Exxon 2010 Annual Report Download - page 39

EXXON฀MOBIL฀CORPORATION฀ •฀ 2010฀SUMMARY฀ANNUAL฀REPORT
RETURN ON AVERAGE CAPITAL EMPLOYED (ROCE)
Return on average capital employed 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 definition of
capital employed, 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.
(millions of dollars) 2010 2009 2008
Net income attributable to ExxonMobil 30,460 19,280 45,220
Financing costs (after tax)
Gross third-party debt
(803) (303)(343)
ExxonMobil share of equity companies
(333) (285)(325)
All other financing costs – net
35 (483)1,485
Total financing costs (1,101 ) (1,071)817
Earnings excluding financing costs 31,561 20,351 44,403
Average capital employed 145,217 125,050 129,683
Return on average capital employed – corporate total 21.7% 16.3% 34.2%
PROVED RESERVES
Proved reserves in this publication for 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 17 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.
RESOURCES, RESOURCE BASE, AND RECOVERABLE RESOURCES
Resources, resource base, recoverable resources, recoverable oil, recoverable hydrocarbons, and similar terms used in this
report are 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.
PROVED RESERVES REPLACEMENT RATIO
The reserves replacement ratio is calculated for a specified period utilizing the applicable proved oil-equivalent reserves
additions divided by oil-equivalent production. See “Proved Reserves” above.
EXPLORATION RESOURCE ADDITION COST
Exploration resource addition cost per oil-equivalent barrel is a performance measure that is calculated using the Exploration
portion of Upstream capital and exploration expenditures divided by exploration resource additions (in oil-equivalent barrels).
ExxonMobil refers to new discoveries, and the unproved portion of discovered resources that were acquired, as exploration
resource additions. Exploration 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. The impact of
the XTO Energy Inc. merger transaction is excluded from this calculation.
2010 2009 2008
Exploration portion of Upstream capital and exploration expenditures (millions of dollars) 4,121 3,718 2,871
Exploration resource additions (millions of oil-equivalent barrels) 4,725 2,860 2,230
Exploration resource addition cost per oil-equivalent barrel (dollars) 0.87 1.30 1.29
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