Exxon 2008 Annual Report Download - page 47

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.
(millions of dollars) 2008 2007 2006
Net income 45,220 40,610 39,500
Financing costs (after tax)
Gross third-party debt
(343) (339)(264)
ExxonMobil share of equity companies
(325) (204)(156)
All other financing costs – net
1,485 268 499
Total financing costs 817 (275)79
Earnings excluding financing costs 44,403 40,885 39,421
Average capital employed 129,683 128,760 122,573
Return on average capital employed – corporate total 34.2% 31.8% 32.2%
LIQUIDS AND NATURAL GAS PROVED RESERVES
In this report, we use the term “proved reserves” to mean quantities of oil and gas that ExxonMobil has determined to be reasonably
certain of recovery under existing economic and operating conditions on the basis of our long-standing, rigorous management review
process. We book proved reserves when we have made significant funding commitments for the related projects. In this report, we
aggregate proved reserves of consolidated and equity companies, excluding royalties and quantities due others, since ExxonMobil does
not view these reserves differently from a management perspective. To reflect management’s view of
ExxonMobil’s total liquids reserves,
proved reserves in this report also include oil sands reserves from the Canadian Syncrude and Kearl operations,
which are reported sepa-
rately as mining reserves in our Form 10-K and proxy statement. Oil sands reserves included in this report
totaled 1,871 million barrels
at year-end 2008, 694 million barrels at year-end 2007, 718 million barrels at year-end 2006, 738 million barrels at year-end 2005, and
757 million barrels at year-end 2004
. For our own management purposes and as discussed in this report, we determine proved
reserves based on price and cost assumptions that are consistent with those used to make investment decisions. Therefore, the
proved reserves in this report are not directly comparable to the data reported in our Form 10-K and proxy statement. Based on
regulatory guidance, ExxonMobil began in 2004 to state our results in the Form 10-K and proxy
statement to reflect the impacts on
proved reserves of utilizing December 31 liquids and natural gas prices (“year-end price/cost effects”). On this basis, year-end proved
reserves, including year-end price/cost effects totaled 23.0 billion oil-equivalent barrels in 2008, 22.5 billion oil-equivalent barrels in
2007, 22.8 billion oil-equivalent barrels in 2006, 22.4 billion oil-equivalent barrels in 2005, and 21.7 billion oil-equivalent barrels in 2004.
Excluding year-end price/cost effects, 2008 proved reserves totaled 22.8 billion oil-equivalent barrels, 2007 proved reserves totaled 22.7
billion oil-equivalent barrels, 2006 proved reserves totaled 22.7 billion oil-equivalent barrels, 2005 proved reserves totaled 22.4 billion
oil-equivalent barrels, while 2004 proved reserves totaled 22.2 billion oil-equivalent barrels.
RESOURCES, RESOURCE BASE, AND RECOVERABLE RESOURCES
Resources, resource base, recoverable oil, recoverable hydrocarbons, recoverable resources, and similar terms used in this report are the total
remaining estimated quantities of oil and gas that are expected to be ultimately recoverable. In addition to proved reserves, 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.
PROVED RESERVES REPLACEMENT RATIO
Proved reserves replacement ratio is a performance measure that is calculated using proved oil-equivalent reserves additions divided by
oil-equivalent production. Both proved reserves additions and production include amounts applicable to equity companies. The ratio usually
reported by ExxonMobil excludes year-end price/cost effects, and includes Canadian oil sands mining operations in both additions and
production volumes. See the definition of “liquids and natural gas proved reserves” above.
FINDING AND RESOURCE-ACQUISITION COSTS
Finding and resource-acquisition costs per oil-equivalent barrel is a performance measure that is calculated using the Exploration portion of
Upstream capital and exploration expenditures and proved property acquisition costs divided by resource additions (in oil-equivalent barrels).
ExxonMobil refers to new discoveries and acquisitions of discovered resources as resource additions. In addition to proved reserves, resource
additions include 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.
2008 2007 2006
Exploration portion of Upstream capital and exploration expenditures (millions of dollars) 2,871 1,909 2,044
Proved property acquisition costs (millions of dollars) 61 37 234
Total exploration and proved property acquisition costs (millions of dollars) 2,932 1,946 2,278
Resource additions
(millions of oil-equivalent barrels) 2,230 2,010 4,270
Finding and resource-acquisition costs per oil-equivalent barrel (dollars) 1.32 0.97 0.53
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