Exxon Mobil Corporation (XOM)
ExxonMobil (NYSE: XOM) is the largest of the vertically integrated oil majors, as well as the second largest publicly-traded corporation in the world by market cap and revenue. In 2010 the company’s total earnings were $30.5 billion (excluding special items), up 57% from 2009.
ExxonMobil leads a pack of six global “supermajor” petroleum companies which explore for, produce, refine, and market oil and gas. Of these six (including BP (BP), ChevronTexaco (CVX), Total (TOT), ConocoPhillips (COP), and Royal Dutch Shell), ExxonMobil has consistently produced the highest revenue, income, and returns on capital employed (16.3% in 2009). To diversify its revenues the company continues to expand in natural gas production through acquisitions, primarily in shale deposits, in oil sands and a wide ranging geographical presence.
Despite these strengths, ExxonMobil remains at the mercy of market maker OPEC, an organization of petroleum-producing nations that controls global oil prices by holding about 40% of the world’s crude oil supply. Additionally, environmental concerns over natural gas and oil production and outside factors that come with such a geographic presence create pressure on the company. And while oil & gas hold a monopoly over the world’s supply of energy, alternative energies such as biofuels pose a long-term threat to the industry.
Exxon’s efficiency is attributable to several advantages over its competitors:
Production operations and reserves are large, diverse, and firmly established in the major petroleum basins (North America, Europe, West Africa, the Middle East, and Asia Pacific).
Exxon has one of the largest E&P portfolios, allowing the company to selectively choose investments and lower technical and political risks.
Technological advances increase efficiency and allow the development of resources such as tight gas, heavy oil, and liquified natural gas.