Exploration, Development, Production, Gas Marketing, and Research

UPSTREAM STRATEGIES

Although business conditions and opportunities change from year to year, ExxonMobil employs a set of long-term fundamental strategies in its worldwide exploration, development, production, and gas marketing businesses. Success is determined by how well these strategies are implemented and how effectively we utilize our leadership position in key technologies on what is probably the best upstream asset portfolio in the industry.

• Maximize profitability of existing oil and gas production

• Identify and pursue all attractive exploration opportunities

• Invest in projects that deliver superior returns

• Capitalize on growing natural gas markets

Statistical Recap	1999	1998	1997
Earnings (millions of dollars)	5,886	3,352	6,905
Liquids production (thousands of barrels per day)	2,517	2,502	2,527
Natural gas production available for sale (millions of cubic feet per day)	10,308	10,617	10,894
Proved reserves replacement, excluding sales (percent)	106	132	138
New field resource additions (millions of oil-equivalent barrels)	1,530	1,690	1,770
Average capital employed (millions of dollars)	38,863	35,139	33,001
Return on average capital employed (percent)	15.1	9.5	20.9
Capital and exploration expenditures (millions of dollars)	8,390	9,990	8,992

Industry Conditions

• World oil demand increased by over 1 million barrels per day in 1999. Inventories began the year at historically high levels but decreased throughout the year due to curtailment of supply.
• Oil prices recovered in 1999, with Brent averaging nearly $18 per barrel, over $5 per barrel higher than 1998.
• Worldwide natural gas demand increased about 3% with continued growth for gas power generation and the beginning of a recovery in the Asia-Pacific economies.
• Worldwide natural gas prices declined about 3% on average in 1999. Stronger prices in the U.S. were more than offset by lower European prices, which typically lag movements in oil prices.

Worldwide Upstream — ExxonMobil conducts exploration and production operations in some 50 countries and is a leading producer both on and offshore.

1999 Highlights

Earnings were $5.9 billion, an increase of $2.5 billion or over 75 percent. Return on average capital employed was 15 percent, up from 10 percent in 1998.

Profit per oil-equivalent barrel produced was $3.80.

Operating expenses decreased by about $0.30 per oil-equivalent barrel produced.

Total liquids and gas production available for sale remained essentially flat at over 4.2 million oil-equivalent barrels per day, exceeding all competitors.

Proved oil and gas reserve additions totaled more than 1.7 billion oil-equivalent barrels, replacing 106 percent of reserves produced, excluding asset sales. This is the sixth consecutive year that ExxonMobil has exceeded 100 percent replacement. Over the last 20 years, 35 billion oil-equivalent barrels have been added to proved reserves, more than replacing reserves produced.

New field resource additions exceeded 1.5 billion oil-equivalent barrels, with significant discoveries in the deepwater plays off West Africa and in the Gulf of Mexico. Finding costs were $1.20 per oil-equivalent barrel.

Capital and exploration expenditures totaled $8.4 billion.

Major projects to develop more than 6 billion oil-equivalent barrels (net) of resources are underway, providing a solid basis for future profitable production growth.