The Jonathan, the lead client partner for ExxonMobil, is developing his FY19

target
strategy. He has reached out to your company to assist
him in advance of his meeting with ExxonMobil’s C -suite executives
Jonathan expects the following from you:1.Identify the 3-5 key trends,
opportunities, and barriers for ExxonMobil over the next 18 months. Focus on
renewable energy and the influence of technology on ExxonMobil’s business.
 
2.Evaluate ExxonMobil’s competitive positioning vis-à-vis its peers.
 
3.Recommend three strategic actions that ExxonMobil should take to move
forward over the next 18 months.
 
Share your deliverable in a PowerPoint format. In addition, prepare an overall
summary (~500 words) for Jonathan in a word document
The future of Exxon Mobil
Shaped by green and advanced technologies

Rikkey Negi
03 Jan 2022
Recommendations: Strategic initiative
Summary

Focus on low oil-per-barrel Continue focus in South

Green Technology
reserves America
 XOM can find additional ways to • The company specifically hopes • Given that the company has
increase the margins on their to strengthen its position in South reduced its capital investment for
already low oil-per-barrel America through Guyana and oil and gas, Exxon Mobil could
reserves, expect the company to Brazil, which should add to dedicate more capital to invest in
continue to increase its margins another portfolio to XOM’s diverse green technologies in order to
and profitability projects. In Brazil alone, the reduce debt and increase
 Commenced a project to expand company has secured nearly 2 revenue in near future
XOM’s elastomers plant in million gross acres across deep • XOM’s is already focusing
Newport, Wales and will increase water. It has also commenced 3D towards technologies such as
the its global capacity to seismic acquisition for 2017 and carbon capture, storage and
manufacture Santoprene expecting a drill should support hydrogen to reduce emissions
thermoplastic vulcanizate, high- returns in coming future that will help company to
performance elastomers used for • Given XOM’s has been utilizing generate substantial returns in
automotive, industrial and technology to produce oil and gas near future.
consumer applications, by 25 efficiently, the company has a • According to estimates, the
percent significant chance at leading in carbon capture and storage
new energy technologies too markets are fast growing, with the
carbon capture and storage
market estimated at the rate
closer to ~35% per year and the
hydrogen market projections is
closer to~30% per year

Source: Factiva Fact Pact, Earning call transcripts , Press search

Key Trends

Developing and deploying scalable technology solutions

• Decarbonizes existing assets and consistently bring new technology and forms of energy to facilitate the growth

• XOM’s steering away from renewables and has constantly investing in limited carbon-capture capacity, that has been expensive that the few
companies have been willing to invest in large-scale projects

Developing materials that help capture carbon dioxide

• The company spends about $1 billion a year on research and development, much of which goes to developing new energy technologies and
efficiency improvements that reduce emissions

• One project involves directing carbon emitted from industrial operations into a fuel cell that can generate power. That should reduce emissions
while increasing energy production

Upstream Growth Drivers: Guyana and Permian

• Increase earnings in upstream business by investing in growth programs, such as low cost supply investments in U.S. oil, liquefied natural gas
(LNG) and deepwater

• Upscale existing projects and commencement of total 25 new projects likely to yield to boost oil production by five times from Permian Basin. It
aims to increase LNG production to meet future demand

Downstream growth by investment in Refineries

• The earnings are expected to increase by two fold in 2025. The growth supported by strategic investments including up gradation at refineries
in Louisiana, Antwerp , Singapore, Rotterdam, U.K etc.

•The investments will boost value products i.e. ultra-low sulfur diesel, chemicals base stocks for lubricants. These initiatives will support the
growth of downstream margins increase by 20% through 2025

Source: Factiva Fact Pact, Earning call transcripts

Growth Catalyst

Investment Pipeline

• Major source of growth comes from its investment pipeline has been established between FY18-FY20. Its upstream projects like Bakken and
Permian have been considerably profitable

• Other long term upstream projects like Guyana expansion, Liza, and Tengiz, has also potentially profitable. Ninth discovery offshore Guyana,
newly acquired acreage in Brazil enhance Upstream opportunities

Divesture of service stations, and targeting wholesaler

model for EU market
• Completed the sale off 1,000 service stations in Germany

• Conversion of its retail arms to whole sale model in line with other markets in Europe

• Continue the sale of XOM’s SynergyTM fuels and Mobil lubricants at Esso stations through out targeted geography

Advancing Innovative Technologies and Products

•  Started a new unit at its integrated Texas facility, increasing production of sulfur fuels by 45,000 bbl

• The company joined OGCI, a voluntary initiative to mitigate the risks of climate change.
Risks & Barrier’s
Factors affecting future results

Factors include Supply and Demand, Economic conditions, Other demand-related factors, market factors, alternative energy and other
operational and climatic factors

• Like other key energy players, XOM’s biggest risk is commodity risk. Since the last quarter of 2017, oil prices experienced a bit of spike,
complimenting XOM’s Revenue
• Alternative energy, Governments promoting research into new technologies to reduce the cost and increase the scalability of alternative energy
sources

• Oil prices below $60 per barrel will increase the profit margins of the company. Second potential risk for XOM’s that is not as prevalent as
commodity risk is the threat of natural disaster

• Any expected OPEC oil production increase could affect XOM’s results and performance in near term. OPEC oil production has lately
increased and could potentially increase the risk to XOM’s further

• If the Brent prices experience decline will eventually, affects the available cash from operations and likely effects the revenue and stock
performance of the company in coming year. If the Brent prices hit closer to $50 bpl, the dividend might not be stable

• The increase in the Omicron variant could slow down the global economic recovery. If the global economy affects, it ultimately will hit the
Brent prices.

Source: Factiva Fact Pact, Earning call transcripts

Market Competitiveness

Market Strategy in Capital spending vs.

Balanced portfolio
focus Peers strategy

• XOM outlined its growth • XOM has set capital • XOM’s competitive
strategy, aim to double spending $30 billion from advantage include a
earnings and cash flow from 2023 to 2025, in order to balanced portfolio,
operations by 2025 by meet its targeted growth. continuous investment, high-
focusing on current oil prices However, its peers including impact technologies,
• The company expects Chevron Corporation are operational efficiency and
earnings more than 100% cutting down on spending adaptive integration
from last year's adjusted and keeping budgets • Continuous focus on
profit of $15 billion unchanged. reducing unit costs and
• Also penetrating into new • The investment estimates a improving efficiency including
markets such as Mexico and double-digit rates of return in technological advancement,
Indonesia. Moreover, all three business segments cost dominance, productive
integration with chemical chemical upstream and enhancements
manufacturing and upstream downstream
production also support
growth

Source: Factiva Fact Pact, Earning call transcripts