A statement by Rex W.Tillerson, Chairman and Chief Executive Officer of Exxon Mobil Corporation, is given below. The statement has been taken from the company’s 2007 annual report.
To Our Shareholders:
In 2007 Exxon Mobil delivered a record $40.6 billion in net income, with each of our businesses – Upstream, Downstream, and Chemical – achieving record earnings performance. Return on average capital employed was 32 percent and cash flow from operations and asset sales was $56 billion. These exceptional results reflect the fundamental strength of our integrated businesses in a year of robust industry conditions.
Exxon Mobil’s 125th anniversary year was, by many measures, the strongest in our history.
Exxon Mobil’s total shareholder return for 2007 was 24 percent. The Corporation distributed a total of $35.6 billion to our shareholders in 2007 through dividends and share purchases to reduce shares outstanding, an increase of $3 billion from 2006. Over the past five years, we have distributed a total of nearly $118 billion to our shareholders, including a 49-percent increase in our annual dividend.
Our 2007 business results demonstrate our commitment to operational excellence, enduring business controls, and disciplined capital investment. These results also reflect Exxon Mobil’s long-term industry perspective and our ability to meet the challenges of the changing global energy landscape.
Operational excellence, underpinned by our safety and environmental performance, remains a hallmark of our success. In 2007 we achieved our best-ever safety results, with the lost-time incident rate for our combined employee and contractor workforce at a record-low level. We also recorded the fewest hydrocarbon spills ever for the Corporation, with spills to water in our marine operations leading the way at an all-time low.These accomplishments are evidence of the commitment, training, and performance of our workforce throughout our worldwide operations.
Exxon Mobil continues to pursue an industry-leading portfolio of world-class investment opportunities. In 2007 we invested nearly $21 billion in capital and exploration projects. With today’s major energy projects costing billions of dollars and operating for decades, a long-term view that transcends short-term market fluctuations and business cycles is essential.
Seven major Upstream projects started up during 2007 in Qatar, Angola, Norway, Kazakhstan, and the Netherlands. Over the next three years, we plan to participate in the start-up of another 19 major Upstream projects around the world. One of Exxon Mobil’s core competitive advantages remains our proven ability to manage large, complex energy projects under difficult conditions, on time and on budget, to help meet the growing global energy demand.
In our Downstream and Chemical businesses, we are implementing projects that increase capacity, improve yields of higher-value products, meet new product quality requirements, and further enhance our safety and environmental performance.To meet the growing demand for products in Asia, Exxon Mobil is progressing an integrated refining, petrochemicals, and fuels marketing venture in China and a second world-scale petrochemical project in Singapore.
The global energy arena is undergoing important changes. Growing populations and expanding economies, especially in developing countries, are forecast to increase world energy demand by about 30 percent between now and 2030. Oil and natural gas are expected to be the dominant energy sources to meet this growing demand, and while supplies are abundant, they are often challenging to access and develop. New sources are found in remote locations, severe conditions, and unconventional forms. Public policies in some countries also limit access or increase investment risk.
These circumstances play to Exxon Mobil’s strengths, with our outstanding and proven financial, managerial, technological, and operational capabilities. Our fundamental business strategies are key to delivering the energy the world requires while achieving sustained, industry-leading returns and growing shareholder value.
Technology is and will remain key to meeting the world’s growing energy needs. Technological innovations allow the identification and commercialization of challenged resources, optimization of operating unit performance, and development of high-performance products. Exxon Mobil invested about $3.5 billion in research and development over the past five years, demonstrating our commitment to maintaining and developing proprietary technology.
The changing energy landscape also demands that companies are good corporate citizens. Corporate citizenship is embedded in our business culture and is reflected in our ability to effectively integrate good corporate governance, safety, and a commitment to environmental and social responsibility into all aspects of our global business.We choose the course of highest integrity in all of our business interactions because we believe that a well-founded reputation for high ethical standards and strong business controls is a priceless corporate asset.
Exxon Mobil is taking active measures at our facilities to reduce emissions and minimize environmental impacts through our initiative, Protect Tomorrow. Today. We are also partnering with vehicle and engine manufacturers to develop and deploy energy-saving technologies. Additionally, we continue to invest in research and development to identify potential breakthrough innovations that could significantly reduce greenhouse gas emissions worldwide.
Our integrated business model allows us to maximize returns across the entire value chain. Our functional organization structure allows us to apply best practices and deploy expertise globally. Our operational experience allows us to deliver superior performance.These advantages ensure we are well-positioned to address the challenges of the global marketplace.
The same strengths that have enabled our past achievements prepare us to succeed in the future. We remain committed to growing long-term value for our shareholders – through high standards of operational excellence, disciplined capital investment, development of innovative technology, and the dedication and ingenuity of our employees.