Revenues are summarized in the following table:
(In millions) 2010 2009 E&P $ 11,019 $ 7,949 OSM 920 723 IG 150 50 RM&T 62,487 45,530 Segment revenues 74,576 54,252
Elimination of intersegment revenues (2,255) (1,037)
Gain on U.K. natural gas contracts - 72
Total revenues $ 72,321 $ 53,287
Items included in both revenues and costs:
Consumer excise taxes on petroleum products and merchandise $ 5,208 $ 4,924
E&P segment revenues increased $3,070 million from 2009 to 2010, primarily due to higher average liquid
hydrocarbon and natural gas realizations, slightly offset by lower liquid hydrocarbon and natural gas sales volumes. On average, our net worldwide liquid hydrocarbon realizations were 30 percent higher in 2010 than in 2009 and our net worldwide natural gas realizations were 13 percent higher. While liquid hydrocarbon sales volumes in 2010 benefited from the Droshky development in the Gulf of Mexico, which commenced production mid-year 2010, sales volumes were lower overall. The lower sales volumes in 2010 were primarily the result of a turnaround that was completed in the second quarter of 2010 at the production facilities in Equatorial Guinea, natural field declines and 2009 asset dispositions.
2010 2009
E&P Operating Statistics
Net Liquid Hydrocarbon Sales (mbpd)(a)
United States 70 64
Europe 92 92
Africa 83 87
Total International 175 179
Worldwide Continuing Operations 245 243
Discontinued Operations(b) - 5
Worldwide 245 248
Natural Gas Sales (mmcfd)
United States 364 373
Europe(c) 105 138
Africa 409 430
Total International 514 568
Worldwide Continuing Operations 878 941
Discontinued Operations(b) - 17
Worldwide 878 958
Total Worldwide Sales (mboepd)
Continuing Operations 391 400
Discontinued Operations(b) - 7
2010 2009
E&P Operating Statistics
Average Realizations(d)
Liquid Hydrocarbons (per bbl)
United States $ 72.30 $ 54.67
Europe 81.95 64.46
Africa 71.71 53.91
Total International 77.11 59.31
Worldwide Continuing Operations 75.73 58.09
Discontinued Operations(b) - 56.47
Worldwide $ 75.73 $ 58.06
Natural Gas (per mcf)
United States $ 4.71 $ 4.14
Europe 7.10 4.90
Africa 0.25 0.25
Total International 1.65 1.38
Worldwide Continuing Operations 2.91 2.47
Discontinued Operations(b) - 8.54
Worldwide $ 2.91 $ 2.58
(a) Includes crude oil, condensate and natural gas liquids. The amounts correspond with the basis for fiscal settlements with
governments, representing equity tanker liftings and direct deliveries of liquid hydrocarbons.
(b) Our businesses in Ireland and Gabon were sold in 2009 and were reported as discontinued operations.
(c) Includes natural gas acquired for injection and subsequent resale of 18 mmcfd and 22 mmcfd in 2010 and 2009.
(d) Excludes gains and losses on derivative instruments and the unrealized effects of U.K. natural gas contracts that are accounted for
as derivatives.
E&P segment revenues included derivative gains of $95 million and losses of $13 million in 2010 and 2009. Excluded from E&P segment revenues were gains of $72 million in 2009 related to natural gas sales contracts in the U.K. that were accounted for as derivative instruments. These U.K contracts expired in September 2009.
OSM segment revenues increased $197 million from 2009 to 2010. Revenues were impacted by net gains of $25 million
and $13 million in 2010 and 2009 on derivative instruments. Excluding the derivatives impact, the increase in revenue reflects the 26 percent increase in synthetic crude oil realizations. Synthetic crude oil sales volumes were lower in 2010 due to the impact of the planned turnaround at the Muskeg River mine and upgrader that began March 22, 2010 and halted production in April before a staged resumption of operations in May.
RM&T segment revenues increased $16,957 million from 2009 to 2010 due to relative price level changes and
increased refined product sales volumes. The increase in sales volumes is primarily related to production from the Garyville, Louisiana refinery expansion. The table below shows the average annual refined product benchmark prices for our marketing area:
(Dollars per gallon) 2010 2009
Chicago Spot Unleaded regular gasoline $2.09 $1.68 Chicago Spot Ultra-low sulfur diesel $2.17 $1.66 U.S. Gulf Coast Spot Unleaded regular gasoline $2.05 $1.64 U.S. Gulf Coast Spot Ultra-low sulfur diesel $2.16 $1.66
Income from equity method investments increased $116 million in 2010 from 2009 primarily as the result of
higher commodity prices on the earnings of many of our equity investees in 2010.
Net gain on disposal of assets in 2010 is related the pretax gain of $811 million on the sale of a 20 percent outside-
operated interest in our E&P segment’s Production Sharing Contract and Joint Operating Agreement in Block 32 offshore Angola. In 2009, we sold our operated and a portion of our outside-operated Permian Basin producing assets in New Mexico and west Texas, plus sales of other oil and gas properties and retail stores.
Cost of revenues increased $16,357 million from 2009 to 2010. The increase was primarily in the RM&T segment
resulting from higher acquisition costs of crude oil and increased crude oil volume, primarily associated with increased production from our Garyville refinery.
Depreciation, depletion and amortization increased $361 million in 2010 from 2009. The DD&A increase in the
RM&T segment was related to the Garyville expansion being put into service at the end of 2009. In the E&P segment, the DD&A increase was primarily related to the higher sales volumes at a higher rate of DD&A per barrel on our domestic E&P assets.
Long-lived asset impairment in 2010 includes $423 million related to our Powder River Basin field in the first
quarter, as well as smaller impairments to other E&P segment fields due to reductions in estimated reserves, reduced drilling expectations and declining natural gas prices. See Item 8. Financial Statements and Supplementary Data—Note 15 to the consolidated financial statements for further information about the impairments.
Provision for income taxes increased $297 million from 2009 to 2010 primarily due to the increase in pretax
income. The effective rate, however, decreased from 66 percent in 2009 to 50 percent in 2010. The effective tax rate is influenced by the geographical mix of income and related tax expense. In 2009 more income was generated in high tax jurisdictions than in 2010. In addition, in 2009, it was determined that we may not be able to realize all recorded foreign tax benefits and therefore a valuation allowance was recorded against these benefits. See Item 8. Financial Statements and Supplementary Data—Note 10 to the consolidated financial statements.
Discontinued operations reflect the 2009 disposal of our E&P businesses in Ireland and Gabon and the historical
results of those operations, net of tax, for all periods presented. See Item 8. Financial Statements and Supplementary Data—Note 6 to the consolidated financial statements.