Exxon 2012 Annual Report Download - page 16

ExxonMobil’s disciplined approach to investing focuses on the efficient use of capital. By combining rigorous
standards for project assessment with proven project development expertise, we gain advantage in our
investments over the long term. This discipline is applied across our entire portfolio and includes identification
of key growth opportunities and divestment of assets that no longer meet our long-term objectives. Across our
worldwide operations, our return on capital employed has averaged 24 percent over the last five years, and
we continue to lead competition in this important measure of long-term shareholder value.
RIGOROUS STANDARDS, LONG-TERM RETURNS
Investment decisions in the energy industry are characterized by time horizons measured in decades. We test projects
over a wide range of scenarios to ensure that all relevant risks – including financial, commercial, environmental, technical, and
others – are properly identified, thoroughly evaluated, and effectively managed.
In 2012, ExxonMobil invested nearly $40 billion to bring new energy supplies and products to the market. Exploration
investments are drawn from a diverse portfolio of opportunities, allowing us to effectively manage risk. From a portfolio of
more than 120 Upstream projects, we expect to develop 23 billion oil-equivalent barrels across a variety of resource types
and geographic regions. Our scale and diversity allow us to selectively invest in projects most likely to deliver superior financial
performance and profitable volumes growth. We plan to start up 28 major Upstream projects between 2013 and 2017, which
are expected to deliver approximately 1 million net oil-equivalent barrels per day of production by 2017.
Our proven project management systems ensure the efficient use of capital and lead to successful start-ups by incorporating
best practices that are rigorously and consistently applied to projects around the globe. These systems employ a demanding
gate review process overseen by experienced global project teams whose expertise lies in optimizing value from initial discovery
through start-up. We also consider the role of technology to maximize capital efficiency. Project economics are carefully
assessed, budgets are closely monitored, and reappraisals are routinely performed to further improve our performance.
As a result, ExxonMobil-operated projects continue to perform at better cost and schedule certainty than those projects
operated by others in which we have an interest.
KEY MARKETS GUIDE DECISIONS
Investment decisions are guided by our energy outlook, which evaluates future demands and identifies key growth
markets. Our Singapore Chemical Expansion project illustrates how we identify and approach new capital commitments.
The project doubled our steam-cracking capacity at the site, added unparalleled feedstock flexibility, and delivered world-class
energy and cost efficiencies. Our manufacturing capacity of premium products grew significantly, including several products
that ExxonMobil has never before produced in this important region.
The Singapore expansion was undertaken because petroleum and chemical demand is expected to rise rapidly in the
Asia Pacific region. China’s petrochemical demand has grown by 15 percent per year from 1990 through 2010 and is expected
to nearly double this decade. The Singapore plant positions ExxonMobil to participate in Asia’s rapidly growing markets.
We are also expanding ultra-low sulfur diesel production capacity in Singapore, as well as lube oil blending capacity in China,
to support rising demand for these high-value products in the region.
PORTFOLIO MANAGEMENT
Our disciplined approach applies not only to new investments, but also to our willingness to divest assets that
no longer meet our criteria for providing long-term returns. We have a long-standing practice of regularly reviewing assets
to ensure they contribute to our operational and financial objectives, and we divest assets when the sale is deemed to
enhance long-term shareholder value.
During 2012, we completed the sale of some of our Upstream assets, including a portion of our acreage in Angola and Norway.
We also divested our Downstream and Chemical assets in Argentina, Uruguay, Paraguay, Central America, Malaysia, and
Switzerland, and restructured and reduced our holdings in Japan. The transition of our U.S. retail fuel business to a more
capital-efficient branded wholesaler model is also nearly complete.
Over the last 10 years, we have divested or restructured Downstream interests in 19 refineries, 6,000 miles of pipeline,
191 product terminals, 37 lube oil blend plants, and more than 22,000 retail service stations. These Downstream portfolio
improvements resulted in a nearly 4-percentage-point improvement in our Downstream return on capital employed.
COMPETITIVE ADVANTAGES:
Disciplined Investing
14 EXXONMOBIL 2012 SUMMARY ANNUAL REPORT 14 EXXONMOBIL 2012 SUMMARY ANNUAL REPORT