Exxon Mobil Earnings Call INSIGHTS: Australia Gas Projects, Buybacks
Australia Gas Projects
Doug Terreson – ISI Group: My question is on foreign exchange effects, asset sales and tax items and specifically whether or not you have functional and geographical quantification on those items in Q2. I mean, there was a pretty large lump in the quarter and just wanted to see if we could get a little color and segmentation?
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David S. Rosenthal – VP, IR and Secretary: Let me, why don’t I start with the items in the $7.5 billion. The primary item in there was $6.5 billion associated with the Japan restructuring. The segmentation of that $6.5 billion was $5.3 billion in Japan, I mean in the Downstream, $600 million in Chemical, $400 million in corporate and fin and about $100 million in the Upstream. The balance of the $7.5 billion really related to gains on asset sales in the Upstream primarily Angola Block 31 and a number of tax related items.
Doug Terreson – ISI Group: Also in (indiscernible) business there is commentary that several of the major integrated gas projects in Australia faced cost overruns that is less budget contingencies were appropriate at the time. So I want to get your insight into trends and investment performance versus budget in Australia, because Exxon has been in the country for many years and given that you have significant holdings besides the integrated gas you obviously hold a unique perspective. So, any trends that you could highlight or provide insight into would be appreciated?
David S. Rosenthal – VP, IR and Secretary: I will make a general comment and then for specific project updates I’d recommend that you talk to the operator of any specific projects, but in general over the last couple of years, we have seen some foreign exchange issues with the Australian dollar as well as across the board there have been upward cost pressures on labor and I think those have been well documented in the industry. Other than that, that’s all part of normal project management for us and you have to find ways to offset those. I think the important things on some of these large projects in addition to cost management is to ensure that the project stays on schedule and comes up on time and that generally is the focus, but again if you had a specific project in mind, I’d recommend you ask the operator for any specific update.
Edward Westlake – Credit Suisse: Just two quick questions, firstly on buybacks, obviously you’re still maintaining the $5 billion. You did get good sources and uses of cash from acquisitions and (draggy) in Europe is making comments, which is helping the oil price. But if we do see slowdown, how do you think about the rate of buybacks being appropriate and if the earnings don’t support the buybacks, do you see enough disposals in the pipeline to compensate?
David S. Rosenthal – VP, IR and Secretary: Ed, I really won’t comment or provide any guidance on forward expectations with regard to allocation of funds other than to say there’s no change in our ongoing view of that and as you know our first priority to fund all of our attractive investment opportunities; after that is to pay growing dividend and you’ll recall we did raise the dividend 21% earlier this year and then after that it’s the share buyback to maintain our capital structure and return excess cash to the shareholders, so no change in our approach and we’ll see as the year goes along to how the cash flows turnout given the conditions in the market, but no change in our approach.
Edward Westlake – Credit Suisse: Just the specific one on the operations, in Asia gas volumes have been pretty steady for number quarters until the second quarter of 2012. Was that maintenance or is that a PSC effect in terms of a tranche kicking in somewhere?
David S. Rosenthal – VP, IR and Secretary: Let me provide a little more clarity on that, because your question also gets to the main factor. If you look at our volume (NYSE:REX) and you look at the entitlement effects that you saw there. And really the impact you’re seeing in Qatar and I want you to know that unlike the RasGas and Qatargas LNG trains the AKG project, which as you know supports domestic gas sales does operate under a development and production sharing agreement and during the quarter that project became cost current and that did impact both the volumes that you see in the region that we noted as well as the entitlement volumes that we talked about. As far as performance, performance is expected in the region and all the countries there in the assets that we operate and again the real impact is AKG becoming cost current.
Edward Westlake – Credit Suisse: It is fair to think about domestic prices being lower than the other projects, so that would have a lesser impacts on cash flow than the headline production?
David S. Rosenthal – VP, IR and Secretary: Yeah, that would be a correct assumption.