Company/Leadership Profile

Exxon Mobil is an energy company with a wide range of products within their portfolio

including everything from crude oil to industrial lubricants. It serves as the second largest company in

the world through market capitalization. Exxon Mobil recently peaked a value of $500 billion and in

2007 obtained a net income of $40.6 billion; the highest in U.S. corporate history. The company makes

the majority of its earnings through upstream exploration and production activities by producing

4.18million barrels of oil equivalent (MMBOE) every day in 2007. Generating a total of 3% of the

world’s oil and 2% of the global energy production, Exxon Mobil contributes as an international leader

in the energy sector of oil, gas and consumable fuels industry. “Exxon Mobil is a manufacturer and

marketer of commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene

plastics and a range of specialty products.” (“Exxon Overview”)

Exxon Mobil holds various branches of their company such as Exxon Yemen Inc. and different

gas stations including Exxon, Mobil, and Esso. Exxon Yemen Inc. focuses on exploration and

production in Yemen Arab Republic and is under joint venture with Yemen Hunt Oil Company (“Exxon

Overview”). The Mobil brand is marketed around the world and is known for performance, innovation,

and highly recognized in the UK for its advanced technology in lubricants. “For more than a century,

customers around the world have come to respect and rely on Esso-branded fuels, services and

lubricants for their personal and business needs,” (“Esso”). Exxon Mobil develops and sells

petrochemicals and holds a unit that mines coal and other minerals in China.

Major competitors of Exxon Mobil include BP, Chevron Texaco Corporation, Conoco Phillips,

and Total SA. In comparison to its competitors, Exxon Mobil consistently produces the highest revenue,

income, and returns on capital employed. “Exxon also excels in technological advances, and its safety

record led the industry in 2006,” (“Stock Quote and Company Profile”). In terms of market capital,

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Exxon Mobil earns around $497.1 billion which is well above the industry average of $15.4 billion. The

sales of Exxon Mobil also towered over its competitors at $404.5 billion compared $13.1 billion

industry average. Exxon Mobil’s stock is currently going for $93.17 USD a share which still serves to be

slightly higher than its toughest competitor (Chevron Corp.) at $92.89 USD (“Exxon Mobil Corporation

Stock Report”).

In 2006, Mr. Rex Tillerson was elected Chairmen and Chief Executive Officer (CEO) of Exxon

Mobil. He served as the President and Director in 2004; and the Senior Vice President in 2001. Upon

joining Exxon Mobil in 1975, Tillerson has held a variety of management positions in domestic and

foreign operations. He also “held several engineering, technical and supervisory assignments in the

EUSA Production Department throughout Texas and was named Business Development Manager in

1987” (“Stock Quote and Company Profile”). Recently, Fortune Magazine has named Rex Tillerson the

number six most powerful man in business. “Tillerson makes no apologies for running the world’s

biggest non-state-run oil company. Exxon Mobil gets high marks for the quality of its operations and it

stock has out-distanced on Tillerson’s watch,” (“25 Most Powerful People”). Furthermore, Tillerson is

extremely notable for trying a modest approach of PR through acknowledging the possibility of global

warming which is a topic his predecessor never touched in the past. CEO, Rex Tillerson, carries out his

approach through publicly supporting environmental organizations that deal with the possibility of

global warming. Although Exxon Mobil as a company has not taken extreme steps to becoming more

environmentally efficient, the money Tillerson has put forth supports the research and development of

global warming.

Exxon Mobil has 107,100 employees and holds its headquarters in Irving, Texas. The company

is organized by product in a number of global operating divisions. Furthermore, these divisions are

grouped into three different categories including upstream, downstream, and chemical (“Exxon

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Overview”). The upstream operating division of Exxon Mobil is located in Houston, Texas and

concentrates on oil exploration, extraction and shipping and whole sale operations. The company has

upstream activities in about 40 different countries and is a leading producer both on and offshore.

Exxon Mobil is also the largest nongovernment gas marketer and reserves holder. The downstream

division is located in Fairfax, Virginia and works with marketing, refining, and retail operations in

Exxon Mobil. Marketing of fuels under the Exxon, Mobil, and Esso brands also falls under the

downstream activities. Chemical is the third segment of the company is located in headquarters and

deals with the various petrochemicals of the company. The Chemical division is one of the world’s

largest petrochemical companies and is an integrated manufacturer and global marketer of numerous

products such as olefins, aromatics, fluids, synthetic rubber, polyethylene, packaging films, and

synthetic plasticizers (“About Exxon Mobil”). According to Exxon Mobil’s 2006 Citizen Report, their

primary responsibility as a company is to produce the energy the world needs in an economically,

environmentally, and socially responsible manner. They remain “committed to finding practical, broad-

based solutions that will help ensure reliable, affordable for people around the world,” (“2006 Citizen

Report”). Exxon Mobil recognizes the energy needs and demands of the world and understands that in

the hierarchy of needs, energy ranks high. Because of this, Exxon Mobil is constantly striving to meet

these growing needs. They work to meet the energy demands while addressing the global climate

change. At Exxon Mobil, strategies are being implemented to reduce greenhouse gas emissions at their

facilities. They are also deploying energy-efficient technologies across global operations and partnering

with engine manufacturers and automakers to improve consumers’ fuel efficiency.

In regards to the corporate ethics code, Exxon Mobil complies with all governmental laws, rules,

and regulations applicable to its business. “The corporation cares how results are obtained, not just that

they are obtained,” (“2006 Citizen Report”). Integrity is a major standard within Exxon Mobil and all

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transactions are accurately reflected in its books and records. Furthermore, employees are expected to

accurately record every transaction in the Corporation’s books and records, and to be forthcoming and

honest with Exxon Mobil’s internal and independent auditors. “All employees are responsible for

reporting material information known to them to higher management so that the information will be

available to senior executives responsible for making disclosure decisions,” (“Exxon Overview”).

Exxon Mobil conducts internal audits which have unrestricted access to all facilities, personnel, and

records, and are trained to report on control issues. The internal auditors investigate those suspected of

policy violations of law, business practices, or internal control procedures. Exxon Mobil demonstrates

integrity-based ethics codes that define the organization’s guiding values, create an environment that

supports ethically sound behavior, and stress a shared accountability among employees.

Exxon Mobil holds social responsibility in high regard, contributes to numerous social causes,

and supports various charities around the world. In Canada, Exxon Mobil helped develop a platform

operations training program in the Nova Scotia Community College by donating $1.4 million. Exxon

Mobil also established an Enterprise Development Center in Astana, Kazakhstan which provides

potential female entrepreneurs with strategic counseling services and training in the areas of financial,

marketing and human resource management. “ExxonMobil funded a UNICEF grant to improve water

and environmental sanitation in school on Equatorial Guinea. This project has a constructed latrines and

water wells in pre-schools and primary school,” (“2006 Citizen Report”). In 1974, Exxon Mobil helped

to establish the National Action Council for Minorities in Engineering (NACME) in the United States.

NACME has proved to be the largest private source provider of scholarships to minority engineering

students in the U.S. “Exxon Mobil typically sponsors about 750 summer internships and co-op jobs

throughout the world each year,” (“Exxon Mobil Corporation Stock Report”). The company is also

concerned with programs targeted to worldwide health issues because Exxon Mobil believes good health

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to be a springboard to opportunity, achievement and development. In the United States, Exxon Mobil

focuses on public health education and research as it relates to their business. “Exxon Mobil believes in

creating a positive and lasting social impact by developing successful partnerships built on mutual trust

and respect,” (“2006 Citizen Report”).

Marketing

The Exxon Mobil Company contributes both to a business-to-business (B2B) market as well as a

business-to-consumer (B2C) market. The B2B market that Exxon Mobil participates in sells a variety of

products and services to other corporations and small businesses around the world. Lubricants

(commercial and industrial, aviation/marine lubricants), fuels (gasoline, diesel, aviation/marine fuels),

lubrication services (oil analysis, integrated lubrication services, expertise services), base stocks,

petroleum specialties, and chemical supplies all make up Exxon Mobil’s business-to-business market.

Exxon Mobil’s B2C market sells fuels (gasoline, diesel, heating oil, etc.), lubricants (personal vehicles,

aviation lubricants), opening convenience stores, marts, service stations (car wash, repair services), and

travel services (travel guides, Speedpass, station locators) all to the everyday customer in need of their

products or services. By holding relationships with business customers and consumers, Exxon Mobil

has an immense B2B market as well as a B2C market. (“About ExxonMobil”)

Exxon Mobil focuses on using innovation and technology to further the market for natural gas

and oil. As the world’s largest publicly traded oil and gas company, Exxon Mobil explores, sells, and

produces crude oil, natural gas, and petroleum products internationally. In terms of product

classification, Exxon Mobil sells convenience products such as gasoline and lubricants. Customers have

to put forth little or no effort to find these products when needed. The target market that Exxon Mobil

gears their services towards encompasses multiple businesses and consumers that need fuels, lubricants

or other goods offered by the company. The most popular and frequently used modes of transportation

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all require such products to run, therefore, the target market is open to everyone and anyone in need.

Marketers of Exxon Mobil, focus on group behavior of geographic segmentation. Gas stations

providing Exxon Mobil fuel are placed in high-traffic, high-population areas where the most sales will

be made. Exxon Mobil is mostly at the maturity stage of the product life cycle (PLC). This company

has developed into a massive industry provider which makes it hard to grow much more. As one of the

leading providers in its industry, sales for Exxon Mobil are generally the same though are occasionally

growing. However, like many companies, sales, profits and number of competitors all change over time.

(“Exxon Mobil Information Sheet”)

The market for natural gas and oil is an oligopoly, where there are few sellers but many

consumers. In this oligopoly, the prices that each corporation charges must rise and fall together in order

for them stay a competitor in the market. The OPEC governmental body controls the supply, flow, and

price of these goods. The image of Exxon Mobil relies heavily on their environmental policies and

regulations due to the ongoing greenhouse gas issues. Exxon Mobil’s main goals include research for

innovative technologies to improve the way they extract, produce and sell their goods that is

environmentally friendly and efficient. Exxon Mobil promotes their product through advertising their

name in environmental charities and organizations that they support. This strategy helps sell their

product and promote their image as environmentally friendly and socially responsible. (“Exxon

Overview”)

The placement and distribution of products are important factors in the success of the

corporation. The Exxon Mobil Company owns multiple brand names that are recognizable throughout

the world. Exxon Mobil, Esso, Mobil, Synergy, Speedpass, On the Run, Smiles Driver’s Rewards, and

Mobil L-P Gas are all under the umbrella that makes up the Exxon Mobil family. Organization,

education, and efficiency are what have made Exxon Mobil such a reliable and internationally

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successful company. The process of extracting oil from the ground or the sea, the transportation of crude

oil, and finally the refining process is what allows gasoline and other products to be distributed to the

3,400 retail service stations across the world. The Exxon Mobil Company explores 35 different countries

for resources, has production sites in 25 countries and works with 40 refineries that are located in 20

countries—all spread across every region of the world. The company supplies refined products to more

than 35,000 service stations in 100 countries. It also provides fuel to 700 airports and more than 200

ports. All of these sites work together to help Exxon Mobil fulfill its goal of providing energy in an

economically and socially responsible way. (“About Exxon Mobil”)

Exxon Mobil reaches its consumers in many ways; one of its most recent campaigns was

sponsoring the Masters Golf Tournament in April of 2008. Through this campaign, they highlighted

their environmentally friendly and socially responsible means of distributing their products throughout

the world. Concerns for the well-being of the environment have been in the political spotlight in recent

years. Exxon Mobil has made this issue the center of their promotions and campaigning, showing the

world what they are doing to solve environmental concerns. Their company name is attached to their

many donations to charities such as: African Health Initiative, and Educating Women and Girls

Initiative, and work to improve education worldwide. In other efforts, Exxon Mobil has prided

themselves in reducing the number of oil spills to a record low and reducing the use of electronic energy

in their facilities. Other means of promotion is the fact the Exxon Mobil’s brands are some of the most

recognizable names in the world. Over three thousand service stations can be seen in many countries

and populated cities, internationally. Each service station helps boost their popularity and has helped the

Exxon brands become a household name for its target market. Exxon Mobil manufactures products and

then distributes them to retailers, as well as markets directly to their customer. This helps get the

company’s product to the market. (“Exxon Mobil Information Sheet”)

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ExxonMobil Financial Performance

The Income Statement: Revenue and Profit Trends

Exxon Mobil’s revenue took in $404.6 billion in 2007 which was much higher than both revenue

in 2006 ($377.6 billion) and 2005 ($371.1 billion). Like the revenue, Exxon Mobil’s gross profit

increased as well. In 2005, profit reached $158.1 billion; in 2006 profit was $164.1 billion and recently

in 2007, gross profit was $172.0 billion. Over the course of the last five years, Exxon Mobil’s total

revenue has increased. Furthermore, their biggest growth in revenue was between 2003 and 2005

having an average of 30% increase (see appendix, figure 1). The increase in both revenue and gross

profit is due to the fact that oil prices have risen in the past two to three years, which has resulted in

greater income for Exxon Mobil.

Balance Sheet Information, Cash Position

Exxon Mobil’s total assets in 2007 were $242 billion. The primary portion of their money is

attributed to their property, plants and equipment. Other company assets include long term investments,

good will, and intangible assets. Liabilities in 2007 reached $120 billion with current liabilities of $58

billion. Exxon Mobil also contributes its other liabilities to long term debt and deferred long term

liability charges (see appendix, table 5). Cash flow for Exxon Mobil at the end of 2007 was $52 billion

from operating activities. Because one-fifth of their total net worth is available in cash, Exxon Mobil is

financially able to take on short term debt (“Balance Sheet: XOM”). In terms of current ratio, Exxon

Mobil holds the best at 1.5 in comparison to its competitors of Chevron (1.2) and British Petroleum

(1.05).

Stock Performance

Exxon Mobil Corporation, just like the rest of the oil and gas industry, has been very successful

over the past 5 years (See appendix, figure 2). The stock has increased every year since 2003, having its

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best year in 2005 with a 39.1% return. It is currently being offered around $94.00 per share (4/18/08).

The Earning per Share (EPS) is 12.91 and the Price-to-Earning (P/E) ratio is 7.282. The EPS is at sound

value and means that the company is making $12.91 per share. The P/E ratio implies that the risk in this

stock is not great and it has good stability. The stock has split has split five times in its existence but the

last dates back to July 19, 2001. (See appendix, figure 3)

Oil and gas industry, regardless of share holders, receives a lot of attention from the media

because America’s economy is currently heavily dependent on oil. Exxon Mobil has reported this year

that they are going to be increasing capital spending for the next five years (until 2012). They plan to

spend a $25 billion per year (total of $125 billion) that will be invested in a wide range of projects.

Some projects include improving technological tools and chemical plants, and increase the refining

capacity. The primary purpose for these expenses is to be able to produce more oil. Exxon Mobil also

noted that a percentage of this increase in expenses will be used for labor and equipment that is more

costly. Just in the past year, Exxon Mobil paid 18% more to produce the same barrel of oil that they did

a year ago because of increased labor and equipment costs.

Experts are divided about Exxon Mobil’s increase in expenses will have on the future of the

company. Some believe that these expenses will just be a series of other costs. Furthermore, the

additional expenses compounded with their projected cost figures will leave less room for profit and

they project the stock will go down. Contrary to this belief, other experts have faith in Exxon Mobil’s

track record over the years and respect for the company. They highlight the 2007 profits being higher

than any other US company. Furthermore, spending is seen as a good sign to ensure the company stays

current and competitive in their industry. Even with additional spending, these experts feel they will still

be able to maintain their high profits and project the stock to go up. (“Stock Quote and Company

Profile”)

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 This increase in spending is not unique to Exxon Mobil or the oil industry. Many of their

competitors are increasing expenses for similar reasons. Royal Dutch Shell has projected $24 billion in

expenses, Chevron ($23 billion), and British Petroleum ($22 billion). Some experts say that it is

encouraging that Exxon Mobil has increased spending and have devoted the most money out of these

companies. It would be a bad sign if they did not.

Currently in 2008, the stock has declined by 7%. The main tribulation for this decline is Exxon

Mobil’s plan to increase spending while the U.S. economy shows signs of decline. Investors are worried

that the amount of oil used will fall as long as the U.S. economy is not booming. Until the economy

begins to turn around, some experts believe that this decline in the Exxon Mobil stock will continue to

fall. (“Stock of the Day”)

SWOT Factors and Investment Recommendations

The strengths of the Exxon Mobil Company are found in their marketing strategies and financial

investments. The company distributes a broad base of products that are available on both a business to

business market as well as a business to consumer market. As a population, the world relies heavily on

the resources supplied by Exxon Mobil. Therefore, efficiency in processes of extraction, transportation,

refining, and distribution add to the strength of the company. Exxon Mobil has an ongoing reputation as

an environmentally friendly and socially responsible corporation which helps create relationships with

their customers. This enhances both their popularity and overall success in the marketplace. Another

strength that Exxon Mobil possesses is their consistent use of innovation and new technological

resources to improve their products and control environmental concerns. Because there is a constant

demand for oil and petroleum, Exxon Mobil has benefited from the recent price increases that have

resulted in greater revenues. From an investor’s point of view, this company has a strong portfolio.

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Though the stock is expensive, the P/E ratio shows that the investment risk is small and the stock is

stable. (“About Exxon Mobil”)

Though there is great strength that contributes to Exxon Mobil’s success, the company also faces

many weaknesses. Environmentalists place great pressure on companies such as Exxon Mobil. They

have a constant need to improve their products and production of their products in order to ease

concerns. This problem is an everlasting one of a company such as this because each time they extract

oil, natural resources are being displaced and damaged. Also, current political issues have caused many

problems with pricing control and demand throughout the world. Because of this, there is a need to

spend money on finding alternatives to the oil and gasoline that is being demanded by their customers.

There is a large movement, especially in the United States, to use alternative transportation modes and

routes, such as battery power, solar power, and more energy efficient vehicles. Another weakness that

Exxon faces is the price of their stock. Many everyday investors do not have the financial wherewithal

to purchase such an expense stock. (“2006 Citizen Report”)

Exxon Mobil faces some interesting opportunities because they are part of the oil and gas

industry, the health consciousness age, and because they have been an established company for so long.

Being in the oil and gas industry, there is a limited amount of oil supply; this being their main and most

lucrative product. Furthermore, Exxon Mobil is the world’s largest oil and gas company and having their

product distributed in hundreds of countries. These two factors point to the fact they are limited in

opportunities for expansion geographically and in product diversity. However, the CEO of Exxon

Mobil, Rex W. Tillerson does not see these limitations as negatives but instead as opportunity for

improvement. First, he states that the oil industry is currently at its peak as far as competitiveness.

Trouble in the Middle East’s oil reserves and its limited supply in the world are the reasons for this ultra

competitive market for oil. Tillerson explains that this competitiveness forces Exxon Mobil to operate at

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a high level, leaving little room for wasted efforts and error. As he looks in the future, he sees research

and technology being key components into helping their company achieve his goals of efficiency. He

wants to create barrel of oil cheaper than any of their competitors. Even now, during a time that seems

like hard times in the world economy, Exxon Mobil invested $125 billion dollars into research and

technology. The money being targeted at increasing the capacity of oil refining and finding more

efficient ways to decrease the cost of making each barrel. At the forefront of Exxon Mobil’s decisions is

the idea of capitalism and open market. Every decision is made with the intent of ensuring financial

success for the future, Tillerson explains.

Exxon Mobil’s mentality of “profit first”, receives some criticism from the competitors and

environmental groups. Today companies stress the idea of being environmentally friendly or “green”.

The byproducts of burning oil are one of nature’s most dangerous enemies as it is directly linked with

theory of “global warming”. Even with the pressure by society and environmentalist, Exxon Mobil

refuses to deviate from petroleum because they do not believe that any market is more profitable than

the oil industry. Their oil competitors differ from the views of Exxon Mobil and have begun to invest in

more environmentally friendly alternative energy projects. These companies have started researching

and investing in bio-fuels, wind power and solar power. (Colvin)

While environmentalist critique Exxon Mobil for not being environmentally friendly in their

business decisions, experts further criticize Exxon Mobil for not looking far enough in the future. They

speculate that because there is only a limited supply of oil, Exxon Mobil needs to invest in alternate

sources of energy. They believe that if they do not begin investing in alternative energy, they will be

behind in research when a successful alternative is found. Even though it is noted that Exxon Mobil is

currently number one, they are unsure of how long this success will last as time progresses. For instance,

if laws and regulation soon prohibit the amount of oil they are able to drill, refine, and perhaps sell, it

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could have drastic effect on Exxon Mobil’s success. The management of Exxon Mobil and their critics

both make compelling arguments to whether Exxon Mobil is making the right decision just to focus on

petroleum or whether they are going to be missing out on the alternate energy progression. (Colvin)

Many who look at the success of Exxon-Mobil would question what could possibly threaten such

a rich and powerful company. The answer is actually quite surprising. Probably the biggest threat to the

company is the very product that it creates. Currently, with the worry surrounding global warming, oil

and gasoline are under scrutiny for putting chemicals into the atmosphere and hurting the ozone layer.

In an effort to reduce these emissions, companies are now finding new alternative fuel solutions. These

include such things as electricity and hydrogen. As these fuel sources become more main stream, fossil

fuels will be used less. This would obviously devastate the company. This is made even worse by the

fact that Exxon Mobil is falling behind other energy companies when it comes to realizing the global

warming issue, and finding different renewable resources. In fact, Exxon Mobil has in a way shown

their concern about global warming and its effects on their dominance. They have done this by being

part of a group known as the Global Climate Coalition or simply the GCC. This is a group gives both

financial and moral support to a number of scientists who are against global warming and combating it.

On the other hand, many other companies in the oil industry including BP, Amoco, and Royal

Dutch/Shell dropped out of the GCC and have made it obvious that they are serious about the issue of

global warming. They have also made a heavy obligation to reduce the amount of greenhouse gas that is

emitted as well as putting more time and investments into finding new sources of renewable energy.

(“Exxon Mobil Information Sheet”)

Another threat for the company actually lies in its reputation. There have been a number of

different activities that have hurt Exxon Mobil’s reputation. The first being criticism received from

human rights groups. This is due to the fact that they have tried to put toxic waste dumps next to Native

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American reservations as well as run a pipeline through central Africa. The pipeline would have helped

to support oppressive governments in Chad and Cameroon which have both been found committing

human rights abuses. (“Exxon Mobil Information Sheet”)

Based off various financial analysts ratings and consensuses, I would recommend anyone

contemplating investing in Exxon Mobil (XOM) to buy stock. Numerous brokerage firms have priced

XOM stock anywhere from $92 - $100 this year with a Price-to-Earning (P/E) ratio of 7.282 (see

appendix, table 4). The company’s P/E ratio implies the stock to be stable and insures future investors

of its growth. The fall consensus of Exxon Mobil states a steady recommendation for purchasing stock

in XOM (see appendix, table 3) which further adds to the validity of the company’s stability.

Recommendation trends provided by Yahoo Finance analyzes stock within the past three months and

has declared a hold to a strong buy in regards to Exxon Mobil’s progress and expectations (see

appendix, table 1-2). Because both the one year growth EPS growth and the long term EPS growth of

this company have been in the high positives, I personally would invest in Exxon Mobil stock

(“Analysis Consensus: XOM”). Exxon Mobil proves to be a leading corporation in the fuel industry

and shows no signs of decline in the future thus making it a good investment.

Exxon Mobil employees receive excellent compensations and benefits including savings and

pension plans, medical coverage for employees and dependents, and disability and life insurance.

Operationally, Exxon Mobil’s security, safety, and management practices are paramount adding to their

company appeal. Furthermore, the company offers a stable work environment with comfortable hours,

pay and room for advancement depending on individual position (“Employee Benefits”). “ExxonMobil

is committed to providing a positive, productive, and supportive work environment throughout our

global operations” (“2006 Citizen Report). The company clearly values the exceptional qualities and

diverse perspectives of their employees, strives to treat all employees with respect, and encourages

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individual growth and achievement. Exxon Mobil practices an open-door communication policy which

helps promote fairness and respect for the dignity of all employees, as well as effective engagement

between management and the workforce. For these reasons, among many others, I would want to work

for Exxon Mobil.

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