ITEM 1. BUSINESS.
Exxon Corporation was incorporated in the State of New Jersey in 1882. Divisions and affiliated companies of Exxon operate or market products in the United States and over 100 other countries. Their principal business is energy, involving exploration for, and production of, crude oil and natural gas, manufacturing of petroleum products and transportation and sale of crude oil, natural gas and petroleum products. Exxon Chemical Company, a division of Exxon, is a major manufacturer and marketer of petrochemicals. Exxon is engaged in exploration for, and mining and sale of, coal and other minerals. Exxon also has an interest in electric power generation in Hong Kong. Affiliates of Exxon conduct extensive research programs in support of these businesses.
The terms corporation, company, Exxon, our, we and its, as used in this report, sometimes refer not only to Exxon Corporation or to one of its divisions but collectively to all of the companies affiliated with Exxon Corporation or to any one or more of them. The shorter terms are used merely for convenience and simplicity.
The oil and chemical industries are highly competitive. There is competition within the industries and also with other industries in supplying the energy, fuel and chemical needs of commerce, industry and individuals. The corporation competes with other firms in the sale or purchase of various goods or services in many national and international markets and employs all methods of competition which are lawful and appropriate for such purposes.
Exxon Chemical is a major producer of basic petrochemicals, including olefins and aromatics, and a leading supplier of specialty rubbers and of additives for fuels and lubricants. Other products manufactured include polyethylene and polypropylene plastics, plasticizers, specialty resins, specialty and commodity solvents and performance chemicals for oil field operations.
The operations and earnings of the corporation and its affiliates throughout the world have been, and may in the future be, affected from time to time in varying degree by political developments and laws and regulations, such as forced divestiture of assets; restrictions on production, imports and exports; price controls; tax increases and retroactive tax claims; expropriations of property; cancellation of contract rights and environmental regulations. Both the likelihood of such occurrences and their overall effect upon the corporation vary greatly from country to country and are not predictable.
In 1994, the corporation spent $1,877 million (of which $603 million were capital expenditures) on environmental conservation projects and expenses worldwide, mostly dealing with air and water conservation. Total expenditures for such activities are expected to be about $1.9 billion in 1995 and 1996 (with capital expenditures in each year representing about 35 percent of the total).
Operating data and industry segment information for the corporation are contained on pages, and, information on oil and gas reserves is contained on pages and and information on company-sponsored research and development activities is contained on page of the accompanying financial section of the 1994 Annual Report to shareholders.*
ITEM 2.
ITEM 2. PROPERTIES.
Part of the information in response to this item and to the Securities Exchange Act Industry Guide 2 is contained in the accompanying financial section of the 1994 Annual Report to shareholders in Note 8, which note appears on page, and on pages, and through.* - -------- *Only the data appearing on pages and through of the accompanying financial section of the 1994 Annual Report to shareholders, incorporated in this report as Exhibit 13, are deemed to be filed as part of this Annual Report on Form 10-K as indicated under Items 1, 2, 3, 5, 6, 7 and 8 and on page 14.
Information with regard to oil and gas producing activities follows:
1. NET RESERVES OF CRUDE OIL AND NATURAL GAS LIQUIDS (MILLIONS OF BARRELS) AND NATURAL GAS (BILLIONS OF CUBIC FEET) AT YEAR-END 1994
Estimated proved reserves are shown on pages and of the accompanying financial section of the 1994 Annual Report to shareholders. No major discovery or other favorable or adverse event has occurred since December 31, 1994 that would cause a significant change in the estimated proved reserves as of that date. The oil sands reserves shown separately for Canada represent synthetic crude oil expected to be recovered from Imperial Oil Limited's 25 percent interest in the net reserves set aside for the Syncrude project, as presently defined by government permit. For information on the standardized measure of discounted future net cash flows relating to proved oil and gas reserves, see page of the accompanying financial section of the 1994 Annual Report to shareholders.
2. ESTIMATES OF TOTAL NET PROVED OIL AND GAS RESERVES FILED WITH OTHER FEDERAL AGENCIES
During 1994, the company filed proved reserve estimates with the U.S. Department of Energy on Forms EIA-23 and EIA-28. The information is consistent with the 1993 Annual Report to shareholders with the exception of EIA-23 which covered total oil and gas reserves from Exxon-operated properties in the U.S. and does not include gas plant liquids.
3. AVERAGE SALES PRICES AND PRODUCTION COSTS PER UNIT OF PRODUCTION
Incorporated by reference to page of the accompanying financial section of the 1994 Annual Report to shareholders. Average sales prices have been calculated by using sales quantities from our own production as the divisor. Average production costs have been computed by using net production quantities for the divisor. The volumes of crude oil and natural gas liquids (NGL) production used for this computation are shown in the reserves table on page of the accompanying financial section of the 1994 Annual Report to shareholders. The net production volumes of natural gas available for sale by the producing function used in this calculation are shown on page of the accompanying financial section of the 1994 Annual Report to shareholders. The volumes of natural gas were converted to oil equivalent barrels based on a conversion factor of six thousand cubic feet per barrel.
4. GROSS AND NET PRODUCTIVE WELLS
5. GROSS AND NET DEVELOPED ACREAGE
Note: Separate acreage data for oil and gas are not maintained because, in many instances, both are produced from the same acreage.
6. GROSS AND NET UNDEVELOPED ACREAGE
7. SUMMARY OF ACREAGE TERMS IN KEY AREAS
United States
Oil and gas exploration leases are acquired for varying periods of time, ranging from one to ten years. Production leases normally remain in effect until production ceases.
Canada
Exploration permits are granted for varying periods of time with renewals possible. Production leases are held as long as there is production on the lease.
Cold Lake oil sands leases were taken for an initial 21-year term in 1968-69 and renewed for a second 21-year term in 1989-1990. All undeveloped Athabasca oil sands leases are currently in their second 21-year term after being renewed between 1980 and 1987. They may be renewed for a third term of 15 years if the leaseholder files a development plan with the Alberta regulatory authority. The regulatory approval received for Syncrude has set the expiry date of the current production lease at 2025.
United Kingdom
Licenses issued prior to 1977 were for an initial period of six years with an option to extend the license for a further 40 years on no more than half of the license area. Licenses issued between 1977 and 1979 were for an initial period of four years, after which one-third of the acreage was required to be relinquished, followed by a second period of three years, after which an additional one-third of the acreage was required to be relinquished, with an option to extend the license for a further 30 years on the remaining one-third of the acreage. Subsequent licenses are for an initial period of six or seven years with an option to extend for a total license period of 24 to 36 years on no more than half the license area.
Netherlands
Onshore: Exploration drilling permits are issued for a period of two to five years. Production concessions are granted after discoveries have been made, under conditions which are negotiated with the government. Normally, they are field-life concessions covering an area defined by hydrocarbon occurrences.
Offshore: Prospecting licenses issued prior to March 1976 were for a 15-year period, with relinquishment of about 50 percent of the original area required at the end of ten years. Subsequent licenses are for ten years with relinquishment of about 50 percent of the original area required after six years. For commercial discoveries within a prospecting license, a production license is issued for a 40-year period.
Norway
Licenses issued prior to 1972 were for a total period of 46 years, with relinquishment of at least one-fourth of the original area required at the end of the sixth year and another one-fourth at the end of the ninth year. Subsequent licenses are for a total period of 36 years, with relinquishment of at least one-half of the original area required at the end of the sixth year.
France
Exploration permits are granted for periods of three to five years, renewable up to two times accompanied by substantial acreage relinquishments: 50 percent of the acreage at first renewal; 25 percent of the remaining acreage at second renewal. A new law, effective July 15, 1994, requires a bidding process prior to granting of an exploration permit. Upon discovery of commercial hydrocarbons, a production concession is granted for up to 50 years, renewable in periods of 25 years each.
Australia
Onshore: Acreage terms are fixed by the individual state and territory governments. These terms and conditions vary significantly between the states and territories. Production licenses are generally granted for an initial term of 21 years, with subsequent renewals, each for 21 years, for the full area.
Offshore: Exploration permits are granted for six years with possible renewals of five-year periods to a total of 26 years. A 50 percent relinquishment of remaining area is mandatory at the end of each renewal period. Production licenses are for 21 years, with renewals of 21 years for the life of the field.
Malaysia
Exploration and production activities are governed by production sharing contracts negotiated with the national oil company. These contracts typically have an overall term of 20 years with possible extensions to the exploration or development periods. The exploration period is usually three years with the possibility of a two-year extension, after which time areas with no commercial discoveries must be relinquished. The development period is two years from commercial discovery, with an option to extend the period for an additional two years and possibly longer under special circumstances. Areas from which commercial production has not started by the end of the development period must be relinquished. The total production period is typically 15 years from first commercial lifting, not to exceed the overall term of the contract.
Indonesia
Exxon's operations previously conducted under a contract of work agreement converted to a production sharing contract in late 1993, with a term of 20 years. Other production sharing contracts in Indonesia have an overall term of up to 30 years.
Republic of Yemen
Production sharing agreements negotiated with the government entitle Exxon to participate in exploration operations within a designated area during the exploration period. In the event of a commercial discovery, the company is entitled to proceed with development and production operations during the development period. The length of these periods and other specific terms are negotiated prior to executing the production sharing agreement. Existing production operations have a development period extending 20 years from first commercial declaration made in November 1985.
Egypt
Exploration and production activities are governed by concession agreements negotiated with the government. These agreements generally permit three exploration periods, with the first period being three years, and the remaining two optional periods being two years each with 25 percent of the remaining acreage relinquished at each renewal. Production operations have an overall term of 30 years, with an option for a ten-year extension.
Colombia
Prior to 1974, exploration, development and production rights were granted for up to 30 years through concessions. Since 1974, the association contract has been the basic form of participation in new acreage. With this form of contract, exploration rights are granted for up to a maximum of six years. After a discovery is made, the development period extends for 22 years with relinquishment of 50 percent at the end of six years, 50 percent of the retained area after eight years and all remaining area except commercial fields after ten years.
8. NUMBER OF NET PRODUCTIVE AND DRY WELLS DRILLED
9. PRESENT ACTIVITIES
A. Wells Drilling -- Year-End 1994
B. Review of Principal Ongoing Activities in Key Areas
UNITED STATES
During 1994, exploration activities were coordinated by Exxon Exploration Company and producing activities by Exxon Company, U.S.A., both divisions of Exxon Corporation. Some of the more significant ongoing activities are:
. Exploration and delineation of additional hydrocarbon resources continued. At year-end 1994, Exxon's inventory of undeveloped acreage totaled 3.9 million net acres. Exxon is active in areas onshore and offshore in the lower 48 states and in Alaska. A total of 8 net exploration and delineation wells were completed during 1994.
. During 1994, 150 net development wells were completed within and around mature fields in the inland lower 48 states.
. Exxon's net acreage in the Gulf of Mexico at year-end 1994 was 1.2 million acres. A total of 33 net exploratory and development wells were completed during the year.
. There were no new major projects which started up in 1994. The Ram- Powell project was approved which will involve setting a tension-leg platform (TLP) in approximately 3200 feet of water and drilling 17 initial development wells. Start up is expected in 1997.
. Participation in Alaska production and development continued. The second phase of a major Prudhoe Bay Unit gas handling expansion project was started up in September 1994. This additional gas handling capacity will help slow the natural decline from this giant oil field. At the Point McIntyre field, water injection and oil production from the second drill site began in July 1994. Production rates increased to 46 thousand barrels per day (net) by year-end.
CANADA
During 1994, exploration and production activities in Canada were conducted by the Resources Division of Imperial Oil Limited, which is 69.6 percent owned by Exxon Corporation. Some of the more significant ongoing activities are:
. Commercial bitumen production from Cold Lake averaged 84 thousand barrels per day during 1994. Plans progressed to expand the steam- injection, bitumen recovery operations. When complete in 1996, bitumen production should increase more than 20 thousand barrels per day.
. The Syncrude plant, 25 percent owned by Imperial and located in northern Alberta, completed its 16th year of operations. Gross synthetic crude production averaged 190 thousand barrels per day in 1994.
OUTSIDE NORTH AMERICA
During 1994, exploration activities were conducted by Exxon Exploration Company and producing activities by Exxon Company, International, both divisions of Exxon Corporation. Some of the more significant ongoing activities include:
United Kingdom
Exxon's share of licenses held in United Kingdom waters totaled 1.7 million net acres at year-end 1994, with 19.4 net exploration and development wells completed during the year. In 1994, first production began at the Nelson, Galleon and Brent South fields and development of the Pelican and Schooner fields was approved. Barque Extension field is scheduled to start up in 1995 while redevelopment of the Brent field is proceeding as planned.
Netherlands
Exxon's interest in licenses totaled 2.7 million net acres at year-end 1994. During the year, 6.0 net exploration and development wells were completed. Onshore operations continued at Groningen, one of the world's largest gas fields. Also onshore, the Munnekezijl field started up in 1994, while the Pernis-West field is expected to start up in 1995.
Norway
A total of 0.3 million net acres offshore were under license to Exxon at year-end 1994, and 5.0 net exploration and development wells were completed during the year. Production was initiated at the Tordis and Statfjord East fields while the Odin field ceased production during 1994. Projects for development of the Statfjord North and Sleipner West fields are continuing as planned, with first production currently scheduled for 1995-1996.
France
Exxon holds 0.9 million net acres onshore under license in France. During 1994, 4.6 net exploration and development wells were drilled and completed.
Germany
A total of 3.9 million net acres were held by Exxon in Germany at year-end 1994, with 3.5 net exploration and development wells drilled and completed during the year.
Australia
Exxon's year-end 1994 acreage holdings totaled 7.7 million net acres onshore and 2.7 million net acres offshore, with exploration and production activities underway in both areas. During 1994, 13.5 net exploration and development wells were completed. Projects are progressing for the offshore development of the West Tuna and Bream B fields with first production anticipated in 1996.
Malaysia
Exxon has interests in production sharing contracts covering 4.2 million net acres offshore Peninsular Malaysia. During 1994, a total of 58.5 net exploration and development wells were
completed. Development activity continued in the Seligi field with the continuation of development drilling. Also, additional compression facilities were installed at the Jerneh field with commissioning expected in 1995. Development drilling was initiated on the Guntong D and Tabu B platforms.
Indonesia
Exxon acreage holdings totaled 2.4 million net acres onshore and 0.5 million net acres offshore Indonesia, with exploration and production activities being undertaken in both areas. A total of 0.5 net exploration and development wells were completed during 1994.
Thailand
Exxon's net interest acreage in the Khorat concession onshore Thailand totaled 0.1 million acres at year-end 1994.
Republic of Yemen
Exxon's net interest acreage in the Republic of Yemen production sharing agreement areas totaled 0.9 million acres onshore at year-end 1994. During 1994, 7.7 net exploration and development wells were drilled and completed.
Egypt
Exxon is engaged in exploration and production activities in two contract areas, with net acreage holdings totaling 0.1 million acres with 5.0 net exploration and development wells completed during 1994.
Colombia
A total of 0.2 million net acres onshore were held by Exxon at year-end 1994, with 1.3 net exploration and development wells being completed during the year.
WORLDWIDE EXPLORATION
Exploration activities were underway during 1994 in several areas in which Exxon has no established production operations. A total of 25.9 million net acres were held at year-end 1994, and 3.5 net exploration wells were completed during the year.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS.
As reported in the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994, the U.S. Environmental Protection Agency ("EPA") has issued a notice to Exxon Chemical Company alleging violation of certain new source performance standards under the Clean Air Act applicable to a volatile organic compound storage tank. In December 1994, the EPA proposed a penalty of $144,000.
The registrant believes that the EPA and the U.S. Department of Justice are contemplating bringing a proceeding against the registrant to recover penalties for alleged violations of the Clean Air Act, the Clean Water Act and the Resource Conservation and Recovery Act at the registrant's Baton Rouge Refinery.
Refer to the relevant portions of Note 18 on page of the accompanying financial section of the 1994 Annual Report to shareholders for further information on legal proceedings.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
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EXECUTIVE OFFICERS OF THE REGISTRANT [pursuant to Instruction 3 to Regulation S-K, Item 401(b)].
For at least the past five years, Messrs. Raymond, Sitter, Hess, Wilhelm, McDonagh, Robinson, Smiley and Townsend have been employed as executives of the registrant.
The following executive officers of the registrant have also served as executives of the subsidiaries, affiliates or divisions of the registrant shown opposite their names during the five years preceding December 31, 1994.
Officers are generally elected by the Board of Directors at its meeting on the day of each annual election of directors, each such officer to serve until his or her successor has been elected and qualified.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS.
Incorporated by reference to the quarterly information which appears on page of the accompanying financial section of the 1994 Annual Report to shareholders.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA.
Incorporated by reference to page of the accompanying financial section of the 1994 Annual Report to shareholders.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Incorporated by reference to pages through of the accompanying financial section of the 1994 Annual Report to shareholders.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Reference is made to the Index to Financial Statements on page 14 of this Annual Report on Form 10-K.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Incorporated by reference to the relevant portions of pages 4 through 8 (excluding the portion of page 8 entitled "Transactions with Management") of the registrant's definitive proxy statement dated March 10, 1995.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION.
Incorporated by reference to the fourth through seventh paragraphs of page 2, and pages 9 through 12 (excluding the portion of page 12 entitled "Board Compensation Committee Report on Executive Compensation") of the registrant's definitive proxy statement dated March 10, 1995.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Incorporated by reference to the relevant portions of pages 4 through 8 (excluding the portion of page 8 entitled "Transactions with Management" and "Section 16(a) Reports") of the registrant's definitive proxy statement dated March 10, 1995.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Incorporated by reference to the portion of page 8 entitled "Transactions with Management" of the registrant's definitive proxy statement dated March 10, 1995.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) (1) and (a) (2) Financial Statements: See Index to Financial Statements on page 14 of this Annual Report on Form 10-K.
(a) (3) Exhibits: See Index to Exhibits on page 15 of this Annual Report on Form 10-K.
(b) Reports on Form 8-K. The registrant did not file any reports on Form 8-K during the last quarter of 1994.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
EXXON CORPORATION
By: /s/ LEE R. RAYMOND ---------------------------------- (Lee R. Raymond, Chairman of the Board)
Dated March 10, 1995
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POWER OF ATTORNEY
EACH PERSON WHOSE SIGNATURE APPEARS BELOW CONSTITUTES AND APPOINTS JAMES I. ALCOCK, RICHARD E. GUTMAN AND FRANK A. RISCH, AND EACH OF THEM, HIS OR HER TRUE AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION, FOR HIM OR HER AND IN HIS OR HER NAME, PLACE AND STEAD, IN ANY AND ALL CAPACITIES, TO SIGN ANY AND ALL AMENDMENTS TO THIS ANNUAL REPORT ON FORM 10-K, AND TO FILE THE SAME, WITH ALL EXHIBITS THERETO, AND OTHER DOCUMENTS IN CONECTION THEREWITH, WITH THE SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE, AS FULLY TO ALL INTENTS AND PURPOSES AS HE OR SHE MIGHT OR COULD DO IN PERSON, HEREBY RATIFYING AND CONFIRMING ALL THAT SAID ATTORNEYS- IN-FACT AND AGENTS OR ANY OF THEM, OR THEIR OR HIS OR HER SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE HEREOF.
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PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
The consolidated financial statements, together with the report thereon of Price Waterhouse LLP dated February 22, 1995, appearing on pages to; the Quarterly Information appearing on page; and the Supplemental Information on Oil and Gas Exploration and Production Activities appearing on pages to of the accompanying financial section of the 1994 Annual Report to shareholders are incorporated in this Annual Report on Form 10-K as Exhibit 13. With the exception of the aforementioned information, no other data appearing in the accompanying financial section of the 1994 Annual Report to shareholders is deemed to be filed as part of this Annual Report on Form 10-K under Item 8. Consolidated Financial Statement Schedules have been omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the following Prospectuses constituting part of the Registration Statements on:
of our report dated February 22, 1995 appearing on page of the accompanying financial section of the 1994 Annual Report to shareholders of Exxon Corporation which is incorporated as Exhibit 13 in this Annual Report on Form 10-K.
Price Waterhouse LLP
Dallas, Texas March 10, 1995
INDEX TO EXHIBITS
- -------- * Compensatory plan or arrangement required to be identified pursuant to Item 14(a)(3) of this Annual Report on Form 10-K.
The registrant has not filed with this report copies of the instruments defining the rights of holders of long-term debt of the registrant and its subsidiaries for which consolidated or unconsolidated financial statements are required to be filed. The registrant agrees to furnish a copy of any such instrument to the Securities and Exchange Commission upon request.