ENERGY/POWER GLOBAL EQUITY RESEARCH

Integrated Oil UNITED STATES

Earnings Review Exxon Mobil

Weak Quarter Driven by Higher E&P Costs

In light of Exxon Mobil's weaker-than-expected 2Q02 results, we lowered our

Stock Rating: 1-OVERWEIGHT 2002 EPS estimate to $1.50 from $1.55, despite an increase in our oil price
Sector View: NEUTRAL forecast. We maintain our 1-Overweight/Neutral rating due to the company's
extremely strong and financially disciplined management team, the stock's
Ticker: XOM
attractive valuation, a consistently rising dividend, and because we think it should
Price (08/07/02): $34.31
Price Target: $42
outperform its peers within a declining oil price environment. However, we
reduced our 12-month price target to $42 from $47, reflecting the recent pullback
Exchange: NYSE
in the broader market.
S&P 500: 876.77
n On August 1, Exxon Mobil reported operating income of $2,670 million for 2Q02, or
Paul Y. Cheng, CFA $0.39 per share, versus $4,380 million, or $0.64 per share in 2Q01.
1.212.526.1884
pcheng@lehman.com n Results were below our estimate of $0.43 per share and much lower than the Street
consensus of $0.46.
Charles Ting
1.212.526.5580
cting@lehman.com n The shortfall versus our forecast is mainly attributable to surprisingly weak upstream results
driven by increased costs and lower gas production, as well as higher-than-expected
Michael Krieger corporate expenses, in part due to F/X losses.
1.212.526.8729
mkrieger@lehman.com
n In contrast, the downstream and chemicals segments came in ahead of our estimates, due to
strong margin realizations.

n We expect overall 3Q02 earnings to be steady on a sequential basis, as

strengthening R&M and chemicals results offset lower upstream profits due to
declining crude oil and natural gas prices.

Market Data EPS (FY DEC) 2001A 2002E 2003E

52-Week Range 45 – 30 1Q 0.72 0.31a --
Company Description Market Cap. $235.7 Bil. 2Q 0.64 0.39a --
Exxon Mobil Corporation is the Shares Outstanding (Mil.) 6831.0 3Q 0.48 0.39 --
dominant major international oil Float -- 4Q 0.42 0.42 --
company, with operations in 80 Dividend Yield 2.7% Year 2.26 1.50 1.70
countries. The principal business Convertible No P/E 22.9 20.2
is energy, with involvement in
E&P, R&M, transportation, and Financial
petrochemicals. Revenues FY02 N/A
5-Year EPS CAGR (%) -1.0
ROE (%) 14.2
Current BVPS $6.40
Debt-To-Capital (%) 12.7

Source: BigCharts.com

August 12, 2002

http://www.lehman.com PLEASE REFER TO THE END OF THIS DOCUMENT FOR IMPORTANT DISCLOSURES.
Exxon Mobil

Brief Overview of 2Q02

On August 1, Exxon Mobil reported operating income of $2,670 million for 2Q02, or
$0.39 per share, versus $4,380 million, or $0.64 per share in 2Q01. Results were
below our estimate of $0.43 per share and much lower than the Street consensus of
$0.46. The shortfall versus our forecast is mainly attributable to surprisingly weak
upstream results driven by increased costs and lower gas production, as well as higher-
than-expected corporate expenses in part due to F/X losses. Sluggishness in these two
areas was partly offset by slightly better-than-expected performance in both the R&M and
chemicals segments.

Including special items, the company earned $2,640 million in 2Q02, or $0.39 per
share, compared to $4,460 million, or $0.65 per share in 2Q01. Special items in
2Q02 amounted to a loss of $30 million, all of which consisted of merger–related
expenses. In 2Q01, special items were a gain of $80 million, composed of a $175
million gain in chemicals and $95 million in merger–related expenses.

2 August 12, 2002

 Exxon Mobil

The Upstream
Sluggish Results Due to Higher Costs and Lower Gas Production

Although Exxon Mobil’s 2Q02 upstream results improved on a sequential basis due to higher
global oil and U.S. gas prices, the increase was only 7%, which is weak considering that
ChevronTexaco’s increased 10%, Royal Dutch Shell’s was 24% higher, and BP’s was up
20%. On a year-over-year basis, segment earnings were significantly lower primarily resulting
from a sharp decline in U.S. natural gas prices. Compared to our estimate of $2,393
million, the company’s earnings were poor at only $2,153 million. We think the main
reason for the shortfall relates to a higher-than-expected cost structure and, to some degree,
lower European gas production volumes associated with reduced demand in the face of
warmer-than-normal weather. These negative factors were partly offset by low international
exploration expense.

The Trend Is Down, But No Price Collapse Expected

We currently forecast the Looking ahead to next quarter, upstream earnings will likely trend lower due to
company to earn $1,814 downward price movement in the U.S. natural gas market driven by the large supply
million in the upstream during overhang. However, continued strong oil prices will cushion earnings to some extent, as
3Q02, compared to
OPEC leaves production quotas in place, Iraqi exports remain below normal, and the
$2,153 million in 2Q02.
threat of mega-terrorism continues to spook the market. Regarding production, Exxon
Mobil estimates that OPEC restrictions reduced 2Q02 output by approximately 60,000
barrels per day, and we believe this should continue to affect production in 3Q02.
Regarding the large decline in European gas production in the second quarter, the
company stated that it is a result of weak demand in the face of unusually warm weather
during the period and is not a result of declining production capacity. Therefore, any
changes in the state of the European gas market could have a material impact on gas
production and upstream earnings in the coming quarter. As far as the effect of the U.K.
tax rate, the company did not provide an estimated going forward impact to earnings,
but it did say a $200 million one-time charge would be taken in 3Q02 relating to
deferred taxes. In addition to this, we think the higher tax rate will reduce earnings in
3Q02 by $100 million sequentially (with $50 million of this related to a retroactive
charge from April 17) and for all of 2002 by $180 million-$200 million. Concerning
projects and technology, the company’s previously announced Early Production System
(EPS) program is going smoothly, and it is designed to develop offshore fields with less
time between discovery and first production. Three of these vessels are currently under
construction and the first is set to leave Singapore for the Yoho development offshore
Nigeria by late summer. Regarding Exxon’s project with Qatar Petroleum to supply LNG
to the United Kingdom, all is going as planned and the anticipated date of first gas
delivery is in the 2006/2007 timeframe. We currently forecast the company will earn
$1,814 million in the upstream during 3Q02, compared to $2,153 million in 2Q02.
However, in our estimates for the third quarter we assume that the company treats the
deferred tax charge related to the U.K. tax hike as a special item. If it chooses to
expense it as an operating item, results could be lower by more than $200 million.

August 12, 2002 3

Exxon Mobil

Figure 1: Exxon Mobil’s U.S. Production Profile for 2002

Estimated U.S. Production = 1,096 mboe/d

36%

Liquids
Gas
64%

Source: Company Data, Lehman Brothers estimates

Figure 2: Exxon Mobil’s International Production Profile for 2002

Est. International Production = 3,125 mboe/d

42%

Liquids
58% Gas

Source: Company Data, Lehman Brothers estimates

Figure 3: Exxon Mobil’s Worldwide Production Profile for 2002

Estimated Worldwide Production = 4,221 mboe/d

41%

Liquids
59% Gas

Source: Company Data, Lehman Brothers estimates

4 August 12, 2002

 Exxon Mobil

The Downstream
Solid 2Q02 Results, Especially in the U.S.

Although most companies’ downstream results this quarter have come in better than our
low expectations, we are particularly impressed by the performance of Exxon Mobil’s
domestic operations, which beat our estimate by $56 million. The majority of this was
most likely the result of unexpectedly strong marketing margin realizations and a lower
cost structure. We think that part of the lower costs are related to reductions in operating
expenses of $1.4 billion that have been achieved in 2002 to date. While it was not
broken down by segment or quarter, we suspect that some of these gains were
registered in the U.S. downstream in 2Q02. Internationally, earnings were roughly in
line with our estimate. While still poor, refining in most regions were somewhat higher
sequentially, but Southeast Asia remained extremely sluggish. Considering that margins
were below breakeven in some cases, foreign throughput levels were very depressed.
This was particularly true in the Asia-Pacific area, where three of Exxon Mobil’s Japanese
refineries were down for maintenance during the quarter.

We Expect Gradual Improvement

Refining margins in the Asia- While we do not expect a dramatic sequential increase in downstream earnings in the third
Pacific region have quarter, a gradual improvement from the cyclical bottom in 1Q02 should continue. Although
deteriorated substantially refining conditions in the U.S. during July were not significantly better than in 2Q02, we
and, in our opinion, this is
expect an upward trend over the next two months, as the distillate supply overhang continues
due to many refineries
to narrow and gasoline demand stays robust. Regarding domestic marketing margins, they
coming out of turnarounds
and increasing supply were down slightly in July, but we do not think earnings from this business will fluctuate
despite continued depressed substantially. Internationally, overall refining conditions remain extremely sluggish, but
demand. conditions in Europe have firmed somewhat. In contrast, margins in the Asia-Pacific region
have deteriorated substantially and, in our opinion, this is due to many refineries coming out
of turnarounds and increasing supply despite continued depressed demand. Consequently,
improvement in foreign R&M profits could take a considerably longer time, to materialize
particularly if the global economy double dips back into recession. We currently estimate
Exxon Mobil will earn $531 million in the downstream during 3Q02, compared to $382
million in 2Q02.

August 12, 2002 5

Exxon Mobil

Figure 4: Exxon Mobil’s Refining Capacity by Region

W est C oast T o ta l C a p a c ity = 6 .2 m illio n b /d

2%
M id - C o n t O th e r
G u lf C o a s t
1% 13%
23%
M id w e s t
4%

A s ia /P a c ific
E u ro p e
29%
28%

Source: Company data

Chemicals and Other Businesses

Further Improvement in Chemicals Tied to Economic Recovery

While recent chemicals We were impressed by Exxon Mobil’s results in the chemicals segment, which were
results seem to indicate the substantially higher on a year-over-year and sequential basis. Echoing the sentiments of
promise of much better times most other oil companies involved in this business, management attributed the majority of
ahead, the underlying
the sequential upswing to a more positive margin environment, driven by higher demand
fundamentals remain very
sensitive to the overall
and increased capacity utilization rates. The company also benefited from higher
economic environment. production volumes. Looking ahead, while recent results seem to indicate the promise of
much better times ahead, the underlying fundamentals remain very sensitive to the overall
economic environment. That said, even in the case of a slower-than-expected recovery,
we still think that chemicals earnings have already seen the cyclical bottom in light of the
amount of capacity that has been left idle in the wake of the tremendous downturn of the
past few years. We forecast the company to earn $328 million in chemicals in 3Q02,
compared to $269 million in 2Q02.

Other Businesses

At $86 million, earnings from Exxon Mobil’s other business segment was below our estimate
of $115 million partly due to lower copper production in Chile. The company has already
agreed to sell this business, and we expect it to close some time in 3Q02. As a result, future
earnings from this segment should be lower by about $10 million-$20 million per quarter.
We expect the company to earn $100 million from its other businesses in 3Q02.

6 August 12, 2002

 Exxon Mobil

Other Company Information and Investment Conclusion

Corporate and Financial

Corporate expenses in the second quarter were substantially greater than our estimate,
dragging down overall EPS by about $0.01-$0.02 per share. The vast majority of this
difference relates to F/X losses of around $100 million due to the depreciation of the U.S.
dollar toward the end of the period, and increased pension expense also contributed.
Looking ahead, the company does not foresee this higher expense as recurring, and
management continues to forecast a much lower figure of $100 million-$150 million per
quarter. Exxon Mobil’s balance sheet was rock-solid as usual at the end of 2Q02, with a
debt-to-capitalization ration of 12.7% and a net debt-to-capitalization ratio of 6.7%. Unlike
many of its peers, the company continues to generate significant enough free cash flow to
continue its aggressive share repurchase program, and it repurchased 27 million shares for a
cost of $1,105 million in the second quarter. Regarding capex, the prior upstream target of
$10 billion remains firmly in place, as the company funds its many projects that will fuel future
production growth.

Investment Conclusion and Valuation Methodology

In light of Exxon Mobil's weaker-than-expected 2Q02 results, we lower our 2002 EPS
estimate to $1.50 from $1.55, despite an increase in our oil price forecast. Although we
maintain our 1-Overweight/Neutral rating, we reduced our 12-month price target to $42 per
share from $47, reflecting the recent sharp pullback in the broader market. This lower price
target implies a 13.7x multiple of the company’s enterprise value to its estimated mid-cycle
EBIDA, which also represents a 20% premium to our NAV per share estimate. While the
company continues to trade at a premium to its peers, we think that it is fully justifiable, given
management’s gold-standard financial discipline, its rock-solid balance sheet, a vast hidden
resource base, consistently rising dividend, and its aggressive share repurchase program.

August 12, 2002 7

Exxon Mobil

Quarterly Operating Data

Figure 5: Exxon Mobil’s Quarterly Operating Data (in $ Millions, Except Per Share Data)
2Q 02 2Q 01 V% 1Q 02 V%
E xp lo ratio n & P ro d u ctio n
U .S . $674 $1,111 -39% $444 52%
N o n -U .S . $1,479 $1,739 -15% $1,565 -5%
R efin in g & M ark etin g
U .S . $234 $844 -72% $14 1571%
N o n -U .S . $148 $423 -65% ($42) NM
C h em icals
U .S . $87 $49 78% $70 24%
N o n -U .S . $182 $93 96% $62 194%
O th er O p eratio n s $86 $128 -33% $153 -44%
C o rp o rate & F in an cin g ($220) ($7) 3043% ($116) 90%
N et In co m e (O p eratin g B asis) $2,670 $4,380 -39% $2,150 24%
S p ecial Item s ($30) $80 NM ($60) -50%
N et In co m e (R ep o rted B asis) $2,640 $4,460 -41% $2,090 26%
P referred D iv id en d $0 $0 NM $0
E P S (O p eratin g B asis) $0.39 $0.64 -39% $0.31 25%
E P S (R ep o rted B asis) $0.39 $0.65 -41% $0.30 27%
S h ares O u tstan d in g 6831 6963 -2% 6858 0%

O p eratin g S tatistics:
L iq u id s P ro d u ctio n (m b /d ):
U n ited S tates 698 721 -3% 717 -3%
T o tal In tern atio n al 1,794 1,818 -1% 1,821 -1%
W o rld w id e 2,492 2,539 -2% 2,538 -2%

N atu ral G as P ro d u ctio n (m m cf/d ):

U n ited S tates 2,367 2,609 -9% 2,491 -5%
T o tal In tern atio n al 6,802 6,481 5% 9,253 -26%
W o rld w id e 9,169 9,090 1% 11,744 -22%

R efin ery T h ro u g h p u t (m b /d ):
U n ited S tates 1,900 1,849 3% 1,878 1%
T o tal In tern atio n al 3,463 3,557 -3% 3,569 -3%
W o rld w id e 5,363 5,406 -1% 5,447 -2%

R efin ed P ro d u ct S ales (m b /d ):
U n ited S tates 2,678 2,752 -3% 2,728 -2%
T o tal In tern atio n al 4,893 5,181 -6% 4,969 -2%
W o rld w id e 7,571 7,933 -5% 7,697 -2%

E xp lo ratio n E xp en ses
U n ited S tates $48 $35 37% $66 -27%
In tern atio n al $176 $227 -22% $147 20%
E q u ity co m p an ies - X O M sh are $4 $2 100% $2 100%
W o rld w id e $228 $264 -14% $215 6%

Source: Company data

8 August 12, 2002

 Exxon Mobil

Company Models

Figure 6: Exxon Mobil’s Operating Data, 2000-06E

Annual
Compounded
Growth Rate
2000 2001 2002E 2003E 2004E 2005E 2006E 2001-06E
Net Production of Crude Oil and Other Liquids (mb/d) :
U.S. 733 712 703 695 679 668 678 (1.0)%
Canada 304 331 334 352 371 380 382 2.9%
Europe 704 653 613 645 683 696 699 1.4%
Australia and Far East 253 247 263 276 291 300 301 4.0%
Africa 323 342 332 360 405 580 724 16.2%
Others 236 257 260 264 266 288 309 3.7%
Subtotal--Crude Production 2,553 2,542 2,504 2,593 2,695 2,911 3,093 4.0%
Net Production of Natural Gas Available for Sale (mmcf/d)
U.S. 2,856 2,598 2,353 2,262 2,149 2,047 1,969 (5.4)%
Canada 844 1,006 1,056 1,052 1,146 1,177 1,208 3.7%
Europe 4,463 4,595 4,417 4,605 4,735 4,771 4,829 1.0%
Australia and Far East 1,755 1,547 1,933 1,959 1,983 2,011 2,028 5.6%
Africa 0 0 0 0 4 21 21 NM
Others 425 533 539 621 733 897 1,035 14.2%
Subtotal--Natural Gas Production 10,343 10,279 10,298 10,498 10,749 10,924 11,089 1.5%
Worldwide Oil Equivalent Production (mboe/d) 4,277 4,255 4,221 4,343 4,486 4,732 4,941 3.0%
Petroleum Product Sales (mb/d)
U.S. 2,669 2,751 2,779 2,806 2,834 2,863 2,891 1.0%
Canada 577 585 588 591 594 597 600 0.5%
Other Western Hemisphere 2,129 2,079 2,089 2,100 2,110 2,121 2,131 0.5%
Europe 1,667 1,609 1,561 1,592 1,624 1,656 1,689 1.0%
Other Eastern Hemisphere 951 947 919 955 994 1,033 1,075 2.6%
Total Worldwide 7,993 7,971 7,935 8,044 8,156 8,270 8,387 1.0%
Unch Unchanged.

Source: Company data, Lehman Brothers estimates

August 12, 2002 9

Exxon Mobil

Figure 7: Exxon Mobil’s Segment Earnings, 2000-06E (Dollars and Shares in Millions, Except Per Share Data)
Annual
Compounded
Growth Rate
2000 2001 2002E 2003E 2004E 2005E 2006E 2001-06E
Petroleum and Natural Gas
Exploration and Production
U.S. $4,545 $3,932 $2,234 $1,817 $1,639 $1,523 $1,482 (17.7)%
Foreign 7,824 6,497 5,407 4,975 4,838 5,175 5,474 (3.4)%
Subtotal Exploration and Production $12,368 $10,429 $7,640 $6,792 $6,477 $6,698 $6,956 (7.8)%
Refining and Marketing
U.S. $1,561 $1,924 $744 $1,168 $1,321 $1,516 $1,357 (6.7)%
Foreign 1,857 2,303 738 1,390 1,772 2,101 2,142 (1.4)%
Subtotal Refining and Marketing $3,418 $4,227 $1,482 $2,558 $3,093 $3,616 $3,498 (3.7)%
Total Petroleum and Natural Gas $15,786 $14,656 $9,123 $9,351 $9,569 $10,315 $10,454 (6.5)%
Chemicals
U.S. $644 $298 $422 $853 $1,368 $1,669 $1,458 37.3%
Foreign 517 409 688 1,161 1,750 2,065 1,824 34.9%
Total Chemicals $1,161 $707 $1,111 $2,014 $3,118 $3,735 $3,281 35.9%
Other Operations 551 489 439 425 425 425 425 (2.8)%
Corporate and Financing (589) (222) (611) (539) (634) (697) (721) 26.6%
Net Income (Operating Basis) $16,908 $15,630 $10,061 $11,251 $12,478 $13,778 $13,439 (3.0)%
Preferred Dividend $0 $0 $0 $0 $0 $0 $0 NM
Avg. Shares Fully Diluted (MM) 7,034 6,941 6,806 6,690 6,597 6,510 6,429 (1.5)%
Earnings Per Share $2.40 $2.26 $1.50 $1.70 $1.90 $2.10 $2.10 (1.5)%
Special Items $812 ($310) ($60) -- -- -- -- --
Net Income (Reported Basis) $17,720 $15,320 $10,001 $11,251 $12,478 $13,778 $13,439 (2.6)%
Earnings Per Share $2.52 $2.21 $1.45 $1.70 $1.90 $2.10 $2.10 (1.0)%
Memo :
EBITDA (Operating Basis) $37,285 $33,796 $25,288 $27,309 $29,436 $32,046 $31,949 (1.1)%
EBITDA/Share (Operating Basis) $5.30 $4.85 $3.70 $4.10 $4.45 $4.90 $4.95 0.4%
Aftertax CF (Operating Basis) $25,302 $23,641 $17,994 $19,432 $20,979 $22,653 $22,584 (0.9)%
Aftertax CF/Share (Operating Basis) $3.60 $3.40 $2.65 $2.90 $3.20 $3.50 $3.50 0.6%

Source: Company data, Lehman Brothers estimates

Figure 8: Exxon Mobil’s Net Asset Valuation (Dollars and Shares in Millions, Except Per Share Data)
U.S. Proved Petroleum Reserves $30,921 Lehman Brothers Oil & Gas Reserve Valuation Model.
Foreign Proved Petroleum Reserves 62,980 Lehman Brothers Oil & Gas Reserve Valuation Model.
Unproved Petroleum Properties 1,174 Estimated book value from yearend 2001 financial data.
Refining and Marketing 65,122 Lehman Brothers Incorporated Valuation Model.
Chemicals 55,004 Lehman Brothers Incorporated Valuation Model.
Coal, Hong Kong Powers & Others 10,288 Lehman Brothers Incorporated Valuation Model.
Market Value of Inventory 6,706 From year-end 2001 financial data.
Over Book Value
Assets Available for Pensions (9,985) From year-end 2001 financial data.
Over Plan Assets
Miscellaneous Assets 10,000 Office buildings, equipment, land, and other assets.
Working Capital 5,277 From 1Q02 financial data.
Long-term Obligations (7,118) From 1Q02 financial data.
Total Net Asset Value $230,368
Shares Outstanding 6,858
Net Asset Value Per Share $34

Source: Company data, Lehman Brothers estimates

10 August 12, 2002

 Exxon Mobil

Figure 9: Exxon Mobil’s Cash Flow Analysis, 2000-06E (Dollars and Shares in Millions)
Annual
Compounded
Growth Rate
2000 2001 2002E 2003E 2004E 2005E 2006E 2001-06E
Operating Activities
Net Income $17,720 $15,320 $10,001 $11,251 $12,478 $13,778 $13,439 (2.6)%
Depreciation and Depletion 8,130 7,944 7,835 7,965 8,155 8,445 8,660 1.7%
Deferred Taxes 10 650 0 200 200 200 200 (21.0)%
Change in Working Capital 78 (1,769) 872 0 0 0 0 NM
Other (3,001) 744 (358) 0 0 0 0 NM
Net Cash Flow From Operating Activities $22,937 $22,889 $18,350 $19,416 $20,833 $22,423 $22,299 (0.5)%
Investing Activities
Acquisitions and Additions to Prop.,
Plant and Equip. ($8,446) ($9,989) ($11,189) ($12,689) ($12,689) ($12,689) ($12,689) 4.9%
Sales of Subsidiaries and P,P&E, Additional Investment 5,770 1,078 768 200 200 200 200 (28.6)%
Others (622) 700 421 0 0 0 0 NM
Net Cash Flow From Investing Activities ($3,298) ($8,211) ($10,000) ($12,489) ($12,489) ($12,489) ($12,489) 8.7%
Financing Activities
Proceeds from Long-Term Debt $238 $547 $400 $4,000 $5,000 $2,000 $1,000 12.8%
Reduction of Long-Term Borrowings (901) (506) (339) (800) (2,200) (359) (139) (22.8)%
Net Additions to Short-Term debt (5,042) (2,813) (362) 0 0 0 0 NM
Cash Dividends
Exxon Mobil Shareholders (6,123) (6,254) (6,397) (6,557) (6,729) (6,901) (6,814) 1.7%
Minority Interests (251) (194) (204) (214) (225) (236) (248) 5.0%
Acquisition of Treasury Shares (1,859) (5,420) (5,000) (4,000) (4,000) (4,000) (4,000) (5.9)%
Additions to Minority Interests and Sales
of Affiliate Preferred Stock, and others (227) (401) (200) (200) (200) (200) (200) (13.0)%
Net Cash Flow From Financing Activities ($14,165) ($15,041) ($12,102) ($7,771) ($8,354) ($9,696) ($10,401) (7.1)%
Effects of Exchange Rate Changes on Cash ($82) ($170) $0 $0 $0 $0 $0 NM
Change in Cash and Cash Equivalents $5,392 ($533) ($3,752) ($844) ($10) $238 ($591) 2.1%
Cash and Cash Equivalents
At Beginning of Year $1,688 $7,080 $6,547 $2,795 $1,952 $1,942 $2,180 (21.0)%
At End of Year 7,080 6,547 2,795 1,952 1,942 2,180 1,589 (24.7)%

Source: Company data, Lehman Brothers estimates

Figure 10: Capital Structure, 2000-06E (Dollars and Shares in Millions)

Annual
Compounded
Growth Rate
2000 2001 2002E 2003E 2004E 2005E 2006E 2001-06E
Capital Structure:
Short-Term Debt $6,161 $3,703 $3,341 $3,341 $3,341 $3,341 $3,341 (2.0)%
Long-Term Debt 7,280 7,099 7,160 10,360 13,160 14,801 15,662 17.1%
Shareholders' Equity 70,757 73,161 71,361 71,642 72,966 75,407 77,584 1.2%
Total Capital $84,198 $83,963 $81,862 $85,343 $89,467 $93,549 $96,587 2.8%
Total Debt As a Percentage of Total Capital 16% 13% 13% 16% 18% 19% 20%
Memo :
Return on Average Shareholders' Equity 25.2% 21.7% 13.9% 15.7% 17.3% 18.6% 17.6%
Return on Average Invested Capital 20.6% 18.7% 12.3% 13.7% 14.7% 15.5% 14.6%

Source: Company data, Lehman Brothers estimates

August 12, 2002 11

 GLOBAL EQUITY RESEARCH

New York
745 Seventh Avenue
New York, NY 10019 USA
1.212.526.7000

London
One Broadgate
London EC2M 7HA England
44.20.7601.0011
Disclosures:
The analysts responsible for preparing this report have received compensation based upon various factors including the Firm’s total revenues, a
portion of which is generated by investment banking activities.
Tokyo
12-32 Akasaka 1-chome
Risk Disclosure(s): XOM: Our 2002 and 2003 earnings estimates are based on the following assumptions: WTI -- $24.15 and $21.00 per Minato-ku Tokyo 107 Japan
barrel; U.S. gas spot composite -- $2.92 and $3.00 per mmbtu, U.S. Gulf Coast refining margin -- $1.27 and $1.40 per barrel, Europe 813.5571.7354
refining margin -- -$0.44 and $0.25 per barrel, respectively. Any significant change to our base case assumptions could have a meaningful
impact on our estimates. Also, share performance will suffer if (a) the overall market undergoes a revaluation, (b) the company abandons its
highly popular share buyback program, (c) ExxonMobil reduces its medium-term production growth target due to project delays and
cancellation. Lastly, ExxonMobil will underperform its peers under a rising commodity price environment. Hong Kong
One Pacific Place
Key to Investment Opi Opinions:
nions: 88 Queensway, Hong Kong
Stock Ratings: 852.2869.3000
1-Overweight - the stock is expected to outperform the unweighted expected total return of the industry sector over a 12-month investment
horizon.
2-Equal weight - the stock is expected to perform in line with the unweighted expected total return of the industry sector over a 12-month
investment horizon.
3-Underweight - the stock is expected to underperform the unweighted expected total return of the industry sector over a 12-month
investment horizon.
RS-
RS -Rating Suspended - The rating and target price have been suspended temporarily to comply with applicable regulations and/or firm
policies in certain circumstances including when Lehman Brothers is acting in an advisory capacity in a merger or strategic transaction involving
the company.
Sector View:
Positive - sector fundamentals are improving.
Neutral - sector fundamentals are steady, neither improving or deteriorating.
Negative - sector fundamentals are deteriorating.

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Lehman Brothers, in reliance on an NYSE amendment to Rule 472 permitting delayed implementation, will not be making disclosures with
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