NGI The Weekly Gas Market Report
At the corporate level, the union completed last week by Exxonand Mobil wants to be known as Exxon Mobil Corp. But at thesubsidiary level things get more intimate. ExxonMobil — so closethat not even a hyphen can separate the names of what once wererivals — is the chosen moniker for the energy giant’s many andvarious business units.
Last week saw the completion of one of the industry’s mosttalked about mega-mergers and the trickling out of plans for howthe combined company will be organized. At the same time ExxonMobil Corp.’s CEO intimated things look even better than originallythought on the cost savings side.
Exxon Mobil launched a new organizational structure of 11separate global businesses designed to allow the company to competemore effectively in a changing worldwide energy industry. Thecompany also launched a global advertising campaign intended to letpeople know it wants to be No. 1 in petroleum and petrochemicals.
Last week the U.S. Federal Trade Commission (FTC) approved the$81 billion merger of the companies. “The FTC’s decision, coupledwith the European Commission’s approval gained earlier, cleared theway for the merger to proceed. Exxon and Mobil moved quickly toclose the transaction and to launch the world’s premier petroleumand petrochemical company, which will be known as Exxon MobilCorp., incorporated in New Jersey,” said Exxon Chairman LeeRaymond. “The merged company expects that the scale of theworldwide near-term cost savings and the long-term strategicbenefits will likely exceed those announced last year. The mergerwill allow Exxon Mobil to compete more effectively with therecently combined multinational oil companies and the largestate-owned oil companies that are rapidly expanding outside theirhome areas.”
Raymond said by mid-December the company will announce a revisedforecast of merger benefits that will likely exceed the $2.8billion annual level announced last year. Regarding the synergybenefits the companies announced in December 1998 Raymond said, “Atthat time, we announced an expectation that the near-term benefitswould total $2.8 billion annually, on a pre-tax basis. Since thattime, our business transition teams have done a lot more planningand analysis around how to combine the two companies and, at thesame time, reorganize how we manage the business-with a clear goalof maximizing the company’s overall performance.”
Raymond said the Dec. 1, 1998 projection of a worldwidereduction in workforce of about 9,000 may also be revised in thenew forecast. Exxon Mobil’s corporate headquarters are up andrunning in Irving, TX. The board of directors has taken all thenecessary actions to complete the merger. Each of the functionalbusiness line headquarters offices in Houston and Fairfax are inoperation, and organizational plans have been developed forregional centers and other key office locations.
Five global upstream companies-Exploration, Development,Production, Gas Marketing and Upstream Research-will beheadquartered in Houston along with the Chemical company and theCoal and Minerals company. Four downstream companies-FuelsMarketing, Lubricants & Petroleum Specialties, Refining &Supply, and Research and Engineering-will be based in Fairfax,Virginia.
Exxon Mobil has a presence in nearly 200 countries. The companyhas exploration or production operations in some 50 countries. Thecompany sells fuels and chemicals in about 120 countries and lubesin almost 200. Major manufacturing facilities for these productsare strategically located in 24 countries. Mobil brings majorliquefied natural gas (LNG) assets and experience to the combinedcompany, complementing Exxon’s gas assets and gas-to-liquidstechnology.
In related merger news, Exxon Mobil agreed to sell Exxon’sNortheast and Mobil’s Mid-Atlantic service stations and supplyarrangements to Tosco Corp. The agreement also gives Tosco theright to acquire Mobil’s Manassas, VA, terminal and undevelopedproperties intended for service station use in the Northeast andMid-Atlantic regions. The sale involves 1,740 service stations fromVirginia through Maine, including 686 owned or leased propertiesand the assignment of contracts covering some 1,054 dealer anddistributor sites.
The purchase price of about $860 million plus land-bank sitesand terminal will be financed with available cash and debt. Toscodoes not anticipate issuing additional equity.
The assets and supply arrangements involved in the Tosco salesatisfy the conditions required by the Federal Trade Commission andstates who signed a parallel consent order approving the merger.The FTC gave the go-ahead for Exxon and Mobil to merge Nov. 30.Terms of the deal between Exxon Mobil and Tosco require regulatoryapproval. Joe Fisher, Houston
©Copyright 1999 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.
© 2020 Natural Gas Intelligence. All rights reserved.
ISSN © 2577-9877 | ISSN © 1532-1266 |