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These slides discusses the SWOT behind the Exxon and Mobil merger. It starts with the history and background including its mission, vision, principles, culture and operations as well as some controversies. It proceeds with identifying some of the competitors for ExxonMobil. The SWOT prior to the merger is also presented together with some risks, issues and criticisms. Finally the current competitive advantages are also presented.

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  1. 1. ExxonMobil Presented by: Ferdinand C. Importado Dr. Cecile Santiago-Garcia Seminar on Special Cases in Management
  2. 2. Report outline • History of Exxon and Mobil • Mission, vision, principles and corporate culture • Competitors • ExxonMobil’s controversies • S-W-O-T ExxonMobil merger • ExxonMobil’s merger facts • ExxonMobil’s post-merger facts • Reasons, risks and criticisms • ExxonMobil’s competitive advantages
  3. 3. Exxon Mobil History • John D. Rockefeller and partners formed the Standard Oil Company of Ohio in 1870 • In 1882,Rockefeller and partners formed the Standard Oil Trust to unify what then numbered about 40 companies.
  4. 4. Exxon Mobil History • The Trust formed Standard Oil Company of New Jersey New York. • By 1889, the Trust established itself as a vertically integrated organization. • Congress's passage of the Sherman Anti-Trust Act of 1890, eventually led to the dissolution of the Trust in 1892.
  5. 5. Exxon Mobil History The Standard Oil Interest was formed and in 1899 the Standard Oil of New Jersey became its holding company. In May 1911, the United States Supreme Court declared Standard Oil Company of New Jersey an "unreasonable" monopoly and ordered it to dissolve, resulting in 34 distinct and separate companies.
  6. 6. Exxon Mobil History • The Standard Oil Company of New Jersey would become Exxon • The Standard Oil Company of New York would become Mobil • 1999 Exxon and Mobil merged and become the world's largest energy corporation
  7. 7. Mission ―Exxon Mobil Corporation is committed to being the world's premier petroleum and petrochemical company. To that end, we must continuously achieve superior financial and operating results while simultaneously adhering to high ethical standards.‖
  8. 8. Exxon Mobil Corporation aspires to be at the leading edge of competition in every aspect of business. That requires the Corporation's resources — financial, operational, technological, and human to be employed wisely and evaluated regularly Vision
  9. 9. Shareholders Committed to enhancing the long-term value of the investment dollars entrusted by shareholders. By running the business profitably and responsibly, shareholders are expected to be rewarded with superior returns. This commitment drives the management of the Corporation
  10. 10. Customers Success depends on ability to consistently satisfy ever changing customer preferences. By committing to be innovative and responsive, while offering high quality products and services at competitive prices
  11. 11. ExxonMobil Brands Customers in the United States have come to respect and rely on Exxon-branded fuels, services and lubricants for their personal and business needs. Customers around the world have come to respect and rely on Esso-branded fuels, services and lubricants for their personal and business needs. Marketed around the world, Mobil is known for performance and innovation. Mobil is recognized for its advanced technology in fuels, lubricants and services.
  12. 12. Employees Exxon strive to hire and retain the most qualified people available and to maximize their opportunities for success through training and development. They are also committed to maintaining a safe work environment enriched by diversity and characterized by open communication, trust, and fair treatment
  13. 13. Leadership in process safety ExxonMobil is committed to providing a safe work environment for employees, contractors, and the communities they operate. The process safety approach focuses on reducing risk through the flawless execution of Operations Integrity Management System (OIMS). Rigorously deployed throughout global operations, OIMS establishes expectations by which facilities are designed, operated, and maintained in order to continuously improve safety and environmental performance.
  14. 14. Community The firm commit to be a good corporate citizen in all the places they operate worldwide. They maintain high ethical standards, obey all applicable laws, rules, and regulations, and respect local and national cultures. Above all other objectives, they are dedicated to running safe and environmentally responsible operations
  15. 15. Corporate citizenship 7,500 acres of protected wildlife habitat actively managed in 2012 $330 million invested to improve energy efficiency, reduce flaring, and reduce GHG emissions in 2012
  16. 16. Board of Directors
  17. 17. Board of Directors
  18. 18. Corporate Culture • Consistently strive to improve efficiency and productivity through learning, sharing, and implementing best practices • Seek to develop proprietary technologies that provide a competitive edge • Maintain public trust is a key to success • Strive to be a leader in corporate citizenship by operating with the highest integrity, maintaining a steadfast commitment to safety, health and environmental protection, and playing a positive role in the global community
  19. 19. Corporate culture • A technology company, applying science and innovation to find better, safer and cleaner ways to deliver the energy the world needs • New and ongoing measures are taken to prevent and minimize the impact of operations on air, water and ground
  20. 20. Upstream Operations Upstream business encompasses high- quality exploration opportunities across all resource types and geographies, an industry-leading resource base, a portfolio of world-class projects, and a diverse set of producing assets. Exxon have an active exploration or production presence in 40 countries. S T R AT E G I E S • Apply effective risk management, safety, and operational excellence • Identify and selectively capture the highest-quality resources • Exercise a disciplined approach to investing and cost management • Develop and apply high-impact technologies • Maximize profitability of existing oil and gas production • Capitalize on growing natural gas and power markets
  21. 21. Downstream Operations Downstream portfolio includes refining facilities in 17 countries. Exxon is the world’s largest integrated refiner and manufacturer of lube base stocks and a leading marketer of petroleum products and finished lubricants. The high-quality products, combined with a strong global refining and distribution network, position Exxon as premier supplier around the world.S T R AT E G I E S • Maintain best-in-class operations • Provide quality, valued products and services to our customers • Lead industry in efficiency and effectiveness • Capitalize on integration across ExxonMobil businesses • Maintain capital discipline • Maximize value from leading-edge technologies
  22. 22. Chemical Operations ExxonMobil Chemical is one of the largest chemical companies in the world. The unique portfolio of specialty and commodity businesses delivers superior returns across the business cycle. They manufacture high-quality chemical products in 15 countries. With a major presence in Asia Pacific, we are well positioned to competitively supply the rapid chemical demand growth in this region. S T R AT E G I E S • Consistently deliver best-in-class operational performance • Focus on businesses that capitalize on core competencies • Build proprietary technology positions • Capture full benefits of integration across ExxonMobil operations • Selectively invest in advantaged projects
  23. 23. Royal Dutch Shell • Headquarters at The Hague, the Netherlands • Operates in more than 70 countries with an average of 87,00 employees and 44,000 Shell service stations worldwide • 50% production is natural gas where 20.2 million ton of equity LNG are sold during the year • 3.3 million barrels of oil equivalent are produced every day. • Revenue for 2012 amounted to $467.2 billion with net Income equivalent to $26.8 billion. • Shell also spent $2.2 billion on developing alternative energies, carbon capture and storage, and CO2-related R&D over the past five years
  24. 24. British Petroleum PLC • International headquarters is located at London, England • Operates in over 80 countries with 20,700 sites and 85,900 employees • The firm produces at least 2,354 thousand barrels per day • Total sales and other operating revenues as of 2012 amounted to $376B with $12B in net income • Refining availability remained at a high level of 94.8%, reflecting strong operations around global refining portfolio
  25. 25. Chevron • Chevron is the second-largest integrated energy company headquartered in the United States and among the largest corporations in the world • In 2012, average net production was 2.61 million barrels of oil-equivalent per day. • Chevron had a global refining capacity of 1.95 million barrels of oil per day at the end of 2012. • It boasts global workforce consists of approximately 61,900 employees, including more than 3,600 service station employees. • Sales and other operating revenues amounted to $231 billion with net income of $26 billion, or $13.32 per share, diluted.
  26. 26. Conoco Phillips • Operations in 30 countries with over 17,000 men and women work in a truly integrated way to find and produce oil and natural gas • Operates on segments which are defined by geographic region: Alaska, Lower 48 and Latin America, Canada, Europe, Asia Pacific and Middle East, and Other International. • In 2012, Conoco Phillips reported total revenues and other income of $63B with Net income attributable to ConocoPhillips at $8.4B. • Dividend per share is estimated at $2.64. Capital program investments totaled $15.7. • Crude oil production in 2012 totaled 618B tons, natural gas liquids at 160B tons, bitumen at 93B tons and natural gas at 4,245B tons.
  27. 27. Brief comparison Exxon Shell British Chevron Conoco Assets 333,795 360,325 300,193 232,982 117,144 Revenue 482,295 481,700 388,285 241,901 62,004 Net income 44,880 26,592 11,816 26,179 8,428 Profit margin 9.31% 5.52% 3.04% 10.82% 13.59% R&D costs 1,042 1,314 674 648 221 R&D margin 0.22% 0.27% 0.17% 0.27% 0.36% Employees 76,900 87,000 86,000 62,000 16,900 Retail shops 19,382 44,000 20,700 8,700 -
  28. 28. ExxonMobil Controversies Various leaks in its facilities, the most notable of which is the Exxon Valdez oil spill The use of hydraulic fracturing procedures in its upstream operations Questionable foreign practices and dealings Human rights violations Issues on LGBT rights
  29. 29. Exxon Valdez Oil Spill In March 24, 1989, the Exxon Valdez supertanker ran aground in Alaska’s Prince William Sound More than 250,000 barrels were spilled Exxon and the U.S. Coast Guard began a massive cleanup effort that eventually involved more than 11,000 Alaskan residents and thousands of Exxon and contractor personnel.
  30. 30. Exxon Valdez Oil Spill In 1992 the U.S. Coast Guard declared the cleanup complete Spent over $4.3 billion as a result of the accident Implemented an operational management system to prevent future incidents
  31. 31. Hydraulic Fracturing Hydraulic fracturing is describes as involving the injection of a solution that is primarily water and sand, mixed with a small amount of chemicals often found in swimming pools, dish detergents and other common uses to open up cracks in water formations that allows natural gas to migrate to the well
  32. 32. Effects of hydraulic fracturing May contaminate water supplies Associated with an increased seismic activity Negative impact on the quality of life of the area and nearby areas May cause serious health hazzard
  33. 33. S W - ExxonMobil Merger STRENGTHS • Exxon and Mobil are the world’s largest oil companies • High production capacities • Strong financial and operating performance • Exxon’s low cost of production • Exxon’s experience in deep water exploration WEAKNESSES • Exxon’s conservative culture • Exxon’s is behind in its research and technology efforts • Instability of oil prices
  34. 34. O T - ExxonMobil Merger OPPORTUNITIES • Growing market for chemical synthesis of plastic • Saudi Arabia opens its oil fields to foreign companies • Alternative sources of fuel and energy THREATS • High cost of replacing assets • Major influence of OPEC on oil prices • Restructuring of other oil companies • The U.S. Anti-trust laws and similar regulations
  35. 35. ExxonMobil Merger facts Third largest merger in the U.S. after America Online – Time Warner ($162B in 2001) and Pfizer’s – Warner-Lambert ($90B in 1999) at $82B (1999) Combined 1997 profit of $11.8 billion on $203.1 billion in revenue Exxon and Mobil employed about 122,700 people, branding more than 48,000 service stations and possessing energy reserves larger than Canada’s
  36. 36. ExxonMobil Merger facts Largest divestiture that requires that sale of 2,431 gas stations in the northeast Total savings were estimated at $2.8 billion • $730 million from cutting 9,000 jobs and closing offices • $1.15 billion from trimming business overlap Grand total of 14,000 jobs cut and $3.8 billion of annual pretax savings
  37. 37. ExxonMobil Merger Facts The Federal Trade Commission has allowed Exxon to nine months to complete most of its sales otherwise a trustee can be assigned to complete the sale Owners and operators may use the names "Exxon" and "Mobil," and accept their credit cards, for up to 10 years
  38. 38. Reasons for merger • Technical capabilities will complement each other’s operations • Operating synergies • Increased scale of economies
  39. 39. Risks and criticisms Creation of a new or common corporate culture between Exxon and Mobil Meeting regulatory and Anti-trust requirements to prevent dissolution and maintain competitiveness Retention of key employees with the right knowledge and expertise
  40. 40. ExxonMobil today World largest publicly traded international oil and gas company with total assets of $334B. One of the top chemical companies in 2012 based on chemical sales with total revenues of $482B. Tops the list as the world’s largest refiner with 1,655,500 barrels of crude per calendar day
  41. 41. ExxonMobil today Exploration and production acreages in 36 countries Production operations are spread in 23 countries worldwide Interests in 32 refineries in 17 countries worldwide Over 120 major development projects
  42. 42. Balanced Portfolio Exxon’s portfolio is unmatched in quality, size, and diversity. A broad base of highly competitive resources, assets, products, and projects within each of Exxon’s global businesses – Upstream, Downstream, and Chemical – leads to strong financial and operating results across changing market conditions. Operations in 47 countries around the world 87 billion oil-equivalent barrels in our worldwide resource base
  43. 43. Disciplined Investing Exxon’s diverse resource and asset base offers a large inventory of high-quality investment options. The company carefully evaluates these opportunities across a range of market conditions and time horizons that often span decades. They advance only those projects likely to provide long-term shareholder value, and focus on the efficient use of capital to achieve superior investment returns. 28 major Upstream project start-ups between 2013 and 2017 25 percent return on capital employed across our worldwide operations, leading the industry
  44. 44. High-impact technologies ExxonMobil is an industry leader in the development and application of new technologies that create advantage across our global businesses. Exxon pursue high-impact technologies that unlock new energy sources, reduce the cost of projects, improve the efficiency of operations, and increase the value of products. $5 billion invested in research and development since 2008 World-record 7.7-mile-long horizontal well drilled in 2012
  45. 45. Operational Excellence Maximizing shareholder value requires a relentless focus on operational excellence and effective risk management. The management systems enable them to maintain high operational standards by providing a framework of proven processes and best practices that are applied consistently and rigorously across worldwide operations. 10 percent improvement in refinery energy efficiency since 2002 45 thousand net oil-equivalent barrels per day of additional production from higher operated reliability
  46. 46. Global integration The global integration of business lines and functional organizations creates significant advantage by enabling them to maximize the value of every molecule that they produce and rapidly deploy best practices around the globe. The level of integration results in structural and market advantages that are difficult for competitors to replicate. More than 90 percent of Chemical operations integrated with Downstream or Upstream More than 75 percent of refining capacity integrated with Chemical or Lubes operations
  47. 47. Conclusion The ExxonMobil combination is an archetype of a successful merger. The industry is increasingly utilizing advanced technology in exploration, production, refining, and in the logistics of its operations. It is international in scope. But more importantly, the benefits of synergies that include improvements in the performance of all the parties in the transaction are well pronounced.