(In millions) 2009 2008 E&P $ 7,949 $ 12,246 OSM 723 1,213 IG 50 93 RM&T 45,530 64,481 Segment revenues 54,252 78,033
Elimination of intersegment revenues (1,037) (1,662)
Gain on U.K. natural gas contracts 72 218
Total revenues $ 53,287 $ 76,589
Items included in both revenues and costs:
Consumer excise taxes on petroleum products and merchandise $ 4,924 $ 5,065
E&P segment revenues decreased $4,297 million from 2008 to 2009, primarily due to lower average liquid hydrocarbon
and natural gas realizations, partially offset by higher liquid hydrocarbon and natural gas sales volumes. On average, our net worldwide liquid hydrocarbon realizations were 35 percent lower in 2009 than in 2008 and our net worldwide natural gas realizations were 46 percent lower. Liquid hydrocarbon sales volumes in 2009 benefited from a full year production from both the Alvheim/Vilje development offshore Norway and the Neptune development in the Gulf of Mexico, which commenced production mid-year 2008. Natural gas sales volumes from Equatorial Guinea increased almost 16 percent from 2008 to 2009, more than making up for decreased sales as a result of our property divestitures in the Permian Basin of the U.S., Ireland and Norway. Because the majority of the natural gas sales increase was fixed-price sales to the LNG production facility in Equatorial Guinea, our average international natural gas realizations decreased by more than the market in general. Our share of the income ultimately generated by the subsequent export of LNG produced by EGHoldings, as well as methanol produced by AMPCO, is reflected in our Integrated Gas segment as discussed below.
2009 2008
E&P Operating Statistics
Net Liquid Hydrocarbon Sales (mbpd)(a)
United States 64 63
Europe 92 55
Africa 87 87
Total International 179 142
Worldwide Continuing Operations 243 205
Discontinued Operations(b) 5 6
Worldwide 248 211
Natural Gas Sales (mmcfd)
United States 373 448
Europe(c) 138 161
Africa 430 370
Total International 568 531
Worldwide Continuing Operations 941 979
Discontinued Operations(b) 17 37
Worldwide 958 1,016
Total Worldwide Sales (mboepd)
Continuing Operations 400 369
Discontinued Operations(b) 7 12
2009 2008
E&P Operating Statistics
Average Realizations(d)
Liquid Hydrocarbons (per bbl)
United States $ 54.67 $ 86.68
Europe 64.46 90.60
Africa 53.91 89.85
Total International 59.31 90.14
Worldwide Continuing Operations 58.09 89.07 Discontinued Operations(b) 56.47 96.41
Worldwide $ 58.06 $ 89.29
Natural Gas (per mcf)
United States $ 4.14 $ 7.01
Europe 4.90 7.67
Africa 0.25 0.25
Total International 1.38 2.50
Worldwide Continuing Operations 2.47 4.56
Discontinued Operations(b) 8.54 9.62
Worldwide $ 2.58 $ 4.75
(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. All periods have been recast to reflect these businesses as discontinued
operations.
(c) Includes natural gas acquired for injection and subsequent resale of 22 mmcfd and 32 mmcfd in 2009 and 2008.
(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 losses of $13 million in 2009 and gains of $22 million in 2008. Excluded from E&P segment revenues were gains of $72 million in 2009 and $218 million in 2008 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 decreased $490 million from 2008 to 2009. Revenues were impacted by net gains of $13 million
in 2009 and $48 million in 2008 on derivative instruments, which expired December 2009. Excluding the derivatives, the decrease in revenue reflects the almost 40 percent decline in synthetic crude oil realizations. Synthetic crude oil sales volumes were consistent between the years.
RM&T segment revenues decreased $18,951 million from 2008 to 2009 matching relative price level changes. While
our overall refined product sales volumes in 2009 were relatively unchanged compared to 2008, the level of average petroleum prices declined significantly as shown in Item 1. Business—Refining, Marketing and Transportation. The level of crude oil prices has a direct influence on our refined product prices. The table below shows the average annual refined product benchmark prices for our marketing area.
(Dollars per gallon) 2009 2008
Chicago Spot Unleaded regular gasoline $ 1.68 $ 2.50 Chicago Spot Ultra-low sulfur diesel $ 1.66 $ 2.95 U.S. Gulf Coast Spot Unleaded regular gasoline $ 1.64 $ 2.48 U.S. Gulf Coast Spot Ultra-low sulfur diesel $ 1.66 $ 2.93
Sales to related parties decreased in 2009 as a result of the sale of our interest in Pilot Travel Centers LLC (“PTC”)
during the fourth quarter of 2008.
Income from equity method investments decreased $467 million in 2009 from 2008 primarily as the result of
lower commodity prices on the earnings of many of our equity investees in 2009 and the sale of our equity method investment in PTC during the fourth quarter of 2008.
Net gain on disposal of assets in 2009 includes our gain on the sale of 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. In 2008, we sold our outside-operated interests (24 percent of Heimdal field, 47 percent of Vale field and 20 percent of Skirne field) and associated undeveloped acreage in offshore Norway and our share of the PTC joint venture in 2008.
Cost of revenues decreased $19,135 million from 2008 to 2009. The largest decreases were in the RM&T segment
and resulted from lower acquisition costs of crude oil. Acquisition costs for refinery charge and blendstocks and for purchased refined products also decreased. In our other segments, lower commodity prices and the related lower energy costs also contributed to the lower cost of revenues.
Depreciation, depletion and amortization increased $496 million in 2009 from 2008. The increase in 2009
primarily relates to higher sales volumes, particularly from the Alvheim/Vilje development offshore Norway and the Neptune development in the Gulf of Mexico, both of which commenced production mid-year 2008.
Goodwill impairment expense of $1,412 million in 2008 relates to our OSM reporting unit. There were no such
impairments in 2009. See Item 8. Financial Statements and Supplementary Data—Note 14 to the consolidated financial statements for further information about the impairment.
Net interest and other financial costs increased $121 million from 2008 to 2009. Interest income decreased due to
substantially lower interest rates, although average cash balances were higher in 2009. While interest expense increased due to the February 2009 issuance of $1.5 billion in senior notes, increased capitalized interest related to our capital projects offset the impact. We recorded a writeoff of a portion of the contingent proceeds from the sale of the Corrib natural gas development in the fourth quarter of 2009 by $70 million on the basis of new public information regarding the pipeline that would transport gas from the Corrib development.
Provision for income taxes decreased $1,110 million from 2008 to 2009 primarily due to the reduction in pretax
income. The effective rate, however, increased from 50 percent in 2008 to 66 percent in 2009. 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 2008. Also contributing to the increase in the effective tax rate is the remeasurement of foreign currency denominated tax balances to U.S. dollars. In 2009 the remeasurement provided a $319 million tax charge compared to a $249 million tax benefit in 2008. See Item 8. Financial Statements and Supplementary Data—Note 10 to the consolidated financial statements.
Discontinued operations reflect the current year 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.