ExxonMobilPresented by:

Ferdinand C. Importado

Dr. Cecile Santiago-GarciaSeminar on Special Cases in Management

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

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.

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.

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.

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

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.”

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

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

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

ExxonMobil BrandsCustomers 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.

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

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

IntegrityManagement 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.

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

Corporate citizenship

7,500 acresof protected wildlife

habitat activelymanaged in 2012

$330 millioninvested to improve

energy efficiency,reduce flaring, and

reduce GHG emissionsin 2012

Board of Directors

Board of Directors

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

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

Upstream OperationsUpstream 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

Downstream OperationsDownstream 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

Chemical OperationsExxonMobil 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

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

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

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.

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.

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 -

ExxonMobil ControversiesVarious 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

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.

Exxon Valdez Oil SpillIn 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

Hydraulic FracturingHydraulic 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

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

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

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

ExxonMobil Merger factsThird 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

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

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

Reasons for merger

• Technical capabilities will complement each other’s operations

• Operating synergies• Increased scale of economies

Risks and criticismsCreation 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

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

ExxonMobil todayExploration 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

Balanced PortfolioExxon’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 countriesaround the world

87 billionoil-equivalent barrelsin our worldwideresource base

Disciplined InvestingExxon’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 majorUpstream projectstart-ups between 2013and 2017

25 percentreturn on capitalemployed across ourworldwide operations,leading the industry

High-impact technologiesExxonMobil is an industry leader in the development

and application ofnew 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 billioninvested in research

and developmentsince 2008

World-record7.7-mile-long horizontal

well drilled in 2012

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 percentimprovement inrefinery energyefficiency since 2002

45 thousandnet oil-equivalent barrelsper day of additionalproduction from higheroperated reliability

Global integrationThe global integration of business lines and functionalorganizations creates significant advantage by enabling themto maximize the value of every molecule that they produceand rapidly deploy best practices around the globe.The level of integration results in structural and marketadvantages that are difficult for competitors to replicate.

More than

90 percentof Chemical operationsintegrated withDownstream orUpstreamMore than

75 percentof refining capacityintegrated withChemical or Lubesoperations

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.