Thank you. Good morning and welcome to Exxon Mobil’s teleconference and webcast on our Q3 2007 financial and operating results. As you are aware from this morning’s press release we had another good quarter as the fundamentals of our business remain strong. Our integrative business model, long standing commitment to the integrity of our operations, and disciplined approach to prudently invest and meet long term demand growth continue to position the company to benefit from robust industry conditions. Before we go further I’d like to draw your attention to our cautionary statement.
Please note that estimates, plans, and projections are forward looking statements. Actual results, including resource recoveries, volume growth, and project outcomes could differ materially due to factors I discuss and factors noted in our SEC filings. Please see factors effecting future results and form AK we furnished this morning which are available through the investors section of our website. Please also see the frequently used terms, the supplements to this morning press release and the 2006 financial and operating review on our website.
This material defines key terms I will use today, so is Exxon Mobil’s net interest in specific projects and includes our SEC regulation G disclosure. Now I’m pleased to turn your attention to the Q3. Exxon Mobil’s Q3 net income and normalized earnings were $9. 4 billion, down 1. 1 billion from 2006 record Q3 results primarily due to lower Downstream and chemical margins. Earnings per share were $1. 70 reflecting continued strong earnings performance and the benefits of our ongoing share purchase program.
Before I discuss specific business results I’d like to discuss some of our recently achieved milestones. In the Upstream, the [Orman Longa] deep water natural gas project off the coast of Norway began production this quarter. At full production, the development will produce more than two billion cubit feet of gas per day. The gas will be exported through the worlds longest sub-sea pipeline, approximately 750 miles to the UK. First production was also achieved this quarter from the Exxon Mobil Marimba North project, off shore Angola.
The project was completed ahead of schedule and within budget. This is the first tie back development to the Kizomba A infrastructure to cost effectively develop new capacity by utilizing existing field facilities, the project will develop 80 million barrels of oil and have peak production capacity of 40 thousand barrels per day. On October 12, gas deliveries from the Stat Fjord late life project started up the tam-pan link pipeline in the Norwegian North Sea. This project will increase ultimate recovery from the field by 360 million oil equivalent barrels and extend field life up to 2020.
Peak production is expected to reach 360 million cubic feet of gas per day and 70 thousand barrels of crude and condensate per day. These three startups, together with the projects which began production earlier this year, RasGas train 5 in Qatar[ Waden Z] in the Netherlands, and Rosa offshore Angola bring our 2007 to date major products to six. In exploration we had several notable milestones the quarter. Exxon Mobil was awarded two exploration licenses offshore of western Greenland further enhancing our strong portfolio of arctic exploration opportunities.
The West Disco bloc four and bloc six together cover over 6 million acres and are in 150 to 1300 feet of water. In the recent central Gulf of Mexico lease sale, Exxon Mobil was the high bidder for 13 offshore blocs in the Gulf of Mexico totaling over 70 thousand acres. Also this quarter together with our partners we made a new discovery in the ultra deep MTPS bloc 100 miles off the coast of the republic of the Congo. The Casio P discovery well was drilled to a depth of approximately 10 thousand feet and tested at 5600 barrels of oil per day. Exxon Mobil interest in the block is 30%.
These milestones continue to reflect the geographic diversity and strength of our industry leading Upstream portfolio. In the Downstream, our feed diversification activities continued this quarter. We ran 34 crudes that were new to individual refineries and three that were new to Exxon Mobil. We also maintained focus on our margin enhancement strategy which includes increasing the contribution from our refining operations through reliability improvements and effective technology deployment while incrementally adding to our crude and conversion processing capacity.
Also in the Q3, Exxon Mobil launched our fuels marketing joint venture in the Fujian province of China, with our partners’ Sinopek and Saudi Aramco. This venture, which is part of our fully integrated Fujian project, covers retail and wholesale sales of gasoline, diesel, and other petroleum products. Exxon Mobil’s investments in the Fujian refining, petrochemical, and fuels marketing joint ventures demonstrate our commitment to advantaged strategic Downstream and chemical investments to meet growing demand around the world.
In our chemical business Exxon Mobil announced it will build a second world scale petrochemical project at our integrated refining and chemical facility in Singapore. The new project will include and 1 million ton per year ethylene steam cracker, polyethylene, polypropylene, specially elastomer, and benzene units and expansions to our exiting oxo alcohol and parazylene units. Exxon Mobil will construct a 220 mega watt cogeneration unit as part of the overall investment unit. This project, with expected startup in 2011 will be key to be meeting the growing demand for Exxon Mobil chemical projects in Asia.
The project will employ Exxon Mobil’s’ latest proprietary technologies enabling a broad range of feed stocks to be processed and converted into premium products. In the quarter we also announced our investment to expand the parazylene and benzene production facilities at our Rotterdam aromatics plant by 25 and 20% respectively. The new production unit will employ Exxon Mobil’s proprietary PX max technology which increased parazylene production and improves process efficiency. Exxon Mobil chemical also began commercial production of butyl rubber at the Notre Dame de Gravenchon facility using proprietary breakthrough technology.
This technology improves energy efficiency and enables significant capacities at existing facilities. The integration of these new projects into our existing refining and chemical operations are further examples of our strategy to develop and rapidly deploy differentiated technologies and selectively invest in advantaged projects to capture the full benefit of integration across all Exxon Mobil operations. Turning now to the business line results. Upstream earnings in the Q3 were$ 6. 3 billion, down 200 million from the Q3 of 2006.
Improved crude realizations were more than offset by reduced natural gas realizations, higher expenses, including the impact of major project startups and lower property sales. Worldwide crude realizations were $71. 46 per barrel, up $6. 32 from the Q3 2006. Upstream after tax unit earnings in the Q3 of 2007 at $17. 47 per barrel were in line with last year. In total, oil equivalent volumes were down 2% from the Q3 of 2006. As you are aware, on September 6th, Exxon filed a request for arbitration with the international center for settlement of investment disputes following the expropriation of assets in Venezuela in June.
Excluding Venezuela volume effects, as well as entitlement divestment and quota impacts, production was actually up 3% in the Q3. That increase was driven by increased volumes from major project ramp ups in Russia, West Africa, and Qatar, which more than offset natural field decline. Turning to liquids production, volumes fell by 111 thousand barrels per day, or 4% from the same quarter last year primarily due to entitlement effects in Africa and the absence of Venezuela volumes. Venezuela accounted for about 40% of the reduction. Natural field decline was offset by project related increases in Russia and West Africa.
Gas volumes were up 163 million cubic feet per day from last year, as higher production in Qatar primarily due to the startup of RasGas Train 5 more than offset naturalized decline in mature areas. Now turning to the sequential comparison. Versus the Q2 of 2007, Upstream earnings increased by nearly $350 million, higher realizations were partially offset by lower liquids production and seasonally lower natural gas demand. Liquids production decreased 5% including the impact of entitlement effects in Africa and the absence of Venezuela volumes.
Natural gas production was down 5% primarily due to lower volumes in Europe reflecting seasonally lower demand, divestment effects, and scheduled maintenance. For further date on regional volumes please refer to the press release and IR supplement. Now turning to the Downstream results. Q3 Downstream earnings were $2 billion, down approximately $735 million from record results in the Q3 of 2006. Lower margins reduced earnings by $610 million with decreases in refining and fuels marketing margins partially offset by improved lubes marketing margins.
Volume mix effects increased earnings by $120 million, as we benefited from our continued focus on feed stock flexibility, capacity utilization, and product optimization. These more than offset the impact of higher plant turn around activity. Other items reduced earnings by $250 million reflecting increased maintenance activity and the absence of positive tax effects in the Q3 2006. Sequentially, Q3 earnings decreased by almost $1. 4 billion, due to markedly lower refining margins. Volume mix effects were positive $110 million due to lower plan maintenance in the US and refinery optimization activities.
Other factors reduced earnings by $240 million, primarily the absence of positive impact from the Ingolstadt divestment in the Q2. Q3 chemical earnings were $1. 2 billion, earnings were down $150 million versus the record Q3 2006 as higher feed stock costs more than offset increased realizations. Positive mix effects benefited earnings by $30 million. Other factors increased earnings by $65 million, including positive tax effects. Sequentially, Q3 chemicals earnings increased by $190 million versus the second quarter of 2007, improved margins benefited earnings by $110 million, while volume mix effects were negative $35 million.
Other impacts increased earnings by $115 million, including positive tax effects. Turning now to your corporate and financing segment. The corporation recorded Q3 expenses of $92 million in the corporate and financing segment, unchanged from the Q3 of 2006. The effective tax rate for the Q3 was 36%. The corporation distributed almost $9 billion to shareholders in the Q3, through dividends and share purchases to reduce shares outstanding. During the quarter, Exxon Mobil purchased $7 billion in shares, in excess of dilution, reducing the number of shares outstanding by 1.5% and further demonstrating our ongoing commitment to return cash to our shareholders. CapEx in the Q3 was $5. 4 billion, an increase of 7. 5% from the Q3 2006.
At the end of the Q3 our cash balance was $36 billion and debt was $9 billion. In summary, these results highlight the fundamental strength of our business; our ability to deliver superior operational performance and continue to grow our integrated capabilities while continuing to position ourselves for future demand growth and create value for our shareholders. That concludes my prepared remarks and I would now be happy to take your questions.
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