Products $7,423 million (2024: $4,033 million); Chemical Products $800 million (2024: $2,577 million); Specialty Products $2,857 million (2024: $3,052 million); and Corporate and Financing a loss of $3,590 million (2024: a loss of $1,372 million). Net liquids production was 3,329 thousand barrels daily against 2,987, and refinery throughput 3,979 thousand barrels daily against 3,900. **What moved the segments in 2025.** In Upstream, lower realizations cut earnings by $6.1 billion, primarily on lower crude prices as record demand was more than offset by increased industry supply; advantaged volume growth added $1.9 billion on record Permian and Guyana production; base volume cost $0.7 billion on non-strategic divestments; structural cost savings added $1.4 billion; expenses cost $0.6 billion, primarily higher depreciation from the Tengiz expansion; other items added $0.6 billion on favorable tax and foreign exchange; favorable derivative timing effects added $0.6 billion; and identified items were a $0.9 billion loss mainly from asset impairments. In Energy Products, margins added $1.8 billion on robust demand and supply disruptions, advantaged volume growth $0.2 billion, base volume $0.4 billion on lower scheduled maintenance and structural cost savings $0.6 billion, against $0.5 billion of higher expenses from growth projects, with $0.2 billion from favorable year-end inventory effects, $0.4 billion of favorable timing effects and a $0.5 billion identified-item gain mainly from asset sales. In Chemical Products, margins cut earnings by $1.8 billion as oversupply held the market at bottom-of-cycle, and higher advantaged project spend including the China complex ramp-up cost $0.5 billion, partly offset by $0.2 billion each from advantaged volume growth, structural cost savings and other items; identified items were a $0.3 billion loss driven by impairments. In Specialty Products margins added $40 million and advantaged volume growth and structural cost savings $0.1 billion each, against $0.2 billion of higher spend to develop markets for carbon materials and Proxxima resins and $0.2 billion of unfavorable foreign exchange. Corporate and Financing expenses were $3.6 billion against $1.4 billion in 2024, mainly on higher financing costs. **Costs.** Strategic changes since 2019 produced $15.1 billion of cumulative structural cost savings, including $3 billion during 2025, from operational efficiencies, workforce reductions, divestment-related reductions and other measures. The company targets $20 billion of structural cost reduction between 2019 and 2030 and points to centralization, system implementations, improved maintenance and turnarounds and simplified processes as remaining opportunities. **Liquidity.** Cash and cash equivalents were $10.7 billion at the end of 2025, down $12.5 billion. The major sources of funds were net income including noncontrolling interests of $29.8 billion, the noncash depreciation and depletion adjustment of $26.0 billion, $3.2 billion of asset sale proceeds and $3.4 billion of other investing activities. The major uses were $28.4 billion of additions to property, plant and equipment, $17.2 billion of dividends, $20.3 billion of ExxonMobil stock purchases, $4.1 billion of additional investments and advances, and a $7.7 billion working capital change. At December 31, 2025 undrawn short-term committed lines of credit were $7.3 billion and undrawn long-term lines $1.0 billion; in the fourth quarter the company established a 364-day revolving credit facility of $7.0 billion for general corporate purposes. **Project milestones cited for 2025.** Yellowtail entered service in Guyana in August and averaged 240 thousand barrels per day of gross production in the fourth quarter; the Hammerhead final investment decision was taken in September for 2029 start-up. Mechanical completion was achieved on the Golden Pass LNG project with first LNG expected in the first quarter of 2026. Force majeure was lifted in Mozambique, with Rovuma LNG in front-end engineering and design toward a final investment decision in 2026. The Strathcona Renewable Diesel project and the Fawley Hydrofiner started up, as did the Huizhou petrochemical complex and the Singapore Resid Upgrade project. The Pegasus-1 exploratory well offshore Cyprus encountered a gas-bearing reservoir, with commercialization evaluations ongoing. ## The second quarter of 2026 From the Form 10-Q for the quarter ended June 30, 2026 (accession 0000034088-26-000093). **Market conditions.** The quarter was heavily influenced by supply disruptions in the Middle East and by global refining capacity reductions. Average crude prices remained within the ten-year historical range (2010-2019) with reduced refining capacity and inventory releases; natural gas prices remained elevated above the ten-year average on ongoing supply disruptions; industry refining margins were sharply above the ten-year historical range on what the company calls unprecedented global refining capacity reductions; and chemical margins improved but stayed below the bottom of the range, with regional supply constraints affecting product availability, particularly in Asia. **Results.** Second-quarter earnings were $14.5 billion against $7.1 billion a year earlier, or $3.48 per share against $1.64. First-half earnings were $18.7 billion against $14.8 billion, or $4.47 per share against $3.40. Management attributes the increase to higher prices and margins, advantaged investments across Upstream and Energy Products, and structural cost savings, partly offset by higher depreciation expense, lower volumes from scheduled maintenance and Middle East disruptions, and identified items — primarily impairments and financial reserves. Depreciation and depletion is reported inclusive of impairments. **By segment (second quarter, against the same quarter of 2025).** Upstream earned $7,927 million against $5,402 million. Higher crude realizations added $4,650 million, partly offset by lower gas realizations; advantaged volume growth added $1,140 million on Guyana and Permian growth; structural cost savings added $170 million; base volume cost $130 million, Middle East volume $1,060 million, expenses $690 million, other items $170 million on one-time tax impacts and the absence of divestments, and timing effects $180 million on unfavorable derivative mark-to-market; identified items were a $1,199 million loss from financial reserves. Energy Products earned $5,465 million against $1,366 million: margins added $3,180 million on stronger refining margins, advantaged volume growth $270 million, structural cost savings $110 million and timing effects $2,560 million, against $280 million from base volume on scheduled maintenance, $310 million from Middle East supply disruptions affecting global operations, $170 million of expenses from growth projects and maintenance and $80 million from unfavorable foreign exchange, with a $1,180 million identified-item loss. Chemical Products earned $1,131 million against $293 million, with margins up $980 million on an increased North America ethane feed advantage and performance chemical margins, offset by $130 million from weak Asia Pacific market dynamics; identified items were an $83 million loss. Specialty Products earned $956 million against $780 million, with margins up $270 million on higher basestock margins and Middle East volume down $110 million; identified items were a $13 million loss. Corporate and Financing expenses were $954 million, $195 million higher than a year earlier on lower interest income and unfavorable tax impacts, and $2,007 million for the half, $450 million higher on lower interest income and the absence of favorable tax items. **Volumes.** Second-quarter production of 4.5 million oil-equivalent barrels per day fell 116 thousand from the second quarter of 2025, driven by Middle East disruption impacts and mostly offset by Permian and Guyana growth; first-half production of 4.6 million fell 37 thousand on the same drivers. The disruption is visible in Asian gas: net natural gas production available for sale in Asia was 1,274 million cubic feet daily in the quarter against 3,206 a year earlier, pulling worldwide gas to 6,849 million cubic feet daily from 8,219, while worldwide liquids production rose to 3,373 thousand barrels daily from 3,259. Worldwide Energy Products sales were 5,698 thousand barrels daily against 5,588; Chemical Products sales were 4,471 thousand metric tons against 5,264 and Specialty Products sales 1,784 thousand metric tons against 2,004. **Taxes.** Income tax expense was $4,543 million against $3,351 million. The effective income tax rate, calculated on consolidated company income taxes plus ExxonMobil's share of equity company income taxes, was 24%, ten points lower than a year earlier, due primarily to a change in the mix of results across jurisdictions with varying tax rates. For the half the rate was 29% against 34%, on portfolio mix effects. Total taxes were $10.7 billion for the quarter and $19.9 billion for the half, the latter down $1.3 billion. **Cash and the balance sheet.** Operating cash flow was $23,555 million in the quarter and $32,260 million for the half, $7.8 billion higher than the prior-year half; cash flow from operations and asset sales was $24.0 billion in the quarter, up $12.3 billion. For the half, the noncash depreciation and depletion adjustment of $15.5 billion was up $3.7 billion, operational working capital was a $3.9 billion reduction, investing used $12.3 billion (including $13.0 billion of additions to property, plant and equipment, up $0.8 billion, against $0.6 billion of asset sale proceeds, down $1.4 billion), and financing used $19.9 billion. Cash capital expenditures were $6.8 billion in the quarter, up $0.2 billion, and $13.0 billion for the half; the company plans to invest $27 billion to $29 billion in 2026. Total debt was $42.4 billion against $43.5 billion at year-end 2025, debt to total capital 13.7% against 14.0%, and net debt to capital 10.7%, down 0.3 percentage points, against total equity of $266.1 billion and cash and cash equivalents excluding restricted cash of $10.6 billion. Undrawn short-term committed lines of credit were $7.4 billion and undrawn long-term committed lines $0.3 billion. Cumulative structural cost savings reached $16.3 billion relative to 2019, including a further $1.2 billion in the first half of 2026. **Shareholder distributions.** The company distributed $8.6 billion in dividends and repurchased $10.0 billion of common stock — 66.7 million shares — in the first half. Second-quarter repurchases totaled 33,118,472 shares at an average price of $149.30, leaving approximately $10.2 billion of value that may yet be purchased under the program at June 30, 2026. The company has said it expects share repurchases of $20 billion in 2026, assuming reasonable market conditions. **Divestments.** Through June 30, 2026 the company realized proceeds of approximately $0.6 billion and recognized net after-tax earnings of approximately $0.1 billion from divestment activities, comprising the sale of certain assets in the United States and other smaller divestments. It continues to evaluate its asset mix for potential upgrade and to evaluate portfolio-enhancing acquisitions of assets or companies, judged on strategic fit, cost synergies, growth potential, low cost of supply and valuation. **Contingencies.** State and local governments and other entities across the United States and its territories have brought a number of proceedings against oil and gas companies including ExxonMobil seeking relief for alleged climate-change injuries; the company regards the legal and factual theories as meritless and believes the likelihood is remote that the ultimate outcomes will have a material adverse effect taken as a whole. Guarantees relating to notes, loans and contract performance totaled $6,279 million at June 30, 2026, of which $660 million related to equity company obligations. ## Subsequent events From the Form 10-Q for the quarter ended June 30, 2026 (accession 0000034088-26-000093). The condensed consolidated financial statements reflect periods before the reorganization described first below. **Redomiciliation completed July 1, 2026.** Exxon Mobil Corporation, a New Jersey corporation, completed its redomiciliation reorganization, under which ExxonMobil Holdings Corporation, a Texas corporation, became the publicly traded parent company of the ExxonMobil consolidated group. Each outstanding share of the predecessor's common stock, which was without par value, was automatically exchanged for one share of the new parent's common stock with a par value of $0.001, and former shareholders held the same number of shares and the same percentage ownership immediately afterward. The new parent replaced the predecessor as the publicly held corporation traded on the New York Stock Exchange under the ticker symbol "XOM" and became the successor registrant under Rule 12g-3(a) of the Securities Exchange Act of 1934. Shareholder rights are now governed by the Texas Business Organizations Code and the new parent's governing documents in place of the New Jersey Business Corporation Act. The company states the reorganization did not change the consolidated business, operations, assets, liabilities or financial reporting basis. **Louisiana coastal erosion settlement effective July 31, 2026.** Local governments in Louisiana had brought proceedings against a number of oil and gas companies, including ExxonMobil, seeking compensation for the restoration of coastal marsh erosion in the state. Effective July 31, 2026 the company entered into a settlement with the state of Louisiana and the relevant coastal parishes settling all claims related to these matters. The settlement is not material to the company: estimated earnings impacts were included in the second-quarter financial reserve updates and third-quarter earnings impacts are expected to be immaterial. It reflects a negotiated resolution of disputed claims, does not constitute an admission of liability or wrongdoing and does not provide for any government sanctions. No acquisition, divestiture or financing after June 30, 2026 is disclosed in the quarterly report.