Exxon 2011 Annual Report Download - page 46

Frequently Used Terms
Listed below are definitions of several of ExxonMobil’s key business and financial performance measures and other terms. These definitions are
provided to facilitate understanding of the terms and their calculation. In the case of financial measures that we believe constitute “non-GAAP
financial measures” under Securities and Exchange Commission Regulation G, we provide a reconciliation to the most comparable Generally
Accepted Accounting Principles (GAAP) measure and other information required by that rule.
Total Shareholder Return • Measures the change in value of an investment in stock over a specified period of time, assuming dividend reinvestment.
We calculate shareholder return over a particular measurement period by: dividing (1) the sum of (a) the cumulative value of dividends received during the
measurement period, assuming reinvestment, plus (b) the difference between the stock price at the end and the beginning of the measurement period;
by (2) the stock price at the beginning of the measurement period. For this purpose, we assume dividends are reinvested in stock at market prices at
approximately the same time actual dividends are paid. Shareholder return is usually quoted on an annualized basis.
Proved Reserves • Proved reserves in this publication from 2009 and later years are based on current SEC definitions, but for prior years, the referenced
proved reserve volumes are determined on bases that differ from SEC definitions in effect at the time. Specifically, for years prior to 2009 included in our
five-year average replacement ratio, reserves are determined using the SEC pricing basis but including oil sands and our pro-rata share of equity company
reserves for all periods. Prior to 2009, oil sands and equity company reserves were not included in proved oil and gas reserves as defined by the SEC.
In addition, prior to 2009, the SEC defined price as the market price on December 31; beginning in 2009, the SEC changed the definition to the average
of the market prices on the first day of each calendar month during the year. For years prior to 2009 included in our 18 straight years of at least 100-percent
replacement, reserves are determined using the price and cost assumptions we use in managing the business, not the historical prices used in SEC
definitions. Reserves determined on ExxonMobil’s pricing basis also include oil sands and equity company reserves for all periods.
Proved Reserves Replacement Ratio • The reserves replacement ratio is calculated for a specific period utilizing the applicable proved oil-equivalent
reserves additions divided by oil-equivalent production. See “Proved Reserves” above.
Resources, Resource Base, and Recoverable Resources • Along with similar terms used in this report, refers to the total remaining estimated
quantities of oil and gas that are expected to be ultimately recoverable. ExxonMobil refers to new discoveries and acquisitions of discovered resources as
resource additions. The resource base includes quantities of oil and gas that are not yet classified as proved reserves, but which ExxonMobil believes will
likely be moved into the proved reserves category and produced in the future. The term “resource base” is not intended to correspond to SEC definitions
such as “probable” or “possible” reserves.
Heavy Oil and Oil Sands • Heavy oil, for the purpose of this report, includes heavy oil, extra heavy oil, and bitumen, as defined by the World Petroleum
Congress in 1987 based on American Petroleum Institute (API) gravity and viscosity at reservoir conditions. Heavy oil has an API gravity between 10 and
22.3 degrees. The API gravity of extra heavy oil and bitumen is less than 10 degrees. Extra heavy oil has a viscosity less than 10 thousand centipoise,
whereas the viscosity of bitumen is greater than 10 thousand centipoise. The term “oil sands” is used to indicate heavy oil (generally bitumen) that is
recovered in a mining operation.
Capital and Exploration Expenditures (Capex) • Represents the combined total of additions at cost to property, plant and equipment and exploration
expenses on a before-tax basis from the Summary Statement of Income. ExxonMobil’s Capex includes its share of similar costs for equity companies.
Capex excludes depreciation on the cost of exploration support equipment and facilities recorded to property, plant and equipment when acquired. While
ExxonMobil’s management is responsible for all investments and elements of net income, particular focus is placed on managing the controllable aspects
of this group of expenditures.
RETURN ON AVERAGE CAPITAL EMPLOYED (ROCE) 2011 2010 2009 2008 2007
(millions of dollars)
Net income attributable to ExxonMobil 41,060
30,460 19,280 45,220 40,610
Financing costs (after tax)
Gross third-party debt (153
)(803)(303)(343)(339)
ExxonMobil share of equity companies (219 )(333)(285)(325)(204)
All other financing costs – net 116 35 (483)1,485 268
Total financing costs (256 )(1,101)(1,071)817 (275)
Earnings excluding financing costs 41,316 31,561 20,351 44,403 40,885
Average capital employed 170,721 145,217 125,050 129,683 128,760
Return on average capital employed – corporate total 24.2% 21.7% 16.3% 34.2% 31.8%
ROCE is a performance measure ratio. From the perspective of the business segments, ROCE is annual business segment earnings divided by average business segment
capital employed (average of beginning and end-of-year amounts). These segment earnings include ExxonMobil’s share of segment earnings of equity companies,
consistent with our capital employed definition, and exclude the cost of financing. The Corporation’s total ROCE is net income attributable to ExxonMobil excluding the
after-tax cost of financing, divided by total corporate average capital employed. The Corporation has consistently applied its ROCE definition for many years and views
it as the best measure of historical capital productivity in our capital-intensive, long-term industry, both to evaluate management’s performance and to demonstrate to
shareholders that capital has been used wisely over the long term. Additional measures, which are more cash flow based, are used to make investment decisions.
44 ExxonMobil • 2011 Summary Annual Report