Exxon mobile

Exxon Mobil
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Industry analysis
In the major integrated oil and gas integrated industry, Exxon Mobil has one of the highest market capitalizations, which also highlights the company’s financial strength as a global player in oil, gas and petrochemicals. As a vertically integrated industry, players in the oil and gas production typically carry out activities from exploration manufacturing, refining, marketing to trading, and at times transportation of there products. The biggest non state owned players with headquarters in America or Europe have long used consolidation to increase there outreach. On the other hand, state owned oil and gas corporations typically operate in there country of origin, in a major oil and gas producing countries.
There are differences between the oil and gas segments, because oil production tends to be affected by global factors. On the other hand, gas production is more localized as this depends on transportation infrastructure. Saudi Arabia still plays a prominent role in determining oil production for the OPEC countries, but gas consumption is likely to grow faster than oil consumption. Nonetheless, increase in the number of proved reserves is beneficial to the industry, and use of technology will improve the revenue streams of the industry (SEC, 2013). Exxon Mobil, increased capital investments by $ 0.2 billion from 2012 to 2013. This is a continuing trend where industry players improve infrastructure of proven reserves, acting to complete projects more than ever before. Nonetheless, increase in exploration expenses will also impact the companies’ ability to invest in new areas, highlighting the industry’s reliance on technology to improve efficiency and increase revenue.
The financial statements of Exxon Mobil mirror a similar trend of the industry being affected by the geo-political factors in the major oil and gas producing countries. The return on average capital in the case of upstream employed increased from 6.8% to 7 % in 2013 in the U.S. but then decreased in the non U.S. market from 31.7 % to 24.3 % (SEC, 2013). In the downstream, upstream and chemical sectors of the Exxon Mobil, there was a decrease in earnings from operations from 2012 to 2013 in the Non U.S. This is a possible indicator of increasing market volatility of oil and gas producing countries outside the U.S. in the Middle East and Africa.
The rise in oil and gas prices when there is increased demand or fall in supply has seen the sector mainly depend on oil prices for profit margins. Future expectations have also had a direct impact on the industry, especially when OPEC countries determine the supply quotas for each countr...