ExxonMobil has long been known for its insular culture that prevents rapid, adaptable change. But investors concerned about ExxonMobil’s ability to withstand an expected steep decrease in fossil fuel demand can find solace.
ExxonMobil once saw climate science as controversial and conducted campaigns of confusion to discredit it – but all that has now changed.
The Company’s Beginnings
It grew from being a regional marketer of kerosene in the US to an international oil and chemical giant engaged in every stage of petroleum exploration, production, refining, marketing and petrochemical manufacturing. Over its first century of existence, this business witnessed remarkable expansion while simultaneously being shrouded in controversy over environmental impacts related to operations and products manufactured.
Following the Exxon Valdez oil tanker disaster of 1989, its reputation was severely tarnished. This cost the company billions of dollars while damaging many customers’ perception of them as well.
Exxon began investing more resources into research and development to keep pace with competitors after the accident. One result was an innovative method for turning methanol into high-octane gasoline that increased longevity while cutting car maintenance costs and engine wear; Exxon also created a patentable lubricant which enabled engines to run at higher speeds.
ExxonMobil became the world’s largest oil and gas company when they merged together in 1995, becoming known as ExxonMobil and remaining at that position ever since. Their refineries are located across the U.S. and operate year round; moreover, ExxonMobil owns and operates over 7,000 service stations as well as 150 “On the Run” convenience stores that offer fuel, snacks, beverages, goods and other goods directly to motorists while offering one-stop shopping with uniformed employees providing one-stop service along with Tiger Express drive-through windows – it offers one-stop convenience!
ExxonMobil is also active in power generation with plants in China and Japan, where its investments focus heavily on Asia where demand for crude oil will outstrip that in Europe and North America. Furthermore, ExxonMobil supports conservation of Asian tigers through the Save the Tiger Fund established with National Fish and Wildlife Foundation.
The Company operates in several other markets, including air, sea and land transportation. It owns an impressive fleet of jet aircraft, cargo ships and barges as well as oil/natural gas pipelines and storage facilities.
The Company’s Merger
Exxon Valdez oil disaster in 1989 severely damaged their reputation, cost billions to clean up, and caused many of their employees to leave; yet they went on to become one of the world’s largest petroleum and petrochemical enterprises – merging with Mobil in 1999, becoming the world’s largest publicly traded oil and gas company in terms of revenue, earnings and market capitalization.
ExxonMobil owns and operates numerous refineries both domestically and abroad, as well as owning and operating an expansive pipeline network, natural gas exploration, oil production and marketing/selling petrochemical products. Furthermore, ExxonMobil provides low emission fuels and performance lubricants.
At a time of skyrocketing global energy prices, this company has seen profits soar and become flush with cash – leaving them seeking acquisitions to add to their portfolios. Pioneer Natural Resources was recently announced as their biggest deal since merging with Mobil in 1999.
ExxonMobil will gain access to some of the largest carbon dioxide (CO2) storage sites in the country as well as a comprehensive CO2 transportation network of more than 925 miles of owned and operated pipelines, enabling it to capture and store carbon emissions to help mitigate climate change.
ExxonMobil’s move is a telltale indication that it has taken steps toward transitioning away from fossil fuels, even while still exploring for new oil and gas reserves. Some advocates for entirely shifting away from oil exploration towards alternative forms such as renewable energy sources like solar.
Other people, however, maintain that fossil fuels are here to stay and that companies should focus on producing as much as they can while investing in technologies to minimize environmental damage. No matter your opinion of ExxonMobil’s influence on global energy future, one thing is certain – ExxonMobil plays an instrumental role.
The Company’s Growth
Exxon quickly expanded into one of the world’s premier oil and gas companies over time, amassing more than 40,000 service stations worldwide and operating multiple refineries and petrochemical plants; additionally it mined coal while conducting oil drilling operations, shipping operations, exploration activities and marketing operations.
Exxon expanded internationally through acquisitions such as purchasing shares of Arabian American Oil Company in 1948 and Iranian production rights in 1954, respectively. When Exxon merged with Mobil in 1999, it had become the largest oil and gas company by revenue worldwide.
As the 20th century progressed, the company experienced continuous expansion. It expanded into the petrochemical business and invested in various projects ranging from a $2 billion olefins plant in Singapore to an $1.5 billion ethylene project with partners in Venezuela. Furthermore, power generation opportunities in China were being pursued while refining business was growing throughout Asia.
ExxonMobil employs a multifaceted strategy for earnings growth, focused on cost reductions and capital investments. Since 2019, ExxonMobil has made $9 billion in structural cost reductions and expects to make another $6 billion by 2027. ExxonMobil continues its efforts at cost cutting by improving efficiency and digitizing business operations – two methods ExxonMobil employs in its quest for growth.
As well as making significant investments, ExxonMobil continues to pay out large dividends and repurchase shares at an impressive pace, including its $30 billion share repurchase program and increase in annual dividend. Exxon also expects to accumulate excess cash; they anticipate having over $60 billion of it by 2025 assuming oil averages $60 per barrel.
Through its long history, Exxon Mobil has experienced financial difficulty. In 1989, its Exxon Valdez oil tanker spilled 11 million gallons of crude oil into Alaskan waters, damaging their reputation and incurring billions in cleanup costs; they were ultimately assessed $5 billion in punitive damages but successfully appealed the ruling.
The Company’s Leadership
ExxonMobil stands as one of the world’s premier fuels and chemical companies with global reach and resources to be an industry leader across several major sectors, providing products that enable modern life. One of the world’s largest integrated fuels, lubricants and chemical companies – its primary business segments being Upstream, Product Solutions and Low Carbon Solutions — power cars, computers, petrochemicals and oil refining, providing energy to everything that matters today.
ExxonMobil’s upstream segment specializes in discovering and producing crude oil and natural gas, while its downstream businesses specialize in manufacturing high-quality lubricants and gasoline additives. ExxonMobil’s low-carbon businesses develop technologies to mitigate fossil fuels’ environmental impact; and are leaders in alternative energy sources like wind and solar power development.
In the mid to late 1990s, huge profits enabled the Company to take some bold risks with its investments. It bought into Indonesia’s Natuna gas field with 50 percent, risked billions on new oil and gas fields in Russia, North Sea and Alaska’s Prudhoe Bay area; even joined Royal Dutch/Shell for an international joint venture.
By the mid-1980s, however, global oil consumption had outstripped supply and prices began to plummet. Alongside its substantial investments in refineries and service stations, the Company had also acquired several petrochemical plants and engaged in coal mining.
As a result, ExxonMobil was forced to reduce its operations and eliminate jobs. ExxonMobil managers struggled to invest the company’s vast wealth in ways that would evade antitrust challenges while remaining profitable at the same time. One method for making optimal use of its remaining resources was buying back a portion of stock — an action applauded by Wall Street – while they explored diversification options without success or cost effectiveness; an Alaska oil tanker disaster further damaged ExxonMobil’s image as well as brought costly punitive damages from punitive damages awards against it.
