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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549-1004
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 21, 1996
MOBIL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-7555 13-2850309
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
3225 Gallows Road
Fairfax, Virginia 22037-0001
Telephone: (703) 846-3000
(Address of principal executive offices)
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<PAGE>
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Item 5. Other Events
The Registrant hereby incorporates by reference herein the
information set forth in its News Release dated October 21, 1996,
a copy of which is annexed hereto as exhibit 99.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(c) Exhibits.
99. Mobil Corporation News Release dated October 21,
1996 reporting estimated earnings for the third
quarter of 1996.
<PAGE>
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
REGISTRANT MOBIL CORPORATION
By /s/ Gordon G. Garney
NAME AND TITLE Gordon G. Garney, Senior Assistant Secretary
DATE October 21, 1996
<PAGE>
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EXHIBIT INDEX
EXHIBIT SUBMISSION MEDIA
------- ----------------
99. Mobil Corporation, Electronic
News Release dated
October 21, 1996
Exhibit 99
CONTACT: David Dickson, +1 703 846 2378 or
Christopher Springham, +1 703 846 2500
Fairfax, VA, October 21, 1996 -- Mobil Corporation today announced estimated
third quarter 1996 operating income of $668 million, down $76 million, or
10%, from the $744 million earned in the comparable quarter last year.
Including special items, reported income of $769 million was $17 million
lower than last year. This quarter's results included net special benefits
of $101 million -- $129 million of gains on asset sales, partly offset by
$28 million of restructuring implementation costs. Last year's results
included $42 million of net special benefits -- a $71 million favorable
litigation settlement, partly offset by $29 million of property write-downs.
Estimated operating earnings per common share for the third quarter were
$1.66 in 1996 compared with $1.85 in 1995. On a reported basis, earnings
per common share were $1.92 in 1996 compared with $1.95 in 1995. For the
nine months ended September 30, 1996, Mobil's operating income was $2,218
million, up $132 million, or 6%, from the comparable period in 1995.
In commenting on third quarter operating income compared with the same
period last year, Chairman Lucio A. Noto said: "Third quarter results were
disappointing due to unfavorable market conditions in many of the businesses
where we have a substantial presence; although we continue to have a bullish
view for these businesses over the longer term. Also, results were hurt by
a higher level of unscheduled refinery downtime in the United States. All
affected refineries are back to normal operations."
"Strong crude oil and natural gas prices were more than offset by
significantly lower worldwide downstream and petrochemical margins. In
particular, the downstream business has not been able to recover rising
crude oil prices in the marketplace. Additionally, paraxylene prices have
recently been under significant downward pressure as a result of surplus
capacity and weak demand. Other factors unfavorably affecting this period's
comparison with last year were the absence of the Nigerian reserve bonus,
the Ruhrgas dividend, and income from our divested chemical businesses. The
expiration of the tax holiday for our petrochemicals joint venture in Saudi
Arabia and higher exploration expenses in our international upstream
operations also had negative impacts. Partly offsetting these items were
the favorable impacts of higher worldwide downstream sales volumes, which
were up 7%, and benefits from initiatives."
"This quarter, savings from our expense initiatives totaled about $160
million before tax, including savings from our staff redesign project and
other restructuring programs. These savings were offset by higher volume
related expenses, including costs associated with new programs for growth,
as well as inflation, in particular higher purchased energy expenses."
Mr. Noto concluded, "Since we are in a very competitive industry that has
significant price volatility, changes in the way we run our business are
essential if we are to compete in the long term. We are not counting on
continuing high oil prices to enhance shareholder value. Our strategies
continue to be to improve the performance of our existing businesses and to
provide profitable growth."
<PAGE>
COMPARISON OF THIRD QUARTER 1996 WITH THIRD QUARTER 1995
The following comments address the operating performance of the major
business segments during the third quarter of 1996, as compared with the
same quarter of 1995 (refer to Table 2):
. Exploration and Producing income of $422 million was $120 million higher.
In the United States, income was $152 million, up $106 million, mainly due
to higher prices for crude oil and natural gas. The crude price increase
was mitigated by the weakening of prices for California heavy crudes, which
make up about 40% of Mobil's U.S. crude production, relative to light
crudes. Lower exploration expenses, savings from restructuring initiatives,
and lower capital recovery charges also contributed to the improved
earnings. These benefits were partially offset by the impact of lower
production volumes resulting from asset sales and natural field declines.
International income of $270 million was $14 million higher, mainly due to
higher prices and volumes. Volumes were up due to the success of our
continuing investment program in Nigeria and production was added with the
acquisitions of Tengiz and Ampolex. Earnings were hurt this period by
higher exploration expenses, timing of the Ruhrgas dividend, and the absence
of the Nigerian reserve bonus included in last year's third quarter.
.Marketing and Refining income of $231 million was $146 million lower.
United States income was $83 million, down $65 million, mainly due to weak
margins, as product prices lagged the increase in crude costs, and
unscheduled refinery downtime. The unscheduled refinery downtime hurt
earnings by about $25 million. These factors were partially offset by
higher product sales volumes, notably retail gasoline sales, where volumes
increased due to the implementation of "Friendly Serve" and other programs
to develop new business.
International income of $148 million was down $81 million due to lower
integrated margins in Europe and Asia-Pacific. U.K. marketing margins,
while somewhat improved from the second quarter of this year, were
significantly below those in the third quarter of 1995. Lower paraxylene
margins also had an impact on Mobil's Singapore refinery earnings, as income
from the aromatics complex at this facility is shared between M&R and Mobil
Chemical. These market factors more than offset the positive impact of
stronger sales volumes.
. Chemical income of $90 million was $89 million lower than last year'svery
strong third quarter. The decline reflected lower worldwide paraxylene and
polyethylene resin margins, the absence of income from divested businesses,
and the expiration of the tax holiday in Saudi Arabia.
<PAGE>
. Corporate and Other expense of $8 million was $29 million lower than the
same quarter last year when results included costs associated with
restructuring. Additionally, this quarter benefited from improved results
in real estate operations and the timing of certain miscellaneous items.
. Net Financing Expense of $67 million was $10 million lower than last year
due to lower interest rates, partly offset by interest on additional
borrowings resulting from this year's Ampolex and Tengiz acquisitions.
COMPARISON OF NINE MONTHS 1996 WITH NINE MONTHS 1995
Mobil's estimated 1996 year-to-date operating income was $2,218 million, up
$132 million, or 6%, from last year. Year-to-date 1996 reported income of
$2,288 million is $687 million higher than the $1,601 million earned in the
comparable period last year. Included in this year's reported income were
net special benefits of $70 million, representing gains on asset sales,
partly offset by restructuring implementation costs. Reported income last
year included $485 million of net special charges, primarily for the
realignment of worldwide staff support services and restructuring of
marketing and refining operations in the United States and Europe.
The $132 million increase in operating earnings is mainly from improved
petroleum sector market conditions and benefits from higher volumes and
business initiatives, largely offset by lower Chemical income. In
Exploration and Producing, higher income resulted from higher prices, lower
producing expenses, and from lower capital recovery charges primarily due to
adoption of FAS 121 in the fourth quarter of 1995. In Marketing and
Refining, higher volumes and industry refining margins have been partly
offset by a higher level of refinery downtime and lower U.K. marketing
margins. Unscheduled refinery downtime reduced earnings by about $45
million. Chemical income is lower than last year when record income
resulted from very high worldwide petrochemical margins. This year,
petrochemical margins are significantly lower and results have been hurt by
the absence of income from divested businesses and the expiration of the
Saudi tax holiday. Additionally, chemical plant operating reliability
reduced earnings by about $25 million.
Capital and Exploration Expenditures for the third quarter of 1996 were
estimated at $2,750 million, an increase of $1,631 million from the
comparable period last year. For the nine months of 1996, worldwide capital
and exploration expenditures were estimated at $4,705 million, compared with
$2,897 million for the year-earlier period. The increase in both periods
was primarily due to the full consolidation of the Ampolex acquisition that
was previously reflected in investments and advances.
<PAGE>
Mobil's estimated Return on Average Shareholders' Equity for the twelve
months ended September 30, 1996, based upon reported income, was 16.8%,
compared with 13.5% for calendar year 1995. (On an operating basis,
excluding special items, returns were 16.3% and 16.2% for the same periods.)
Estimated Return on Average Capital Employed for the twelve months ended
September 30, 1996, based upon reported income, was 12.8% compared with
10.9% for calendar year 1995. (On an operating basis, excluding special
items, returns were 12.5% and 12.8% for the same periods.)
Mobil's estimated Debt-to-Capitalization Ratio was 31% at September 30,
1996, and 27% at December 31, 1995. The increase in debt was primarily due
to funding of the Ampolex and Tengiz acquisitions.
Common Stock Dividends were $1.00 per share in the third quarter of 1996 and
$2.925 per share for the first nine months of 1996, $.075 and $.225 per
share higher than the comparable periods last year.
<TABLE>
Table 1
MOBIL CORPORATION
<CAPTION>
Third Quarter Nine Months
----------------------- -----------------------
1995 1996 Incr/ 1995 1996 Incr/
INCOME ($MM) Act Est (Decr) Act Est (Decr)
------ ------ ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Petroleum Operations
E&P: United States 46 234 188 185 556 371
International 256 303 47 792 963 171
------ ------ ------- ------ ------ -------
Total E&P 302 537 235 977 1,519 542
M&R: United States 148 83 (65) 131 311 180
International 200 148 (52) 231 512 281
------ ------ ------- ------ ------ -------
Total M&R 348 231 (117) 362 823 461
------ ------ ------- ------ ------ -------
Total Petroleum 650 768 118 1,339 2,342 1,003
Chemical 179 90 (89) 523 225 (298)
Corporate and Other (a) 34 (22) (56) (46) (107) (61)
Net Financing Expense (77) (67) 10 (215) (172) 43
------ ------ ------- ------ ------ -------
Net Income 786 769 (17) 1,601 2,288 687
========== ====== ====== ======= ====== ====== =======
COMMON SHARES OUTSTANDING (MM)
Average 395.5 393.9 (1.6) 395.7 394.2 (1.5)
End of Period ... ... ... 395.2 394.0 (1.2)
EARNINGS PER COMMON SHARE ($)
Based on Net Income (b) 1.95 1.92 (0.03) 3.94 5.70 1.76
DIVIDENDS
Common Stock
Total Paid ($MM) 366 394 28 1,069 1,153 84
Per Share ($) 0.925 1.00 0.075 2.700 2.925 0.225
Preferred Stock ($MM) 14 13 (1) 42 40 (2)
(a) Includes the results of Real Estate operations, Mining and Minerals,
corporate administrative expenses, and other items.
(b) The earnings per common share calculation is based on income, less
preferred stock dividend requirements, divided by the weighted average
number of common shares outstanding.
</TABLE>
<TABLE>
Table 2
MOBIL CORPORATION
<CAPTION>
Third Quarter Nine Months
----------------------- -----------------------
INCOME ADJUSTED FOR 1995 1996 Incr/ 1995 1996 Incr/
SPECIAL ITEMS ($MM) Act Est (Decr) Act Est (Decr)
------ ------ ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Petroleum Operations
E&P: United States 46 152 106 237 474 237
International 256 270 14 817 930 113
------ ------ ------- ------ ------ -------
Total E&P 302 422 120 1,054 1,404 350
M&R: United States 148 83 (65) 235 311 76
International 229 148 (81) 528 512 (16)
------ ------ ------- ------ ------ -------
Total M&R 377 231 (146) 763 823 60
------ ------ ------- ------ ------ -------
Total Petroleum 679 653 (26) 1,817 2,227 410
Chemical 179 90 (89) 539 225 (314)
Corporate and Other (a) (37) (8) 29 (55) (62) (7)
Net Financing Expense (77) (67) 10 (215) (172) 43
------ ------ ------- ------ ------ -------
Oper. Income Before
Special Items 744 668 (76) 2,086 2,218 132
Special Items 42 101 59 (485) 70 555
------ ------ ------- ------ ------ -------
Net Income 786 769 (17) 1,601 2,288 687
========== ====== ====== ======= ====== ====== =======
EARNINGS PER COMMON SHARE ($)
BASED ON:
Operating Income Before
Special Items (b) 1.85 1.66 (0.19) 5.17 5.52 0.35
Net Income (b) 1.95 1.92 (0.03) 3.94 5.70 1.76
(a) Includes the results of Real Estate operations, Mining and Minerals,
corporate administrative expenses, and other items.
(b) The earnings per common share calculation is based on income, less
preferred stock dividend requirements, divided by the weighted average
number of common shares outstanding.
</TABLE>
<TABLE>
Table 3
MOBIL CORPORATION
<CAPTION>
1995 by Quarter and Year 1996
SPECIAL ITEMS ----------------------------------- -----------------
AFFECTING INCOME ($MM 1Q 2Q 3Q 4Q Year 1Q 2Q 3Q Est
---- ------ ----- ------ ------ ---- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
E&P United States
Asset Sales - (22) - - (22) - - 82
Asset Impairment - - - (366) (366) - - -
Restructuring - (30) (a) - (21) (51) - - -
E&P International
Asset Sales - - - 23 23 - - 33
Asset Impairment - - - (121) (121) - - -
Tax Adjustment - - - 26 26 - - -
Restructuring - (25) (a) - (16) (41) - - -
M&R United States
Restructuring - (104) (b) - - (104) - - -
M&R International
LIFO/Oth. Inv. Adj. - - - (13) (13) - - -
Property Writedowns - - (29) - (29) - - -
Restructuring - (268) (c) - (48) (316) - - -
Chemical
Asset Sales - - - 501 501 - - -
Restructuring - (16) (a) - - (16) - - -
Corp/Other
Asset Sales - - - 74 74 - - 14
Environmental - - - (24) (24) - - -
Restructuring - (62) (a) - - (62) - - -
Litigation Settle. - - 71 - 71 - - -
SRP Implementation (a - - - - - - (31) (28)
---- ------ ----- ------ ------ ---- ----- ------
Total Special Items - (527) 42 15 (470) - (31) 101
==== ====== ===== ====== ====== ==== ===== ======
(a) Staff redesign project (SRP).
(b) Includes $65 million for staff redesign project and $39 million for
restructuring of marketing and refining operations.
(c) Includes $88 million for staff redesign project and $180 million for
European refining.
</TABLE>
<TABLE>
Table 4
MOBIL CORPORATION
<CAPTION>
Third Quarter Nine Months
------------------------ -------------------------
CAPITAL AND EXPLORATION 1995 1996 Incr/ 1995 1996 Incr/
EXPENDITURES ($MM) Act Est (Decr) Act Est (Decr)
------- ------- ------ -------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Petroleum Operations
Exploration & Producing
United States 306 95 (211) 577 367 (210)
International 459 2,226 (a)1,767 1,267 3,072 (a)1,805
------- ------- ------ -------- ------- ------
Total E&P 765 2,321 1,556 1,844 3,439 1,595
------- ------- ------ -------- ------- ------
Marketing & Refining
United States 94 87 (7) 333 261 (72)
International 178 243 65 502 730 228
------- ------- ------ -------- ------- ------
Total M&R 272 330 58 835 991 156
------- ------- ------ -------- ------- ------
Total Petroleum 1,037 2,651 1,614 2,679 4,430 1,751
Chemical 63 92 29 155 223 68
Other 19 7 (12) 63 52 (11)
------- ------- ------ -------- ------- ------
Total Mobil Corporation 1,119 2,750 1,631 2,897 4,705 1,808
======= ======= ====== ======== ======= ======
Memo:
Exploration expenses charged
to income, included above
United States 27 6 (21) 53 39 (14)
International 75 137 62 223 252 29
------- ------- ------ -------- ------- ------
Total Exploration Expens 102 143 41 276 291 15
======= ======= ====== ======== ======= ======
===========================================================================
OTHER FINANCIAL DATA ($MM)
Total Revenues 18,637 20,326 1,689 55,113 58,546 3,433
Depreciation, Depletion,
and Amortization 688 645 (43) 2,225 1,903 (322)
Income Taxes 616 836 220 1,611 2,427 816
AVERAGE U.S. PRICES
Crude ($/BBL) 14.34 17.21 2.87 14.72 16.73 2.01
NGL ($/BBL) 9.49 12.81 3.32 9.94 12.00 2.06
Natural Gas ($/MCF) (b 1.45 1.96 0.51 1.51 2.06 0.55
AVERAGE INT'L. PRICES
Crude ($/BBL) 16.25 20.83 4.58 17.01 19.71 2.70
Natural Gas ($/MCF) 2.44 2.65 0.21 2.50 2.54 0.04
(a) Includes $1,394 million of Ampolex acquisition expenditures which were
reported in the second quarter as cash investment in equity companies.
(b) Effective third quarter 1996, the wellhead price is reported. Prior to
the third quarter, prices reflected gas marketing realizations,
including transportation costs. This reporting change to wellhead
price is consistent with our gas marketing business realignment.
</TABLE>
<TABLE>
Table 5
MOBIL CORPORATION
<CAPTION>
Third Quarter Nine Months
----------------------- -----------------------
1995 1996 Incr/ 1995 1996 Incr/
OPERATING HIGHLIGHTS Act Est (Decr) Act Est (Decr)
------ ------ ------- ------ ------ -------
NET PRODUCTION OF LIQUIDS (TBD)
<S> <C> <C> <C> <C> <C> <C>
United States 278 257 (21) 285 268 (17)
Canada 53 50 (3) 53 52 (1)
Indonesia 82 60 (22) 77 70 (7)
Nigeria 156 213 57 149 203 54
Norway 87 82 (5) 91 83 (8)
United Kingdom 72 61 (11) 74 62 (12)
Other 83 128 45 79 98 19
------ ------ ------- ------ ------ -------
Total International 533 594 61 523 568 45
------ ------ ------- ------ ------ -------
Worldwide 811 851 40 808 836 28
====== ====== ======= ====== ====== =======
NET PRODUCTION OF NATURAL GAS (MMCFD)
United States 1,417 1,284 (133) 1,479 1,366 (113)
Canada 400 425 25 429 423 (6)
Germany 323 455 132 409 506 97
Indonesia 1,538 1,429 (109) 1,559 1,459 (100)
United Kingdom 306 339 33 516 590 74
Other 110 136 26 142 140 (2)
------ ------ ------- ------ ------ -------
Total International 2,677 2,784 107 3,055 3,118 63
------ ------ ------- ------ ------ -------
Worldwide 4,094 4,068 (26) 4,534 4,484 (50)
====== ====== ======= ====== ====== =======
TOTAL NET
PRODUCTION (TBDOE) 1,539 1,574 35 1,614 1,633 19
====== ====== ======= ====== ====== =======
</TABLE>
<TABLE>
Table 6
MOBIL CORPORATION
<CAPTION>
Third Quarter Nine Months
----------------------- -----------------------
1995 1996 Incr/ 1995 1996 Incr/
OPERATING HIGHLIGHTS Act Est (Decr) Act Est (Decr)
------ ------ ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
REFINERY RUNS (TBD)
Runs for and by Mobil
United States 902 926 24 897 914 17
Europe 433 336 (97) 428 324 (104)
Asia-Pacific 625 724 99 654 705 51
All Other 159 186 27 140 185 45
------ ------ ------- ------ ------ -------
Total 2,119 2,172 53 2,119 2,128 9
Runs for Mobil by Others 8 8 - 9 9 -
------ ------ ------- ------ ------ -------
Worldwide Runs for Mobil 2,127 2,180 53 2,128 2,137 9
====== ====== ======= ====== ====== =======
PETROLEUM PRODUCT SALES (TBD)
United States
Automotive Gasoline
Sales to Trade 553 568 15 535 552 17
Supply/Other Sales 247 270 23 210 219 9
------ ------ ------- ------ ------ -------
Total Automotive Sales 800 838 38 745 771 26
Distillates/Jet Fuel 280 335 55 306 338 32
Other 205 241 36 215 231 16
------ ------ ------- ------ ------ -------
Total United States 1,285 1,414 129 1,266 1,340 74
International 1,910 1,989 79 1,885 1,969 84
------ ------ ------- ------ ------ -------
Worldwide 3,195 3,403 208 3,151 3,309 158
====== ====== ======= ====== ====== =======
CHEMICAL SALES (MM LBS)
Worldwide Polyethylene Resin 564 614 50 1,750 1,859 109
CHEMICAL SALES BY PRODUCT CATEGORY ($MM)
Petrochemicals 719 469 (250) 2,268 1,421 (847)
Films Products 189 196 7 586 576 (10)
Chemical Products 27 33 6 86 91 5
Other Plastics 335 5 (330) 963 78 (885)
------ ------ ------- ------ ------ -------
Total 1,270 703 (567) 3,903 2,166 (1,737)
====== ====== ======= ====== ====== =======
</TABLE>
