ExxonMobil - Challenges and Opportunities
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Case Code: BSTR582 Case Length: 18 Pages Period: Pub Date: 2019 Teaching Note: Not Available |
Price: Rs.500 Organization: ExxonMobil Industry: Energy Countries: United States Themes: Corporate Strategy, Strategic Planning, Strategy Formulation, Strategy Implementation |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Challenges for ExxonMobil
On February 2, 2018, the share price of ExxonMobil fell by 5.1 percent, its worst single day fall since 2011. The drop in share price was triggered by the release of the company's 2017 fourth quarter earnings. The company not only missed the earnings expectation, but also reported a decline of 3.2 percent in oil production. Production in the US fell to 244,000 barrels per day. In the fourth quarter of 2017, ExxonMobil reported a net income of $8.4 billion compared to $1.7 billion in the same quarter in 2016 – an increase of $6.7 billion...
Opportunities for ExxonMobil
While many analysts were worried about ExxonMobil's future growth potential considering its not so impressive financials and declining share price, some were of the view that the company still had the ability to find and develop enormous energy deposits profitably. The global demand for oil increased by 1.6 million barrels per day in 2017 to reach 98 million barrels for the whole year. Over the decade, the average increase in daily global demand for oil was one million barrels. ExxonMobil had projected that by 2040, the global oil demand would increase by 20 percent to touch 118 million barrels per day...
Tackling the Challenges
In March 2018, ExxonMobil outlined an aggressive growth plan that would double its earnings and cash flow by 2025. It aimed to achieve that target by increasing its spending to a total of $230 billion over the eight-year period between 2018 and 2025. The company expected to generate more than $60 billion in annual operating cash flow by 2025, assuming oil price was $50 a barrel. ExxonMobil's earnings were projected to increase by more than 100 percent to $31 billion by 2025 at constant 2017 prices from 2017's adjusted earnings of $15.3 billion excluding US tax reforms and impairments...
The Road Ahead
In March 2019, ExxonMobil announced that it would update its growth plans. It expected its annual earnings potential to increase by more than 140 percent by 2025 from the 2017 adjusted earnings, on expectations of an oil price of $60 per barrel and based on 2017 margins...
Exhibits
Exhibit I: ExxonMobil's Financial Highlights
Exhibit II: ExxonMobil's Share Price
Exhibit III: ExxonMobil's Production History
Exhibit IV: ExxonMobil's Future Projects
Exhibit V: ExxonMobil's Earnings by Businesses
Exhibit VI: ExxonMobil's Performance in the Q1 2019
Exhibit VII: Crude Oil Prices
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