Stock Dividends The quarterly common stock dividend was increased by 11.1 percent in April 2012 to $0.90 per common share, making 2012 the 25th consecutive year that the company increased its annual dividend payment.

     Common Stock Repurchase Program The company purchased $5.0 billion of its common stock in 2012 under its share repurchase program. The program began in 2010 and has no set term or monetary limits.

Results of Operations

Major Operating Areas The following section presents the results of operations for the company’s business segments – Upstream and Downstream – as well as for “All Other.” Earnings are also presented for the U.S. and international geographic areas of the Upstream and Downstream business segments. Refer to Note 10, beginning on page FS-36, for a discussion of the company’s “reportable segments,” as defined in accounting standards for segment reporting (Accounting Standards Codification (ASC) 280). This section should also be read in conjunction with the discussion in “Business Environment and Outlook” on pages FS-2 through FS-5.

     U.S. upstream earnings of $5.3 billion in 2012 decreased $1.2 billion from 2011, primarily due to lower natural gas and crude oil realizations of $340 million and $200 million, respectively, lower crude oil production of $240 million, and lower gains on asset sales of $180 million.

     U.S. upstream earnings of $6.5 billion in 2011 increased $2.4 billion from 2010. The benefit of higher crude oil realizations increased earnings by $2.8 billion between periods. Partly offsetting this effect were lower net oil-equivalent production, which decreased earnings by about $400 million, and higher operating expenses of $200 million.

     The company’s average realization for U.S. crude oil and natural gas liquids in 2012 was $95.21 per barrel, compared with $97.51 in 2011 and $71.59 in 2010. The average natural gas realization was $2.64 per thousand cubic feet in 2012, compared with $4.04 and $4.26 in 2011 and 2010, respectively.

     Net oil-equivalent production in 2012 averaged 655,000 barrels per day, down 3 percent from 2011 and 7 percent from 2010. Between 2012 and 2011, the decrease in production was associated with normal field declines and an absence of volumes associated with Cook Inlet, Alaska, assets sold in 2011. Partially offsetting this decrease was a ramp-up of projects in the Gulf of Mexico and Marcellus Shale and improved operational performance in the Gulf of Mexico. The net liquids component of oil-equivalent production for 2012 averaged 455,000 barrels per day, down 2 percent from 2011 and 7 percent from 2010. Net natural gas production averaged about 1.2 billion cubic feet per day in 2012, down approximately 6 percent from 2011 and about 8 percent from 2010. Refer to the “Selected Operating Data” table on page FS-10 for a three-year comparative of production volumes in the United States.

International Upstream

     International upstream earnings were $18.5 billion in 2012 compared with $18.3 billion in 2011. The increase was mainly due to a gain of approximate $1.4 billion on an asset exchange in Australia, higher natural gas realizations of about $610