The Exxon - Mobil Merger Controversy
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Case Code : BSTR117
Case Length : 21 Pages
Period : 1998-2003
Organization : ExxonMobil
Pub Date : 2004
Teaching Note :Not Available
Countries : USA
Industry : Oil and Energy
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
Exxon was one of the companies formed after the disintegration of the Standard Oil Trust. The US Supreme Court in 1911 ordered the dissolution of Standard Oil Trust, resulting in the spin-off of 34 companies.
Two of the companies that were spun-off were Jersey Standard (Standard) and Socony, the predecessor companies of Exxon and Mobil respectively.
John Archbold took over as the president of Jersey Standard in 1911. During his
tenure, Standard started oil exploration to overcome the problem of its poor
crude oil reserves.
By the early 1950s, Standard had emerged as the world's largest oil company with major oil exploration operations in the Middle East. Standard had consolidated most of its oil exploration divisions in the US by 1960, into one subsidiary known as the Humble Oil and Refining Company. Monroe J. Rathbone who became the CEO in 1960 took an important strategic decision to start oil exploration projects outside the Middle East. During the period 1964-67, the company spent nearly $700 mn on exploration in non-OPEC countries. The oil exploration efforts started to show results by 1977, and the company had more reserves outside the Middle East than any other company.
In 1972, Standard was renamed Exxon. In the 1970s and 1980s, Exxon faced major setbacks in its attempt to diversify into other forms of energy.
In the 1990s, Exxon shifted its focus to the Asia-Pacific region and invested heavily in anticipation of a boom in the market for LNG (Liquefied Natural Gas). It undertook aggressive refinery expansion and new oil exploration projects in Asia.
By the late 1990s, Exxon had emerged as a diversified company with worldwide presence in exploration, development, production, and sale of oil and natural gas, refining and sale of petroleum products, development, production, and sale of various chemical products, production and sale of coal and minerals, and power generation.
Socony was formed after Standard Oil was dissolved. Over the next two decades, the company built up its business. Socony acquired a 45 per cent stake in Magnolia Petroleum Company, a major refiner, marketer, and pipeline transporter in the US to expand its business...