Exxon Mobil(Taking on the World’s Toughest Energy Challenges)

CEO MR. Rex W. Tillerson

Presented by :Mr. Abhishek Chaube (Student of Master of Science International Finance and Banking ) TBS

About the Company It works in Oil , Gas and Chemicals (Energy) sectors.

Exxon is a brand of motor fuel and related products by ExxonMobil , From 1972 to 1999, Exxon was the corporate name of the company previously known as Humble Oil or Standard Oil of New Jersey.

ExxonMobil, is an American multinational oil and gas corporation headquartered in Irving, Texas, United States.

It is a formed on November 30, 1999, by the merger of Exxon and Mobil (formerly Standard Oil of New Jersey and Standard Oil of New York).

It is the worlds third largest companies by world ( $453 Billion) and listed in NYSE having current share price of $95.03(Feb 21,2013).

It is the second largest publicly traded company by market capitalization($406 Billions) and Operation in 47 countries

OperationsUpstream (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.The upstream division dominates the

company's cashflow, accounting for approximately 70 percent of revenue.

Invested $5billion in Research and Development from 2008.

Production ExxonMobil's reserves were 87.1 billion BOE (barrels of oil

equivalent worldwide) at the end of 2013. With 37 oil refineries in 21 countries constituting a

combined daily refining capacity of 6.3 million barrels (1,000,000 m3).

ExxonMobil have daily production of 3.921 million BOE.45 % of refining capacity in North America, 30 % in Europe

and the remainder in Asia Pacific and the Middle East.

SYNERGY The interaction or cooperation of two or more organizations, substances, or other

agents to produce a combined effect greater than the sum of their separate effects.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) and then full benefits by the third year after the merger.

• The first two years, the benefits have been partly offset by one-time costs at $2 billion for business integration.

Capital productivity improvements:.• The businesses and assets of Exxon and Mobil were highly complementary in key

areas. For E.g. the exploration and production area.• 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

PESTEL Analysis

SWOT Analysis

Porter’s Five forces

BCG Chart

COMPETITORS

Share Price Evolution

Glimpse of Exxon Mobil https://www.youtube.com/watch?feature=player_embedded&v=FZ3S2EOBbwE

Criticism 1) Exxon Valdez oil spill in Prince William Sound, Alaska, on March 24, 1989 where

Exxon Valdez, an oil tanker bound for Long Beach, California, struck Prince William Sound's Bligh Reef and spilled 260,000 to 750,000 barrels (41,000 to 119,000 m3) of crude oil over the next few days. It is considered to be one of the most devastating human-caused environmental disasters.

2) Human Rights:. 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. which states that 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, but then dismissed in August 2009 by a different federal judge, the dismissal is currently under appeal.

3) LGBT: lobbying Group and Political Action committee, gave ExxonMobil a score of "-25", the first and only negative score, in its Corporate Equality Index, a scorecard that rated 1000 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."

Valuation

Aswath Damodaran16

We got 15 % .

Valuation continue

Reinvestment Rate: Considering 15% as return of capital and Growth rate of 3%.

Reinvestment rate=Growth / ROC =3/15% =20%

• Normalized Operating Income=$34,612

Cost of CapitalDebt ratio=0.0285Pre tax Cost of Debt=3.75%Beta=1Risk free rate =4.1 %Risk Premium=4.05%Cost of Equity=8.15%Tax Rate= 38%Cost of Capital ( Incl Tax)=7.92%

Value of Operating Asset

Value of operating asset =$34612(1-0.38)(1-0.20)/(0.079-0.03)

Value of Operating asset =$360 172 Million

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