Historical and Finacial Anaylsis
Historical and Finacial Anaylsis
The Energy Sector is made up of a wide array of companies that in 2010 accounted for 12% of Standard and Poor’s’ Composite 1500 index market value. Half of that value was represented by Integrated Oil and Gas Companies (IOC) (S&P, 2011). An Integrated Oil Company is defined as “a business entity that engages in the exploration, production, refinement and distribution of oil and gas (Investopedia, 2011). The world market designates IOCs based on their ownership. Private or state held companies are not traded on the open market and are difficult to use for comparison to other publicly traded companies because they do not disclose financial information. Publicly traded companies are grouped together as “Major Integrated Oil and Gas.” ExxonMobil Corporation
ExxonMobil Corporation has developed over 140 years of creation, diversification, and conjuncture to become “the world’s largest publicly traded international oil and gas company” (ExxonMobil, 2011). The company has roots as a regional marketer of kerosene and has grown to explore, produce, transport, and market oil and gas in over 200 countries and territories worldwide (ExxonMobil Corporation, 2011). This mix of work for an integrated oil company breaks down into three business units: downstream, upstream, and chemical. Growth in market capitalization, rising oil costs, and smart business sense have allowed ExxonMobil to produce record profits through expanded upstream exploration and efficient downstream technologies (2010 Summary Annual Report, 2011). Analysts forecast for 2011, Exxon will generate $10 Billion in profit (Newcomb, 2011). History
In 1859, the United States drillers hit oil. Colonel Edwin Drake and Uncle Billy Smith drilled the first successful oil well in Titusville, Pennsylvania (ExxonMobil Corporation, 2011). John Rockefeller and associates quickly took notice and created the Standard Oil Company (Ohio) in 1870 (ExxonMobil, 2011). Over the next two decades Standard Oil controlled 95% of the US refining industry and in 1882 the company was reorganized into a trust with regional controllers (ExxonMobil Corporation, 2011). These companies included the Standard Oil Company of New Jersey (Jersey Standard) and Standard Oil Company of New York (Socony) (ExxonMobil, 2011). This regional alignment was not enough. The Sherman Antitrust Act passed in 1890 to combat the monopoly Standard Oil had on the industry. A monopolization charge was brought against the company in 1906 and by 1911 Standard Oil was forced to break up into 34 separate companies (ExxonMobil Corporation, 2011). These companies included Jersey Standard, Socony, and Vacuum Oil. All of which became ExxonMobil in later years. Socony and Vacuum Oil Company merged in 1931 to become Socony-Vacuum Corp; renamed Mobil Oil Corporation in 1966. Standard Oil had purchased 75% controlling interest in Vacuum in 1879 (ExxonMobil, 2011). The business was based around distilling kerosene. The distillation process, itself, was not particular interesting to Standard Oil, but the revenues and success from selling the by-product lubricants was attractive (ExxonMobil Corporation, 2011). Mobil’s lubricants became famous and popular after being used in events such as: 1903’s Wright Brothers first flight, 1915 Indianapolis 500 winner’s car, and in 1928 both Amelia Earhart and Charles Lindbergh used MobilOil in their flights (ExxonMobil, 2011). Jersey Standard became Exxon Corporation in 1972 (ExxonMobil Corporation, 2011). The company was focused more upstream or exploration business units rather than the refining or processing functions of Mobil. The company created the first commercial petrochemical, rubbing alcohol, in 1920, and developed fuel brands under the name Esso. Possibly the company’s largest influence on the oil and...