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ExxonMobil
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The Exxon Mobil Corporation, or ExxonMobil, is an American oil and gas corporation. It is a direct descendant of John D. Rockefeller's Standard Oil company, formed on November 30, 1999, by the merger of Exxon and Mobil.
ExxonMobil is the world's largest publicly traded company when measured by either revenue or market capitalization. Exxon Mobil's reserves were 72 billion oil-equivalent barrels at the end of 2007 and, at current rates of production, are expected to last over 14 years.
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Encyclopedia
The Exxon Mobil Corporation, or ExxonMobil, is an American oil and gas corporation. It is a direct descendant of John D. Rockefeller's Standard Oil company, formed on November 30, 1999, by the merger of Exxon and Mobil.
ExxonMobil is the world's largest publicly traded company when measured by either revenue or market capitalization. Exxon Mobil's reserves were 72 billion oil-equivalent barrels at the end of 2007 and, at current rates of production, are expected to last over 14 years. The company has 38 oil refineries in 21 countries constituting a combined daily refining capacity of 6.3 million barrels.
While it is the largest of the six oil supermajors with daily production of 3.921 million BOE (barrels of oil equivalent) in 2008, this is only approximately 3% of world production and ExxonMobil's daily production is surpassed by several of the largest state-owned petroleum companies. When ranked by oil and gas reserves it is 14th in the world with less than 1% of the total.
Organization
The Exxon Mobil Corporation global headquarters are 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
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.
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
- Downstream
- ExxonMobil Refining and Supply Company
- ExxonMobil Fuels Marketing Company
- ExxonMobil Lubricants & Specialties Company
- ExxonMobil Research and Engineering Company
- Chemical
- ExxonMobil Chemical Company
- ExxonMobil Global Services Company
- ExxonMobil Information Technology
- Global Real Estate and Facilities
- Global Procurement
- Business Support Centers
History
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.
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 specialty 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 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 of 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.
On June 12, 2008, ExxonMobil announced that it was exiting the retail fuel business, citing the increasing difficulty to run gas stations under rising crude oil costs. The multi-year process will gradually phase the corporation out of the direct market, and will affect 820 company-owned stations and approximately 1,400 other stations operated by dealers distributing across the United States. The sale will not result in the disappearance of Exxon and Mobil branded stations; the new owners will continue to sell ExxonMobil gasoline and license the appropriate names from ExxonMobil, who will in turn get compensated for use of the brand.
Corporate affairs
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, .
Board of directors
, the current Exxon Mobil board members are:
- 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, President and CEO, IBM Corporation
- 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
Production
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.
Revenue and profits
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. 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).
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.
As the cost per gallon of gasoline has continued to rise, so has criticism of the petroleum industry in general. ExxonMobil profits have been a source of concern despite the fact their profit margin of 10% remains well under other sectors such as pharmaceuticals and banking. .
As of April 01, 2008 ExxonMobil occupied all 10 slots for Top Corporate Quarterly Earnings of all Time.
Top Ten Corporate Quarterly Earnings of all Time| Place | Company | Year | Quarter | Dollars (USD) | 1 | Exxon Mobil Corp | 2008 | 2 | $11.68 billion | 2 | Exxon Mobil Corp | 2007 | 4 | $11.66 billion | 3 | Exxon Mobil Corp | 2008 | 1 | $10.89 billion | 4 | Exxon Mobil Corp | 2005 | 4 | $10.71 billion | 5 | Exxon Mobil Corp | 2006 | 3 | $10.49 billion | 6 | Exxon Mobil Corp | 2006 | 2 | $10.36 billion | 7 | Exxon Mobil Corp | 2007 | 2 | $10.26 billion | 8 | Exxon Mobil Corp | 2006 | 4 | $10.25 billion | 9 | Exxon Mobil Corp | 2005 | 3 | $9.92 billion | 10 | Exxon Mobil Corp | 2007 | 3 | $9.41 billion |
Financial data
Financial Data USD millions| Year-end | 2002 | 2003 | 2004 | 2005 | 2006 | Total revenue | 204 506 | 237 054 | 291 252 | 358 955 | 377 635 | EBITDA | 26 038 | 41 220 | 51 646 | 70 181 | 79 869 | Net income | 11 460 | 21 510 | 25 330 | 36 130 | 39 500 | Total debt | 10 748 | 9 545 | 8 293 | 7 991 | 6 645 |
Environmental record
Exxon has funded initiatives dedicated to environmentally friendly energy production. According to Stanford University, the corporation has plans to invest up to US$100,000,000 (over a ten year period) in that university's Global Climate and Energy Project.
ExxonMobil's environmental record has been a target of critics from outside organizations such as Greenpeace as well as some institutional investors who disagree with its stance on global warming. Based on year 2000 data, ExxonMobil was ranked sixth on the Toxic 100 list of US corporate air polluters by Political Economy Research Institute (PERI). In 2005, ExxonMobil had committed less than 1% of their profits towards researching alternative energy,less than other leading oil companies.
Exxon Valdez oil spill
The March 24, 1989 Exxon Valdez oil spill resulted in the discharge of approximately 11 million gallons of oil (240,000 barrels) into Prince William Sound, oiling 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", 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. 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.
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.
Exxon's Brooklyn oil spill
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.
A study of the spill released by the US Environmental Protection Agency in September 2007 reported that the spill consists of approximately 17 to 30 million gallons of petroleum products from the mid 1800's to the mid 1900's. The largest portion of these operations were by ExxonMobil or its predecessors. By comparison, the Exxon Valdez oil spill was approximately 11 million gallons. The study reported that in the early 1900s 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.
Funding of global warming skeptics
ExxonMobil has drawn criticism for its funding of organizations critical of the Kyoto Protocol and skeptical of the scientific opinion that global warming is caused by the burning of fossil fuels. The company also donates to pro-environmental causes such the Nature Conservancy [top of page 2]. According to Mother Jones Magazine, the company was a member of one of the first such skeptic groups, the Global Climate Coalition, founded in 1989. 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. ExxonMobil's support for these organizations has drawn criticism from the Royal Society, the academy of sciences of the United Kingdom. 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. 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." These charges are consistent with a purported 1998 internal ExxonMobil strategy memo, posted by the environmental group Environmental Defense, stating
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 as well as the Republican Party.
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".
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.
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, 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."
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".
Criticism
Environment
ExxonMobil has been harshly criticized by major environmental advocacy groups among which are Greenpeace. In 2003, Greenpeace listed Exxon as #1 Climate Criminal. Exxon's alleged crimes include the sabotage of efforts to deal with climate change, the fraudulent manipulation of peer reviewed scientific studies and organizations, misleading and outright lying to the population of the USA, its government officials and the global community in general. It has also been accused of fomenting so called junk science in order to deny climate change and support the views of climate sceptics, among other actions.
Foreign business practices
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 (44,500 km²) off the coast of Angola that hold an estimated 7.5 billion barrels (1.2 km³) of crude.
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.
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. 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.
Human rights
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 ExxonMobil's relationship with the Indonesian military first arose in 1992; the company denies these accusations and has filed a motion to dismiss the suit, which as of 2006 is still pending.
Same-sex couples
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.
See also
Bibliography
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- 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.
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