Essays on Financial Accounting at ExxonMobil Corporation Case Study

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The paper "Financial Accounting at ExxonMobil Corporation " is a perfect example of a finance and accounting case study. ExxonMobil Corporation is the United States of America-based multinational firm that engages in the exploration, distribution, and marketing of both oil and gas-related products. It is headquartered in Irving, Texas. The firm is a result of a merger that took place in 1999 between two well-known companies; Exxon and Mobil. Presently, the firm is rated as the world’ s 7th largest in terms of revenue-base and listed public-trading companies by market capitalization (ExxonMobil, 2017).

By the end of 2008, the company covered approximately 3% of the overall world production. As of 2016, the firm had employed at least 73,500 people across its major operations in the world including its well-known subsidiaries like Aera Energy, Esso Australia, and XTO Energy. In general terms, the oil and gas industry extends to such other areas as the mining and extraction of oil; the underlying production of natural gases; as well as the production of crude oil petroleum (ExxonMobil, 2017). In this regard, there has been a continuous degree of cooperation amongst the many different companies within the oil and gas sector as a whole.

This species can be seen in its downstream operations that include; sale of gasoline under its brand names as Esso, Exxon, and Mobil. The focus of this paper is thus examining the financial as well as the strategic performance of ExxonMobil within the oil and gas sector. B. Company & Industry Analysis SWOT Analysis Strengths: i)Brand Value; according to the Brand Finance report, the firm is ranked as 51st in terms of the major global brands.

It is estimated that its brand value when monetized is approximately equal to $19B (ExxonMobil, 2017). ii)Market Position: the company is considered to enjoy a significant level of the market position given the fact that it is currently the largest refinery across the globe. It is important to note that it operates in most countries while it has made sure to explore each and every continent including Africa for possible crude and natural gases. As of 2016, the company is said to possess at least 23 refineries that are distributed across 14 countries while it has a distillation capacity of more than 136,000 barrels per each day of operations (ExxonMobil, 2017). iii)Enormous and far-wide operations; the firm can be seen to have successfully explored and exhausted and sells any possible product that is accessed from a crude oil refinery process (IBIS World, 2016).

It certainly enjoys a great stride of operations in its upstream and downstream operations. It is further considered to be one of the world’ s notable sellers of fuel and lubes. iv) Extensive Research & Development framework; is yet another strength enjoyed by this firm.

It is safe to note that ExxonMobil engages in extensive R& D projects in order to maintain its relevance in the overall industry (IBIS World, 2016). Some of the notable R& D projects relate to efficient technology adoption that has ensured easier and affordable mining of such products as bitumen as well as those relating to the reduction of greenhouse gas emissions Weaknesses: Negative publicity; the firm has continued to face serious and damaging litigations as well as lawsuits across its many operations across the globe. The level of these lawsuits extends to damages, fines, and penalties being awarded to the affected victims, which also impacts negatively on the overall image of the company and thereby resulting in enormous financial losses. Weak Financials; the firm has continued to be impacted negatively in regards to its revenues that fell by 34% in 2015 while profits also reduced by at least 50% within the same operational period. Growing debt levels; the firm has continued to seek lots of debt for its operational projects; a factor that would likely dilute its overall control of operations as years go by. Opportunities: Rising Demand; there has been a continued rise in the level of demand for energy-related products across the globe and this would possibly grow into the future period.

This presents a significant potential for growth of at least 40% by the end of 2040 (IBIS World, 2016). Significant increase in LNG demand; the company has currently engaged in heavy investments in LNG-related research and development. It is expected that by the end of 2040, there will be nearly close to half of the natural gas demand being wholly met by LNG (IBIS World, 2016).

The firm is set to be ready for this future development and commence sales for a similar market. Threats: i)Stiff Competition; the firm is currently operating in a very competitive industry from other companies to engage in similar operations. In fact, it is as a result of this enormous level of competition that has resulted in a massive decrease in revenues and profits over the years (IBIS World, 2016). ii)Economy; the global economy has continued to face lots of challenges, which has resulted in some of the most notable consumer countries to relatively cut down on oil imports (IBIS World, 2016).

In addition to this, the current fall in oil prices across the different markets continues to pose an enormous threat. iii). Supply-related risks; the firm and the industry as a whole continue to face supply of crude and gas challenges that are a result of several factors that include both natural and man-made like in the case of oil spills being witnessed nowadays.  

References

List

Brigham, E.F. & Ehrhardt, M.C., 2013. Financial management: Theory & practice. Cengage Learning.

ExxonMobil. 2017. 2016 Summary Annual Report. Accessed from http://cdn.exxonmobil.com/~/media/global/files/summary-annual-report/2016_summary_annual_report.pdf

IBIS World. 2016. Global Oil & Gas Exploration & Production. Retrieved from: http://clients1.ibisworld.com.proxy.lib.sfu.ca/reports/gl/industry/majorcompanies.aspx?entid=190#MP10249

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