Speech Oct. 6, 2015 Personal Reflections on the Petroleum Industry Rex W. Tillerson Chairman and Chief Executive Officer Energy Intelligence Petroleum Executive of the Year Dinner London, England Ladies and gentlemen … It is an honor to receive the 2015 Petroleum Executive of the Year Award. I thank Energy Intelligence for this recognition and all it stands for. I am also mindful that any recognition I receive is really a tribute to the more than 75,000 men and women of ExxonMobil who work 24/7 to supply the energy the world’s economies require and that people require to sustain their quality of life and lift themselves out of poverty. I appreciate receiving this honor from last year’s honoree, Emilio Lozoya. In many ways, Emilio is a reminder of what makes this industry so extraordinary. We are an industry filled with engineers, scientists, entrepreneurs, and workers – united by an optimistic vision for the future. This vision requires the industry’s leaders to work on many levels – addressing technical challenges, managing financial risks, optimizing daily operations, solving long-term policy questions, and cooperating across companies, countries, and continents. Emilio has been one such leader. He has stood at the center of one of the most positive developments in global energy markets in decades. In recent years, Mexico has carried out a wise and inclusive discussion to build sound energy policies – policies that will lead to more investment, opportunity, and energy security for his nation and the world. But as with every great and historic opportunity, this transformation of Mexico’s energy sector is a task that is both difficult and demanding. It will continue to require tremendous time, focus, and leadership to reinvent the foundations of the industry to take on 21st century markets and challenges. Thank you, Emilio, for taking time to present this award. And thank you for your commitment, your courage, and your friendship. As part of this evening’s dinner, I have been asked to give a few short remarks, drawing specifically from personal experiences over my four decades in the energy sector. To that end, I’d like to briefly lay out a few lessons I have learned. First, expect the unexpected. This was one of the very first lessons I learned in my career. For one thing, I did not intend to go to work in the oil and gas industry. The year before graduating from the University of Texas, I had spent the summer working for Armco Steel Corporation, one of the largest steel mills in the United States. I planned to work there after graduation because they offered the most money and a guaranteed promotion within six months. But a couple of recruiters from Exxon wouldn’t take no for an answer. I wondered why Exxon wanted someone who knew nothing about oil and gas. In fact, I asked several times: What is a civil engineer going to do for you guys? And they just kept coming back with the same answer, “Just come to work for us. Don’t worry, you’ll figure it out.” And they were right. Over time, I have seen that the unexpected challenges and opportunities that arise – and how we deal with them – make our industry unlike any other. No industry compares with the energy industry in terms of size or scale. No industry operates on time horizons as lengthy or far-reaching as ours. No industry faces the same combination of risks – geological, technical, operating, geo-political, and price risks – and complexity. And no industry offers the opportunity to do such good for so many people around the world as the energy industry. Today, we are dealing with forces that were unexpected and unanticipated only a few years ago. Global markets are adjusting to vast, new supplies of oil and gas flowing from new technologies in North America. Energy demand growth has been moderated by the economic slowdown in China and the sluggish growth in Europe, the United States, and elsewhere. And the shared concern for mitigating the risks of climate change is influencing energy policies – and industry efforts – around the world. In the midst of these challenges, our industry continues to thrive. We continue to innovate and cooperate each day to produce energy in ways that are increasingly safe, secure, and environmentally responsible. A second perspective I would share is that this may be a commodity industry, but people are what make it possible. When I got out of school, there was tremendous demand for engineers. But that soon changed. In the early 1980s I had my first personal experience with a significant downturn in oil prices. It was the first and only time in my 40-year career with Exxon that we had broad-based lay-offs of people. I remember having to call people into my office – many of whom had graduated about the same time or had worked alongside me. I had to tell them they no longer had a job. Those were hard days, the most difficult in my career. For all of us at Exxon who experienced that period, it made a lasting impression on us and as a result we committed to do our best such that the company would never be in that position again. In a commodities-based business, that requires taking a disciplined approach to investing, project execution and cost management, so that we are prepared as best we can be for the inevitable downturn in prices. The industry’s response in the 1980s carried another lesson for the entire energy sector. Those layoffs made it hard to attract talent in the years that followed because young people saw what happened and then chose other career paths. As this audience knows, this industry is facing another such downturn. It is putting pressure on every company. The challenge is not just to find new efficiencies for cost savings. We must also work to make wise decisions to keep the industry’s people and capabilities in place so we can move forward when markets change. A third lesson I have learned is never short technology. This was always the fundamental flaw with the peak oil theory; that we knew everything there was to know. One of the most gratifying aspects of having a job like mine is seeing how people use technology to do the extraordinary. I am continually encouraged by the human ingenuity that creates technologies to help us be more efficient and effective. In our business, the risks are enormous. And the challenges are often monumental. But the way in which our people manage those risks, using their expertise to deliver energy to the world in a safe and reliable manner, is remarkable. One of the projects that I take a lot of personal pride in is the Sakhalin-1 project in sub-arctic Russia. Technologically, it is a marvel. Resources that were discovered in the 1970s had to wait for the technical and engineering solutions to commercialize them and add them to the global energy supply. Off the coast of Sakhalin Island, the conditions are harsh. Severe wave activity is the norm and the pack ice which can be up to five-feet thick is mobile and persists for much of the year. Yet, we have pioneered technologies that have allowed us to drill record-breaking horizontal wells from a land-based drilling rig to reach the oil and natural gas more than 13 kilometers away under the ocean floor. And the initial development investment decisions at Sakhalin were taken in an oil price environment that was lower than today’s. As an engineer, I was involved in innovative ways to solve problems when I was coming up through the organization, yet I stand in awe of what our engineers and scientists can do today. I would never have dreamt we would be doing the things we are doing, and it gives me confidence that there is more to come. We will be doing things 10, 20, and 30 years from now that we can hardly imagine today. One potential risk for our industry – and to global progress – is the failure to recognize this power and potential of human ingenuity and the importance of putting in place policies that enable the investment, collaboration, and long-term efforts needed for innovation to flourish. Finally, I’ll close with this observation. Integrity underpins everything. It is the key – to building bridges between people, companies, and cultures. The one constant in sustained success, which I have seen wherever I have worked, has been integrity. In civil engineering the definition of structural integrity is ‘to be complete and whole’. So for a building or a bridge to have structural integrity, it must be built with sturdy design and solid construction materials. Similarly, for an individual life or an organization to have integrity, it must be built on a foundation of honesty and trust, with a strong commitment to ethical action at every step. Integrity makes us utterly predictable in word and deed, which engenders understanding and builds trust. A shared focus on integrity facilitates productive cooperation and collaboration. It strengthens our international partnerships as we take on ambitious projects. It helps us to honestly assess our performance, which helps us innovate and improve constantly. Our industry faces a dual challenge in the years and decades ahead: to expand energy supplies and to find ways to reduce the risks of climate change. To do so, we will need to constantly press forward the frontiers of knowledge and technology. We will need to work together as never before. And we will need to have open and informative dialogue with policymakers about the power of innovation. Integrity in all we do is essential for our industry to take these steps forward together in a way that enables us to improve the lives of everyone we lead, we work with, and we serve with our products. On behalf of all the men and women of ExxonMobil, I thank you again for this recognition and for your kind attention.