Exxon Mobil Corporation

Type	Public
Traded as	NYSE: XOM Dow Jones Component S&P 500 Component
Industry	Oil and gas
Predecessor(s)	Exxon Mobil
Founded	November 30, 1999 (1999-11-30)
Headquarters	Irving, Texas, United States
Area served	Worldwide
Key people	Rex Tillerson (Chairman & CEO)[1]
Products	Fuels, lubricants, petrochemicals
Revenue	US$ 486.429 billion (2011)[2]
Operating income	US$ 073.257 billion (2011)[2]
Net income	US$ 041.060 billion (2011)[2]
Total assets	US$ 349.000 billion (2011)[2]
Total equity	US$ 154.396 billion (2011)[2]
Employees	83,600 (2010)[2]
Subsidiaries	Aera Energy, Esso, Esso Australia, Exxon, Exxon Neftegas, Imperial Oil (69,6%), Mobil, Mobil Producing Nigeria, SeaRiver Maritime, Superior Oil Company, Vacuum Oil Company, XTO Energy
Website	ExxonMobil.com

Exxon Mobil Corporation (NYSE: XOM) or ExxonMobil, is an American multinational oil and gas corporation. It is a direct descendant of John D. Rockefeller's Standard Oil company,^[3] and was formed on November 30, 1999, by the merger of Exxon and Mobil. Its headquarters are in Irving, Texas. It is affiliated with Imperial Oil which operates in Canada.

ExxonMobil is one of the largest publicly traded companies by market capitalization in the world and is the largest company in the world by revenue.^[4] The company is ranked #3 globally in Fortune Global 500 list in 2011.^[5] Exxon Mobil's reserves were 72 billion oil-equivalent barrels at the end of 2007 and, at then (2007) rates of production, are expected to last over 14 years.^[6] With 37 oil refineries in 21 countries constituting a combined daily refining capacity of 6.3 million barrels (1,000,000 m³), Exxon Mobil is the largest refiner in the world,^[7][8] a title that was also associated with Standard Oil since its incorporation in 1870.^[9]

ExxonMobil is the largest of the six oil supermajors^[10] with daily production of 3.921 million BOE (barrels of oil equivalent). In 2008, this was approximately 3% of world production, which is less than several of the largest state-owned petroleum companies.^[11] When ranked by oil and gas reserves it is 14th in the world with less than 1% of the total.^[12][13]

Organization[link]

The Exxon Mobil Corporation headquarters is located in Irving, Texas. ExxonMobil markets products around the world under the brands of Exxon, Mobil, and Esso. It also owns hundreds of smaller subsidiaries such as Imperial Oil Limited (69.6% ownership) in Canada, and SeaRiver Maritime, a petroleum shipping company.

The upstream division dominates the company's cashflow, accounting for approximately 70% of revenue. The company employs over 82,000 people worldwide, as indicated in ExxonMobil's 2006 Corporate Citizen Report, with approximately 4,000 employees in its Fairfax downstream headquarters and 27,000 people in its Houston upstream headquarters.

Operating divisions[link]

ExxonMobil is organized functionally into a number of global operating divisions. These divisions are grouped into three categories for reference purposes, though the company also has several ancillary divisions, such as Coal & Minerals, which are stand alone.

Chart of the major energy companies dubbed "Big Oil", sorted by latest published revenue

• Upstream (oil exploration, extraction, shipping, and wholesale operations) based in Houston, Texas
• Downstream (marketing, refining, and retail operations) based in Fairfax, Virginia
• Chemical division based in Houston, Texas

Operating divisions by category are as follows:

• Upstream
  • ExxonMobil Exploration Company
  • ExxonMobil Development Company
  • ExxonMobil Production Company
  • ExxonMobil Gas and Power Marketing Company
  • ExxonMobil Upstream Research Company
  • ExxonMobil Upstream Ventures

• Downstream
  • ExxonMobil Refining and Supply Company
  • SeaRiver Maritime
  • ExxonMobil Fuels Marketing Company
  • ExxonMobil Lubricants & Specialties Company
  • ExxonMobil Research and Engineering Company
  • International Marine Transportation

• Chemical
  • ExxonMobil Chemical Company

• ExxonMobil Global Services Company
  • ExxonMobil Information Technology
  • Global Real Estate and Facilities
  • Global Procurement
  • Business Support Centers

• Imperial Oil

• Infineum

• Aera Energy

• XTO Energy

History[link]

ExxonMobil Building, ExxonMobil offices in Downtown Houston

Exxon Mobil Corporation was formed in 1999 by the merger of two major oil companies, Exxon and Mobil. Both Exxon and Mobil were descendants of the John D. Rockefeller corporation, Standard Oil which was established in 1870. The reputation of Standard Oil in the public eye suffered badly after publication of Ida M. Tarbell's classic exposé The History of the Standard Oil Company in 1904, leading to a growing outcry for the government to take action against the company.

By 1911, with public outcry at a climax, the Supreme Court of the United States ruled that Standard Oil must be dissolved and split into 34 companies. Two of these companies were Jersey Standard ("Standard Oil Company of New Jersey"), which eventually became Exxon, and Socony ("Standard Oil Company of New York"), which eventually became Mobil.^[14]

In the same year, the nation's kerosene output was eclipsed for the first time by gasoline. The growing automotive market inspired the product trademark Mobiloil, registered by Socony in 1920.

Over the next few decades, both companies grew significantly. Jersey Standard, led by Walter C. Teagle, became the largest oil producer in the world. It acquired a 50 percent share in Humble Oil & Refining Co., a Texas oil producer. Socony purchased a 45 percent interest in Magnolia Petroleum Co., a major refiner, marketer and pipeline transporter. In 1931, Socony merged with Vacuum Oil Co., an industry pioneer dating back to 1866 and a growing Standard Oil spin-off in its own right.

In the Asia-Pacific region, Jersey Standard had oil production and refineries in Indonesia but no marketing network. Socony-Vacuum had Asian marketing outlets supplied remotely from California. In 1933, Jersey Standard and Socony-Vacuum merged their interests in the region into a 50–50 joint venture. Standard-Vacuum Oil Co., or "Stanvac," operated in 50 countries, from East Africa to New Zealand, before it was dissolved in 1962.

Mobil Chemical Company was established in 1950. As of 1999, its principal products included basic olefins and aromatics, ethylene glycol and polyethylene. The company produced synthetic lubricant base stocks as well as lubricant additives, propylene packaging films and catalysts. Exxon Chemical Company (first named Enjay Chemicals) became a worldwide organization in 1965 and in 1999 was a major producer and marketer of olefins, aromatics, polyethylene and polypropylene along with speciality lines such as elastomers, plasticizers, solvents, process fluids, oxo alcohols and adhesive resins. The company was an industry leader in metallocene catalyst technology to make unique polymers with improved performance.

In 1955, Socony-Vacuum became Socony Mobil Oil Co. and in 1966 simply Mobil Oil Corp. A decade later, the newly incorporated Mobil Corporation absorbed Mobil Oil as a wholly owned subsidiary. Jersey Standard changed its name to Exxon Corporation in 1972 and established Exxon as a trademark throughout the United States. In other parts of the world, Exxon and its affiliated companies continued to use its Esso trademark.

On March 24, 1989, the Exxon Valdez oil tanker struck Bligh Reef in Prince William Sound, Alaska and spilled more than 11 million US gallons (42,000 m³) of crude oil. The Exxon Valdez oil spill was the second largest in U.S. history, and in the aftermath of the Exxon Valdez incident, the U.S. Congress passed the Oil Pollution Act of 1990. An initial award of $5 billion USD punitive was reduced to $507.5 million by the US Supreme Court in June 2008, and distributions of this award have commenced.

In 1998, Exxon and Mobil signed a US$73.7 billion definitive agreement to merge and form a new company called Exxon Mobil Corporation, the largest company on the planet. After shareholder and regulatory approvals, the merger was completed on November 30, 1999. The merger of Exxon and Mobil was unique in American history because it reunited the two largest companies of John D. Rockefeller's Standard Oil trust, Standard Oil Company of New Jersey/Exxon and Standard Oil Company of New York/Mobil, which had been forcibly separated by government order nearly a century earlier. This reunion resulted in the largest merger in US corporate history.

In 2000, ExxonMobil sold a refinery in Benicia, California and 340 Exxon-branded stations to Valero Energy Corporation, as part of an FTC-mandated divestiture of California assets. ExxonMobil continues to supply petroleum products to over 700 Mobil-branded retail outlets in California.

In 2005, ExxonMobil's stock price surged in parallel with rising oil prices, surpassing General Electric as the largest corporation in the world in terms of market capitalization. At the end of 2005, it reported record profits of US $36 billion in annual income, up 42% from the previous year (the overall annual income was an all-time record for annual income by any business, and included $10 billion in the third quarter alone, also an all-time record income for a single quarter by any business). The company and the American Petroleum Institute (the oil and chemical industry's lobbying organization) put these profits in context by comparing oil industry profits to those of other large industries such as pharmaceuticals and banking.^[15][16]

On June 12, 2008, ExxonMobil announced that it was transitioning out of the direct-served retail market, citing the increasing difficulty of running gas stations under rising crude oil costs. The multi-year process will gradually phase the corporation out of the direct-served retail market, and will affect 820 company-owned stations and approximately 1,400 other stations operated by dealers distributing across the United States. The sale has not resulted in the disappearance of Exxon and Mobil branded stations; the new owners will continue to sell Exxon and Mobil-branded gasoline and license the appropriate names from ExxonMobil, who will in turn be compensated for use of the brands.^[17]

In 2010, ExxonMobil bought XTO Energy, the company focused on development and production of unconventional resources.^[18]

In terms of potential future developments, many gas and oil companies are considering the economic and environmental benefits of Floating Liquefied Natural Gas (FLNG). This is an innovative technology designed to enable the development of offshore gas resources that would otherwise remain untapped, because environmental or economic factors make it unviable to develop them via a land-based LNG operation. ExxonMobil is waiting for an appropriate project to launch its FLNG development,^[19] and the only FLNG facility currently in development is being built by Shell,^[20] due for completion in around 2017.^[21]

In 2012, ExxonMobil confirmed a deal for production and exploration activities in the Kurdistan region of Iraq.^[22]

Merger[link]

Pre-deal events[link]

Exxon-Mobil pre-merger scope (1997 data)

On June 16, 1998, Mr. Lee R. Raymond, Exxon's CEO, met with Mr. Lucio A. Noto, Mobil's CEO, at Mobil's headquarters in Fairfax, Virginia. At the meeting, Mr. Raymond and Mr. Noto had preliminary discussions about the possibility of a combination of the two companies. Later management continued discussions and permanently informed the Boards.^[23]

On August 11, 1998, The British Petroleum Company p.l.c. and Amoco Corporation announced the terms of their merger agreement. Shortly thereafter, Mr. Raymond and Mr. Noto resumed their discussions taking into account this new pricing benchmark. In mid-August 1998, the management of Mobil asked Goldman Sachs to undertake an analysis of strategic alternatives available to Mobil. On September 14, Goldman Sachs presented to the Mobil Board its analyses regarding the various possible transactions, including a possible merger with Exxon.^[23]

At a meeting on October 19, 1998 at Exxon's headquarters attended by Messrs. Raymond, Matthews, Noto and Gillespie, the parties reviewed the possible relative ownership ranges and expanded the discussions to include such issues as the representation of current Mobil directors on the board of the combined company.^[23]

During November 1998, Exxon and Mobil exchanged due diligence request lists and representatives and their advisors participated in a video conference and numerous telephone calls and meetings to conduct reciprocal legal, business, accounting and financial due diligence. A reciprocal confidentiality agreement was entered into on November 12.^[23]

On November 26, 1998, Mr. Noto and Mr. Raymond spoke by telephone to discuss reports that had appeared in the media about a possible transaction between Exxon and Mobil. On November 27, prior to the opening of NYSE trading, Exxon and Mobil issued a joint statement confirming that the two companies were in discussions of a possible business combination.^[23]

Over the course of the weekend of November 27, 1998, Exxon and Mobil representatives and outside counsel continued discussions towards resolving open issues. On the evening of November 30, Messrs. Raymond and Noto reached agreement in principle, subject to Board approval, on the exchange ratio and the resulting exercise price in the stock option agreement.^[23]

Following the approval of their Boards, Exxon and Mobil officially signed an agreement and plan of merger on December 1, 1998. Shareholders of both Exxon and Mobil approved the merger in May 1999. In September 29 of that year the European Commission granted antitrust approval. In November, 30 1999, the historic merger was completed. Mobil became a wholly owned subsidiary of Exxon. The combined company changed its name to Exxon Mobil Corporation.^[23]

^[23][24]

Mobil cumulative abnormal return (11/16/1998 – 12/14/1998)

Exxon cumulative abnormal return (11/16/1998 – 12/14/1998)

The event analysis is very limited because there was no bidding process. The only important public information was merger announcement (December 1, 1998). 10-day cumulative abnormal return (CAR) before this date was +14% for Mobil and +0.4% for Exxon. The main spike in share prices appeared during November 25 – 30 and negative returns were on the announcement day, i.e. rumors in the media influenced the pricing. Total 20-day CAR (10 days before plus 10 days after the announcement) amounted +19.5% for Mobil and +1.07% for Exxon.

Market was very positive on Exxon and Mobil on April 19 and 21, 1999 when FTC approved other two big oil mergers – BP-Amoco and Shell-Texaco. 3-day CAR reached 5.3% for Exxon and 6.8% for Mobil. Market also positively reacted on EU Commission approval: 3-day CAR was +2.2% for Mobil and +2.4% for Exxon. All these signaled that market positively assessed the merger as economically sound and value creating.

Regulators approval[link]

On September 29, 1999 EU Commission granted its approval of the merger with requirement of vast divestitures and breakup of the European refining and marketing joint venture of BP Amoco and Mobil. Mobil wanted to maintain its relationship with BP Amoco, but EC officials feared that the recent rash of mega mergers could kill off downstream competition in member countries. Mobil was also ordered to sell its share in a large chain of gasoline stations (Aral).^[25] Exxon and Mobil sold part of their lubricant base oil manufacturing capacity.

BP Amoco bought Mobil's 30% interest in their R&M JV for $1.65 billion, about the value of the assets that Mobil contributed when the deal was established. Mobil also got around $1.08 billion for its interest in Aral.^[26]

The US FTC announced on November 30, 1999 that it accepted a proposed settlement of charges that Exxon Corp’s acquisition of Mobil Corp would violate federal antitrust laws. The settlement required the largest retail divestiture in Commission history – the sale or assignment of approximately 2,431 Exxon and Mobil gas stations in the Northeast and Mid-Atlantic (1,740), California (360), Texas (319) and Guam (12). In addition, an Exxon refinery in California; terminals; a pipeline and other assets were also subject for sale.^[27]

Exxon Mobil ratios comparison

Ratios overview[link]

Exxon and Mobil return on assets, 1983–1999

Exxon had better return on assets (6.75%) and return on equity (14.57%) ratios (Mobil’s were 3.95% and 9.01% correspondingly). This situation represented Exxon’s better efficiency at using investment funds (shareholder’s equity) to generate earnings growth. Exxon was more stable and effective in using its assets, while Mobil was more volatile and risky. During 1983–1999 Exxon was superior with the exception of 1989, when tanker Exxon Valdez disaster happened and cut profits of the company.

Companies had equal gross margin (38.7% vs. 38.52%), but Exxon had higher gross operating margin (7.9%) and profit margin (5.4%) ratios than Mobil (6.56% and 3.18% correspondingly) which means that Exxon was better in cost-cutting and controlling its expenses. But in some cases low operating expenses can damage long-term profitability and competitiveness of the company.

Liquidity ratios definitely show that both companies were financially stable, but Exxon was in a better situation than Mobil. The Exxon’s current and quick ratios (0.57 and 0.91 correspondingly) were higher than the Mobil’s (0.48 and 0.67 correspondingly) and merged company had significantly improved these results. Ratio of net current assets as a % of total assets (i.e. working capital to total assets) was distorted after the merger (1.48) probably due to large divestitures that followed the deal.

Solvency status of companies also looked good. Though Exxon again showed its financial supremacy with much higher interest coverage ratio (93.41 compared to Mobil’s 7.78) Generally speaking the better interest coverage ratio means less risk but also might be bad for future performance because of the failure of the management to use additional funds for development. Debt to equity ratio was safe and stable in both companies.

Combined company showed even superior results after the merger, which proved the correlation between positive market reaction on the announcement event and success of the merger.

Deal structure[link]

Under the merger agreement, an Exxon subsidiary would merge into Mobil so that Mobil becomes a wholly owned subsidiary of Exxon Mobil. As a result, Exxon would hold 100% of Mobil’s issued and outstanding voting securities. Holders of Mobil common stock would receive 1.32015 shares of Exxon common stock for each share of Mobil common stock.^[23]

Exxon Mobil deal structure

5 days before the announcement Exxon shares price was $72 and 2,431 million shares outstanding ($175 billion market value) compared with $75.25 a share and 779.8 million shares outstanding for Mobil ($58.7 billion market value). With the exchange ratio 1.32015, Exxon paid 1,029.4 million its shares for Mobil or $74.1 billion. This was a $15.4 billion (26.2%) premium over Mobil’s market value or $94.9 a share. After the price run-up Exxon shareholders would own approximately 70% of the combined Exxon Mobil entity, while Mobil shareholders would own approximately 30%. The merger qualified as a tax-free reorganization in the US, and that it was accounted for on a “pooling of interests” basis.^[23]

In addition, the merger agreement provided for payment of termination fees of $1.5 billion. Exxon and Mobil also entered into an option agreement that granted Exxon the option to purchase up to 136.5 million shares (14.9%) of Mobil common stock at a strike price of $95.96. Exxon could exercise the option after the occurrence of an event, entitling Exxon to receive the termination fee payable by Mobil.^[23]

The termination fee and option were intended to make it more likely that the merger would be completed on the agreed terms and to discourage proposals for alternative business combinations. Among other effects, the option could prevent an alternative business combination with Mobil from being accounted for as a “pooling of interests”. Although companies introduced protection against hostile takeover, they didn’t use any collar to protect shareholders. J.P. Morgan & Co. and Davis, Polk & Wardwell advised Exxon, and Goldman Sachs & Co. and Skadden, Arps, Meagher & Flom advised Mobil.^[23]

Valuation[link]

J.P. Morgan performed traditional P/E analysis. Such analysis indicated that Mobil had been trading at an 8% to 15% discount to Exxon. J.P. Morgan's analysis indicated that if Mobil were to be valued at price to earnings multiples comparable to those of Exxon, there would be an enhancement of value to its shareholders of approximately $11 billion.^[23]

Goldman Sachs also reviewed and compared ratios and public market multiples relating to Mobil to following six publicly traded companies:^[23]

• British Petroleum Company plc,
• Chevron Corporation,
• Exxon,
• Royal Dutch Petroleum Company,
• Shell Transport & Trading Co. plc,
• Texaco Inc.

P/E multiple for these firms ranged 19.3–23.8. The analysis showed that Mobil was undervalued 5–16% relative to comparables with fair price $79–89 a share. It’s needed to notice that comparables analysis couldn’t capture the synergy effect, value creation and differences. Simple DCF analysis of Mobil as a standalone company gives range of intrinsic value of $59.8–79.5 billion or $76.7–102 per share depending on cash flow growth rate.^[23]

DCF analysis, based on the estimated pre-tax synergies of $2.8 billion expected to result from the merger, suggested a potential value creation in the short term of approximately $22–25 billion. J.P. Morgan's review suggested that over the long term, the potential for value creation from these elements could be as much as $47–57 billion. So Mobil intrinsic value for this deal was $95–$118.8 a share depending on growth rate.^[23]

Summary of Exxon Mobil merger valuation

Since Exxon's market capitalization was significantly larger than Mobil's, Exxon's shareholders would have enjoyed a greater proportion of the value creation if no premium were paid by Exxon in the merger. By offering a premium to Mobil's shareholders, this potential value creation was instead shared in approximately equal proportions between the companies' shareholders and such sharing was deemed to be a reasonable allocation of value creation. J.P. Morgan's analysis showed that for transactions involving smaller companies with a relative market capitalization comparable to that of Mobil pre-announcement, a premium of 15% to 25% matched market precedent. In comparison, BP paid 35% premium for Amoco.

10 days before the completion of the merger, Exxon market value was $184.5 billion ($76 a share) and Mobil – $77.1 billion ($98.5 a share). Pro forma market value of merged company was $261.6 billion. Right after the merger was completed, the share price of combined Exxon-Mobil was $80.56 with 3,461.5 million shares outstanding, which gave $278.8 billion market value or $17.2 billion of additional value created. This figure would be even higher if we consider pre-announcement pro forma combined market value of $233.7 billion. In this case created value reaches $45.1 billion.^[23]

Synergy[link]

The motivations for the Exxon-Mobil merger reflected the industry forces. Companies needed a secure presence in the regions with high potential for oil/gas discoveries and stronger position to make large investments. The benefits of the merger fell broadly in two categories: near-term operating synergies and capital productivity improvements.^[23]

Near-term operating synergies. $2.8 billion in annual pre-tax benefits from operating synergies (increases in production, sales and efficiency, decreases in unit costs and combining complementary operations). Management expected to realize the full benefits by the third year after the merger. During the first two years, the benefits should had been partly offset by one-time costs at $2 billion for business integration. The firms also planned to eliminate about 9,000 jobs. A year later, pre-tax annual savings were re-assessed and increased to $3.8 billion.^[28]

Capital productivity improvements. Management also believed the combined company could use its capital more profitably than either company on its own. These improvements were realized due to efficiencies of scale, cost savings, and sharing of best management practices. The businesses and assets of Exxon and Mobil were highly complementary in key areas. In the exploration and production area, for example, Mobil's and Exxon's respective strengths in West Africa, the Caspian region, Russia, South America, and North America lined up well, with minimal overlap. The firms also had a presence in natural gas, with combined sales of about 14 bcfd. And Mobil contributed its LNG assets and experience to the venture.^[23]

There were technology synergies as well. In upstream, Exxon and Mobil owned proprietary technologies in the areas of: deepwater and arctic operations, heavy oil, gas-to-liquids processing, LNG, and high-strength steel. In downstream, their proprietary technology focused on refining and chemical catalysts. Exxon’s lube base stocks production fitted well with Mobil's leadership in lubes marketing.^[23] Generally, the Exxon-Mobil deal was a move by the dominant partner to increase its asset base by 30% while raising capital productivity.

Corporate affairs[link]

The current Chairman of the Board and CEO of Exxon Mobil Corporation is Rex Tillerson. Tillerson assumed the top position on January 1, 2006, on the retirement of long-time chairman and CEO, Lee Raymond, who received a retirement and severance package of approximately $400 million USD, of which some were critical.

Board of directors[link]

As of February 5, 2009 (2009 -02-05)^[update], the current ExxonMobil board members are:^[29]

• Michael Boskin, professor of economics Stanford University, director of Oracle Corporation, Shinsei Bank, and Vodafone Group
• Larry R. Faulkner, President, Houston Endowment; President Emeritus, the University of Texas at Austin
• William W. George, professor of management practice, Harvard Business School
• James R. Houghton, Chairman of the Board, Corning Incorporated
• Reatha Clark King, former chairman, Board of Trustees, General Mills Foundation
• Philip E. Lippincott, retired Chairman of the Board, Scott Paper Company and Campbell Soup Company
• Marilyn Carlson Nelson, Chairman and CEO, Carlson Companies
• Samuel J. Palmisano, Chairman of the Board, IBM Corporation
• Joaquin Pelayo, Chairman of the Board and President, McGraw Hill.
• Steven S Reinemund, retired Executive Chairman of the Board, PepsiCo
• Walter V. Shipley, retired Chairman of the Board, Chase Manhattan Corporation
• Rex Tillerson, Chairman of the Board and Chief Executive Officer, Exxon Mobil Corporation
• Edward E. Whitacre, retired Chairman of the Board and Chief Executive Officer, AT&T

Joint ventures and other strategic alliances[link]

• Imperial Oil 70% Ownership in Imperial Oil

• Infineum is a joint venture between ExxonMobil and Royal Dutch Shell for manufacturing and marketing lubricant and fuel additives.

• Aera Energy LLC is an E&P joint venture with Shell Oil, operating in California.

• On August 30, 2011, ExxonMobil announced a $3.2 billion joint venture with Russian oil company Rosneft to develop two offshore oil fields in Russia, the East-Prinovozemelsky field in the Kara Sea and the Tuapse field in the Black Sea.^[30]

• ExxonMobil Yugen Kaisha holds a 50.02 percent stake in TonenGeneral Sekiyu K.K., but in January 2012 TonenGeneral Sekiyu KK agreed to acquire 99 percent of ExxonMobil Yugen Kaisha for 302 billion yen ($3.9 billion). It is the biggest divesture for Exxon since the 1999 deal with Mobil Corporation and Exxon stake in TonenGeneral decline to 22 percent from 50 percent, but the Japanese refiner will retain exclusive rights to use its brands.^[31][32]

Production[link]

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3 percent of the world's oil and about 2 percent of the world's energy.^[33]

ExxonMobil, like other oil companies, is struggling to find new sources of oil. According to Wall Street Journal it replaces only 95% by volume of the oil it pumps. This stands in contrast to natural gas, where it replaces 158% by volume through purchases or finds.^[34]

ExxonMobil is a signatory participant of the Voluntary Principles on Security and Human Rights.

Revenue and profits[link]

In 2005, ExxonMobil surpassed Wal-Mart as the world's largest publicly held corporation when measured by revenue, although Wal-Mart remained the largest by number of employees.^[35] ExxonMobil's $340 billion revenues in 2005 were a 25.5 percent increase over their 2004 revenues.

In 2006, Wal-Mart recaptured the lead with revenues of $348.7 billion against ExxonMobil's $335.1. ExxonMobil continued to lead the world in both profits ($39.5 billion in 2006) and market value ($460.43 billion).^[36]

In 2007, ExxonMobil had a record net income of $40.61 billion on $404.552 of revenue, an increase largely due to escalating oil prices as their actual oil equivalent production decreased by 1%, in part due to expropriation of their Venezuelan assets by the Chavez government.^[37]

As of July 1, 2010, ExxonMobil occupied 8 out of 10 slots for Largest Corporate Quarterly Earnings of All Time. Furthermore, it occupies 5 out of 10 slots on Largest Corporate Annual Earnings.^[38][39]

Financial data[link]

Environmental record[link]

ExxonMobil has been a contributor to environmental causes (the company donated $6.6 million to environmental and social groups in 2007).^[41] Its environmental record has been a target of critics from outside organizations such as the environmental lobby group Greenpeace as well as some institutional investors who disagree with its stance on global warming.^[42] The Political Economy Research Institute ranks ExxonMobil sixth among corporations emitting airborne pollutants in the United States. The ranking is based on the quantity (15.5 million pounds in 2005) and toxicity of the emissions.^[43] In 2005, ExxonMobil had committed less than 1% of their profits towards researching alternative energy,^[44] less than other leading oil companies.^[45]

Exxon Valdez oil spill[link]

The March 24, 1989 Exxon Valdez oil spill resulted in the discharge of approximately 11 million US gallons (42,000 m³) of oil into Prince William Sound,^[46] oiling 1,300 miles (2,100 km) of the remote Alaskan coastline. The State of Alaska's Exxon Valdez Oil Spill Trustee Council stated that the spill "is widely considered the number one spill worldwide in terms of damage to the environment",^[46] but many larger spills have occurred.

Exxon was widely criticized for its slow response to cleaning up the disaster. John Devens, the Mayor of Valdez, has said his community felt betrayed by Exxon's inadequate response to the crisis.^[47] Exxon later removed the name "Exxon" from its tanker shipping subsidiary, which it renamed "SeaRiver Maritime." The renamed subsidiary, though wholly Exxon-controlled, has a separate corporate charter and board of directors, and the former Exxon Valdez is now the SeaRiver Mediterranean. The renamed tanker is legally owned by a small, stand-alone company, which would have minimal ability to pay out on claims in the event of a further accident.^[48]

After a trial, a jury ordered Exxon to pay $5 billion in punitive damages, though an appeals court reduced that amount by half. Exxon appealed further, and on June 25, 2008, the United States Supreme Court lowered the amount to $500 million.^[49]

In 2009, Exxon still uses more single-hull tankers than the rest of the largest ten oil companies combined, including the Valdez's sister ship, the SeaRiver Long Beach.^[50]

Exxon's Brooklyn oil spill[link]

New York Attorney General Andrew Cuomo announced on July 17, 2007 that he had filed suit against the Exxon Mobil Corporation and ExxonMobil Refining and Supply Company to force cleanup of the oil spill at Greenpoint, Brooklyn, and to restore Newtown Creek.^[51]

A study of the spill released by the US Environmental Protection Agency in September 2007 reported^[52] that the spill consists of 17 to 30 million US gallons (64,000 to 110,000 m³) of petroleum products from the mid-19th century to the mid-20th century.^[53] The largest portion of these operations were by ExxonMobil or its predecessors. By comparison, the Exxon Valdez oil spill was approximately 11 million US gallons (42,000 m³).^[46] The study reported that in the early 20th century Standard Oil of New York operated a major refinery in the area where the spill is located. The refinery produced fuel oils, gasoline, kerosene and solvents. Naptha and gas oil, secondary products, were also stored in the refinery area. Standard Oil of New York later became Mobil, a predecessor to Exxon/Mobil.^[54]

Baton Rouge Refinery pipeline oil spill[link]

In April 2012, a crude oil pipeline from the Exxon Corp Baton Rouge Refinery, busted and spilled at least 1,900 barrels of oil,(80,000 gallons)in the rivers of Point Coupee Parish, Louisiana shutting down the Exxon Corp Baton Refinery for a few days. Regulators opened an investigation in response to the pipeine oil spill. Local Louisiana residents were not informed until days after the Exxon pipeline oil spill.^[55]

Yellowstone River oil spill[link]

Map of the Yellowstone River watershed

The July 2011 Yellowstone River oil spill was an oil spill from an ExxonMobil pipeline running from Silver Tip to Billings, Montana, which ruptured about 10 miles west of Billings on July 1, 2011 at about 11:30 pm^[56] The resulting spill leaked an estimated 750 to 1,000 barrels of oil into the Yellowstone River for about 30 minutes before it was shut down.^[57]

As a precaution against a possible explosion, officials in Laurel, Montana evacuated about 140 people on Saturday (July 2) just after midnight, then allowed them to return at 4 am^[56]

A spokesman for Exxon Mobil said that the oil is within 10 miles of the spill site. However, Montana Governor Brian Schweitzer disputed the accuracy of that figure.^[58] The governor pledged that "The parties responsible will restore the Yellowstone River."^[57]

Sakhalin-I in the Russian Far East[link]

Scientists and environmental groups voice concern that the Sakhalin-I oil and gas project in the Russian Far East, operated by an ExxonMobil subsidiary, Exxon Neftegas Limited (ENL),^[59][60] threatens the critically endangered western gray whale population.^[61][62][63] In February, 2009, independent scientists, convened by the International Union for the Conservation of Nature issued an urgent call for a "...moratorium on all industrial activities, both maritime and terrestrial, that have the potential to disturb gray whales in summer and autumn on and near their main feeding areas" following a sharp decline in observed whales in the main feeding area in 2008, adjacent to ENL's project area.^[64] The scientists also criticized ENL’s unwillingness to cooperate with the scientific panel process, which “certainly impedes the cause of western gray whale conservation.”^[65]

Funding of global warming skeptics[link]

ExxonMobil has been accused of paying to fuel skepticism of anthropogenic global warming (i.e. the belief that an increase in the temperature of the earth's atmosphere is due to the greenhouse effect, caused primarily by increased levels of carbon dioxide released in the burning of coal and petroleum-based fuels).^[66][67]

ExxonMobil has drawn criticism from the environmental lobby for funding organizations critical of the Kyoto Protocol and skeptical of the scientific opinion that global warming is caused by the burning of fossil fuels. According to Mother Jones Magazine, the company channeled more than $8 million to forty different organizations that challenged the scientific evidence of global warming^[68] and that the company was a member of one of the first such skeptic groups, the Global Climate Coalition, founded in 1989.^[68] According to The Guardian, ExxonMobil has funded, among other groups skeptical of global warming, the Competitive Enterprise Institute, George C. Marshall Institute, Heartland Institute, Congress on Racial Equality, TechCentralStation.com, and International Policy Network.^[69][70] ExxonMobil's support for these organizations has drawn criticism from the Royal Society, the academy of sciences of the United Kingdom.^[71] The Union of Concerned Scientists released a report in 2007 accusing ExxonMobil of spending $16 million, between 1998 and 2005, towards 43 advocacy organizations which dispute the impact of global warming.^[72] The report argued that ExxonMobil used disinformation tactics similar to those used by the tobacco industry in its denials of the link between lung cancer and smoking, saying that the company used "many of the same organizations and personnel to cloud the scientific understanding of climate change and delay action on the issue."^[72] These charges are consistent with a purported 1998 internal ExxonMobil strategy memo, posted by the environmental group Environmental Defense, stating

Victory will be achieved when

• Average citizens [and the media] 'understand' (recognize) uncertainties in climate science; recognition of uncertainties becomes part of the 'conventional wisdom' …^{[citation needed]}
• Industry senior leadership understands uncertainties in climate science, making them stronger ambassadors to those who shape climate policy^{[citation needed]}
• Those promoting the Kyoto treaty on the basis of extant science appear out of touch with reality.^[73]

ExxonMobil has been reported as having plans to invest up to US$100m over a ten year period in Stanford University's Global Climate and Energy Project.^[74]

A survey carried out by the UK's Royal Society found that in 2005 ExxonMobil distributed $2.9m to 39 groups that the society said "misrepresented the science of climate change by outright denial of the evidence".^[75]

In August 2006, the Wall Street Journal revealed that a YouTube video lampooning Al Gore, titled Al Gore's Penguin Army, appeared to be astroturfing by DCI Group, a Washington PR firm with ties to ExxonMobil.^[76][77]

In January 2007, the company appeared to change its position, when vice president for public affairs Kenneth Cohen said "we know enough now—or, society knows enough now—that the risk is serious and action should be taken." Cohen stated that, as of 2006, ExxonMobil had ceased funding of the Competitive Enterprise Institute and "'five or six' similar groups".^[78] While the company did not publicly state which the other similar groups were, a May 2007 report by Greenpeace does list the five groups it stopped funding as well as a list of 41 other climate skeptic groups which are still receiving ExxonMobil funds.^[79]

On February 13, 2007, ExxonMobil CEO Rex W. Tillerson acknowledged that the planet was warming while carbon dioxide levels were increasing, but in the same speech gave an unqualified defense of the oil industry and predicted that hydrocarbons would dominate the world’s transportation as energy demand grows by an expected 40 percent by 2030. Tillerson stated that there is no significant alternative to oil in coming decades, and that ExxonMobil would continue to make petroleum and natural gas its primary products,^[80] saying: "I'm no expert on biofuels. I don't know much about farming and I don't know much about moonshine. ... There is really nothing ExxonMobil can bring to that whole biofuels issue. We don't see a direct role for ourselves with today's technology."^[81] However, recently Exxonmobil has announced that it will plan on spending up to 600 million dollars within the next 10 years to fund biofuels that come from algae. On July 14, 2010 Exxonmobil announced that, a year after teaming with Synthetic Genomics, Inc., they had opened a greenhouse to research algae as a possible biofuel.^[82]

On July 1, 2009, The Guardian newspaper revealed that ExxonMobil has continued to fund organizations including the National Center for Policy Analysis (NCPA) along with the Heritage Foundation, despite a public pledge to cut support of lobby groups who deny climate change.^[83]

Criticism[link]

ExxonMobil has been reported to be a major financier of the Republican Party^[84]

Funding of climate change skepticism[link]

A recent analysis by Carbon Brief from 2011 concluded that 9 out of 10 climate scientists who claim that climate change is not happening, have ties to ExxonMobil. The results showed that out of the 938 papers cited by climate sceptics, 186 of them were written by only ten men, and foremost among them was Dr Craig D. Idso, who personally authored 67 of them. Idso is the president of the Center for the Study of Carbon Dioxide and Global Change, an ExxonMobil funded think tank. The second most prolific was Dr Patrick Michaels, a senior fellow at the Cato Institute, who receives roughly 40% of his funding from the oil industry. This goes in parallel with the work of the Koch industries; Koch industries is the second largest privately held company in the US, and in the past 50 years, they have invested more than 50,000,000 dollars in spreading awareness of research which discredits global warming, according to Greenpeace.^[85][86][87]

Environment[link]

The Exxon Valdez oil spill in Prince William Sound, Alaska, on March 24, 1989, was a watershed moment for environmental critics of the oil industry.

Foreign business practices[link]

Investigative reporting by Forbes Magazine raised questions about ExxonMobil's dealings with the leaders of oil-rich nations. ExxonMobil controls concessions covering 11 million acres (45,000 km²) off the coast of Angola that hold an estimated 7.5 billion barrels (1.19×10⁹ m³) of crude.^[88]

In 2003, the Office of Foreign Assets Control reported that ExxonMobil engaged in illegal trade with Sudan and it, along with dozens of other companies, settled with the United States government for $50,000.^[89]

In March 2003, James Giffen of the Mercator Corporation was indicted, accused of bribing President Nursultan Nazarbayev of Kazakhstan with $78 million to help ExxonMobil win a 25 percent share of the Tengiz oilfield, the third largest in the world. On April 2, 2003, former-Mobil executive J. Bryan Williams was indicted on tax charges relating to this same transaction. The case is the largest under the Foreign Corrupt Practices Act.^[90] This series of events is depicted in the film Syriana.

In a U.S. Department of Justice release dated September 18, 2003, the United States Attorney for the Southern District of New York announced that J. Bryan Williams, a former senior executive of Mobil Oil Corporation, had been sentenced to three years and ten months in prison on charges of evading income taxes on more than $7 million in unreported income, "including a $2 million kickback he received in connection with Mobil's oil business in Kazakhstan." According to documents filed with the court, Williams' unreported income included millions of dollars in kickbacks from governments, persons, and other entities with whom Williams conducted business while employed by Mobil. In addition to his sentence, Williams must pay a fine of $25,000 and more than $3.5 million in restitution to the IRS, in addition to penalties and interest.^[91]

Human rights[link]

ExxonMobil is the target of human rights activists for actions taken by the corporation in the Indonesian territory of Aceh. In June 2001 a lawsuit against ExxonMobil was filed in the Federal District Court of the District of Columbia under the Alien Tort Claims Act. The suit alleges that the ExxonMobil knowingly assisted human rights violations, including torture, murder and rape, by employing and providing material support to Indonesian military forces, who committed the alleged offenses during civil unrest in Aceh. Human rights complaints involving Exxon's (Exxon and Mobil had not yet merged) relationship with the Indonesian military first arose in 1992; the company denies these accusations and filed a motion to dismiss the suit, which was denied in 2008 by a federal judge,^[92] but then dismissed in August 2009 by a different federal judge.^[93] The dismissal is currently under appeal.

LGBT[link]

When Exxon Corporation merged with Mobil Corporation in 1999, the newly merged company ended enrollment in Mobil Corporation's domestic partner benefits for same-sex partners of employees, and it rescinded formal prohibitions against discrimination based on sexual orientation by removing it from the company's Equal Employment Opportunity policy.^[94] In 2010 the Human Rights Campaign, an LGBT lobbying group and political action committee, gave Exxon Mobil a score of "0" in its Corporate Equality Index, a scorecard that rated 590 companies on several criteria including diversity training that covers gender identity issues, transgender-inclusive medical coverage including surgical procedures, and "positively engaging the external LGBT community."^[95] On May 26, 2010 ExxonMobil shareholders voted down LGBT benefits for its employees – only 22% of shareholders voted yes for the issue.^[96]

Headquarters[link]

ExxonMobil's headquarters are located in Irving, Texas.^[97]

A picture of the 'Project Delta' construction site in Spring, TX, just north of Houston, TX.: Credits – Construction Citizen

As of January 2010, the company is conducting an internal study regarding possible consolidation of facilities to the northern Houston suburb of Spring, at the intersection of Interstate 45 and the Hardy Toll Road. Architectural documents obtained by the Houston Chronicle outline an elaborate corporate campus, including twenty office buildings totaling 3,000,000 square feet (280,000 m²), a wellness center, laboratory, and multiple parking garages.^[98] Alan Jeffers, a spokesperson for the company, did not say whether the consolidation study includes the Irving headquarters, but definitely includes the Fairfax headquarters. Chris Wallace, the chief executive of the Greater Irving-Las Colinas Chamber of Commerce, said that he believed that it does include the headquarters.^[99] In October 2010 the company stated that it would not move its headquarters to Greater Houston.^[100]

Since then, the corporation has acknowledged a move to a suburb between The Woodlands, TX and Spring, TX. This campus will be built to house 8,000 employees, and will be an environment that is suitable for work, play, and life. Beginning early in 2014, and ending some time in 2015, employees will move into the campus and begin work. ExxonMobil hopes to install this as its permanent corporate headquarters.^[101]

See also[link]

	Dallas-Fort Worth portal
	Companies portal
	Energy portal
	United States portal

• Baton Rouge Refinery (in Louisiana, United States)
• Exxon Corp. v. Exxon Insurance Consultants International Ltd
• Kivalina v. ExxonMobil Corp., Et al.
• List of companies by revenue
• Save the Tiger Fund

Further reading[link]

• Private Empire: ExxonMobil and American Power Steve Coll (2012) ISBN 978-1594203350 ^[102]

Notes[link]

References[link]

Bibliography[link]

• Bender, Rob, and Tammy Cannoy-Bender. An Unauthorized Guide to: Mobil Collectibles – Chasing the Red Horse. Atglen, Pennsylvania: Schiffer Publishing Company, 1999.
• Exxon Corporation. Century of Discovery: An Exxon Album. 1982.
• Gibb, George S., and Evelyn H. Knowlton. The Resurgent Years, 1911–1927: History of Standard Oil Company (New Jersey). New York: Harper & Brothers Publishers, 1956.
• Hidy, Ralph W., and Muriel E. Hidy. Pioneering in Big Business, 1882–1911: History of Standard Oil Company (New Jersey). New York: Harper & Brothers Publishers, 1955.
• Larson, Henrietta M., and Kenneth Wiggins Porter. History of Humble Oil & Refining Company: A Study in Industrial Growth. New York: Harper & Brothers Publishers, 1959.
• Larson, Henrietta M., Evelyn H. Knowlton, and Charles S. Popple. New Horizons, 1927–1950: History of Standard Oil Company (New Jersey). New York: Harper & Row, 1971.
• McIntyre, J. Sam. The Esso Collectibles Handbook: Memorabilia from Standard Oil of New Jersey. Atglen, Pennsylvania: Schiffer Publishing Company, 1998.
• Sampson, Anthony. The Seven Sisters: The 100-year Battle for the World's Oil Supply. New York: Bantom Books, 1991.
• Standard Oil Company (New Jersey). Ships of the Esso Fleet in World War II. 1946.
• Tarbell, Ida M. All in a Day’s Work: An Autobiography.. New York: The MacMillan Company, 1939.
• Tarbell, Ida M., and David Mark Chalmers. The History of the Standard Oil Company. New York: Harper & Row, 1966.
• Wall, Bennett H. Growth in a Changing Environment: A History of Standard Oil Company (New Jersey) 1950–1972 and Exxon Corporation (1972–1975). New York: McGraw-Hill Book Company, 1988.
• Yergin, Daniel. The Prize: The Epic Quest for Oil, Money, and Power. New York: Simon & Schuster, 1991.

External links[link]

Wikimedia Commons has media related to: ExxonMobil

• List of largest shareholders
• Company Overview of Exxon Mobil
• The Lamp company public information journal