ExxonMobil

PRESENTED BY PHIL H. LATIMIER, Ph.D.

PHLatimer@aol.com

SHAREHOLDER VALUE & CORPORATE GOVERNANCE FINAL PROJECT

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History of the Company

John D. Rockefeller
1882 Standard Oil Trust Acquirement of Petroleum Interests

90% of control - Monopoly

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1911
U.S. Supreme Court ordered the dissolution of Standard Oil Trust 34 Separate Companies Jersey Standard" and "Socony Became Exxon and Mobil
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 Next Two Decades

Building of Business
(Production, pipelines, refining, research)

Since the end of World II

Expanded market more than 100 countries

1999 Exxon + Mobil = ExxonMobil $76.6 billions Merger Near $ 8 billions of Saving
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Nowadays ExxonMobil
Is based in Houston, Texas. 2003
Stronger Earning Performance over the History $21.5 billions - Net Incomes $30.8 billions - Cash Flow

Sells more than 65 millions gallons of fuel every day. Operates in over 100 countries. It is, World wide, the Biggest Oil Company.
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Corporate Managers
Lee Raymond, Chairman and Chief Executive Officer Rex W. Tillerson, President

Harry Longwell, Executive Vice President

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Edward G. Galante, Senior Vice President

Board
Board Size: - between 10 and 19 members
Election of Directors: - Shareholders Selection Mandatory Retirement: - No director over 70 years. - Annually evaluation of Performance
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Standing Committees
Compensation Committee
Discharge the Board of Directors responsibilities relating to the evaluation and compensation of the Corporation's Chief Executive Officer and other senior executives.

Board Affairs Committee

Monitor compliance with good corporate governance standards Identification of qualified individuals to become Board members Recommend to the Board director nominees for election at the annual meeting of shareholders

Advisory Committee on Contributions

Provide oversight and direction to the Corporation's overall contributions objectives, policies and programs
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Standing Committees (cont.)

Finance Committee - Review the Corporation's financial policies, strategies and capital structure - Create reports and recommendations to the Board of Directors Public Issues Committee - Review the Corporation's policies, programs and practices Executive Committee - It function when the Board of Directors is not in session.
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Standing committees (cont.)

Audit Committee
Conduction of the Corporation's financial reporting process. Integrity of the financial statements and other financial information Corporation's system of internal accounting and financial controls. Corporation's compliance with legal and regulatory requirements. Performance of the Corporation's internal audit function. The independent auditors' qualifications, performance, and independence. Annual independent audit of the Corporation's financial statements.

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Book Value Weigths

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Calculation of the WACC 2001

Kd = 6.1%

Ki = 3.7%

Kp = 4.9%

Ks = 5.4% PHLatimer@aol.com

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Calculation of the WACC 2001 (cont)

Kr = 5.5%

Kn = 5.9%

Ka = 3.2%

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Calculation of the WACC 2002

Kd = 6.2%

Ki = 3.7%

Kp = 4.3%

Ks = 3.3% PHLatimer@aol.com

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Calculation of the WACC 2002 (cont)

Kr = 3.3%

Kn = 3.9%

Ka = 4.05%

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Calculation of the WACC 2003

Kd = 6.8%

Ki = 4.3%

Kp = 6.3%

Ks = 9.3% PHLatimer@aol.com

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Calculation of the WACC 2003 (cont)

Kr = 9.3%

Kn = 10.1%

Ka = 5.51%

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Our Calculation: 5.51% 5.92%

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Weighted Marginal Cost of Capital 2001

Long Term Debt at 5.55 % Common Equity at 5.93 % BP Long Term Debt BP Common Equity $ 547,000,000 (Weight .52) $ 201,000,000 (Weight .28) $ 1,056,629,244 $ 727,451,306
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Weighted Marginal Cost of Capital 2001 (cont)

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Weighted Marginal Cost of Capital 2002

Long Term Debt at 5.6 % Common Equity at 3.86 % BP Long Term Debt BP Common Equity $ 396,000,000 (Weight .49) $ 199,000,000 (Weight .31) $ 811,636,364 $ 643,670,856

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Weighted Marginal Cost of Capital 2002 (cont)

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Weighted Marginal Cost of Capital 2003

Long Term Debt at 6.4 % Common Equity at 10.08 %
BP Long Term Debt BP Common Equity

$ 434,000,000 (Weight .38) $ 127,000,000 (Weight .35)

$ 1,150,337,258

358,317,368

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Weighted Marginal Cost of Capital 2003 (cont)

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Investment Opportunities Schedule 2001

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IOS and WMCC Schedules 2001

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Investment Opportunities Schedule 2002

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IOS and WMCC Schedules 2002

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Investment Opportunities Schedule 2003

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IOS and WMCC Schedules 2003

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FOREX
Conducts business in many foreign currencies. Is subject to foreign currency exchange rate risk on: Cash flows related to sales. Expenses. Financing and investment transactions.
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FOREX
Functional Currency - Primary economic environment in which the
subsidiary operates.

Management selects the functional currency after evaluating this economic environment. (US Dollar)
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FOREX Strategies
Upstream, Downstream and chemicals operations normally use the local currency, except in highly inflationary countries (Latin America, Singapore). Crude and natural gas use US Dollar. (Malaysia, Indonesia, Angola, Nigeria, Equatorial Guinea and the Middle East)
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FOREX Strategies
Makes limited use of currency exchange contracts.
Reduce the risk of adverse foreign currency movements related to certain foreign currency debt obligations .
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FOREX Strategies
Low risk in changes in currency rates: Why?
Corporation size. Geographic diversity. Complementary nature of the businesses.

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ExxonMobil Strategies
Increasing Size, Increasing Globally, Increasing Technology
Maximization of Profitability
- Capital Expenditure are focused:

Meet future Product Quality Requirements Reduce Environmental Affects Safety Systems Lower Operational Costs Produce Higher Values Products Lower Cost Raw Material

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 Identify and Pursue all attractive perforations opportunities

- Research and Development - 90% of oil reserves are own by governments. - Upstream operation in more than 40 countries

Invest in projects that deliver superior return

- 2003: Return of Capital of 21% - Exxon is well positioned for long-term growth. - Exploration and Research in alternative energy. - Invest in oil company (forecast of performance)
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 Maintain Best in Class operations, in all aspects

- Globally integrated Supply Chain

- Strategic Alliances

Provide Quality, value products and service to costumers Lead Industry in Efficiency and Effectiveness
-2003: $11.5 billions of Return to Shareholders

- Buying crude at different time and in different amounts.

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 Maximize values from leading edge technology

- Annually Investment of $600 millions

Improving and Maintenance of Image

- $103 million in charitable contributions and community development investments (2003) - More than $2 million in research and partnership grants to global health organizations to combat malaria in African communities (04/23/04) - Occupational Hazards, positioned ExxonMobil Chemical Oil Company as the American Safest Company.
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Stock of Major Competitors

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Market Value

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Revenues

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Net Income

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Presence in More than 100 countries ...

Exxon and Mobil merger - Vertical Integration Organizational Structure - Global Functional Basis Operational Integreaty Management System

Capitalize on integration with other ExxonMobil business

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Presence in More than 100 countries ...

Addition of Human Rights to its Portafolio
Involment to Society

Local Employees
Support to Comunities

Global Integration
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