Today, we will be diving into energy giant, Exxon Mobil. The origins of Exxon date back to John D. Rockefeller and Standard Oil. Exxon was spun out in 1911 as the Standard Oil of New Jersey, and in 1998, Exxon merged with Mobil, which was the original Standard Oil of New York. To break down the rich history of Exxon, I am joined by Arjun Murti, a long-time energy analyst, and investor. During our conversation, we dive deep into the supermajor business and how that drove Exxon’s century-long success. We address the past decade of underperformance and examine the key drivers of Exxon Mobil moving forward. Arjun gives helpful overviews on how the energy market has changed across fossil fuels and renewables throughout our conversation. I hope you enjoy this breakdown of Exxon Mobil.
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[00:02:25] - [First question] - What is Exxon Mobil and its business scale
[00:04:46] - Various metrics to understand their scale and their revenue streams
[00:07:37] - How many people on average Exxon’s oil touches
[00:08:31] - Ways to think about how a barrel of oil can be used
[00:09:42] - The supply chain of oil and gas and why Exxon chooses to be integrated
[00:10:48] - What a non-integrated supply chain looks like in comparison
[00:14:33] - How technology has impacted the exploration and discovery of oil
[00:17:22] - Once the land is bought and the oil is coming out of it, what next?
[00:19:04] - Overview of what a refinery does to crude oil and its economics
[00:23:58] - Final steps of the non-integrated oil supply chain
[00:25:23] - The history of the oil industry and John D. Rockefeller
[00:29:51] - Why Exxon isn’t the largest market cap in the world these past few years
[00:38:20] - Some of Exxon’s bad capital allocation decisions
[00:43:06] - Thoughts on the XTO acquisition and rough cost
[00:44:12] - Would Lee Raymond have been able to figure out a better way forward
[00:46:36] - Exxon’s bet on renewables and climate change and whether or not it paid off
[00:51:19] - The size and consumption of the energy market today and its size
[00:55:17] - Units costs of oil and coal versus wind and solar and their trends
[00:59:16] - How this will play out on a fifty-year time horizon
[01:02:06] - Exxon’s peer set during their long career
[01:04:14] - Other factors that may have contributed to Exxon’s recent downturn
[01:06:32] - COVID-19’s impact on the oil industry
[01:09:20] - Opportunities for the future and what could cause a double in market cap
[01:12:07] - What could have contributed to a smaller market cap in the future
[01:12:52] - Lessons for builders and investors
[01:17:05] - Resources for learning more: The Prize & Titan