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The Sunday Telegraph: Inexorable Exxon

EXTRACT: Meanwhile, Royal Dutch Shell, its London-quoted rival, has only just managed to emerge from a scandal over the accounting of its oil and gas reserves and BP is being probed over its own safety record in Alaska.

THE ARTICLE

The Sunday Telegraph: Inexorable Exxon

Tillerson’s hand on Exxon’s tiller

Its petrol stations are as familiar to most of us as branches of Starbucks or McDonald’s but the phenomenon that is ExxonMobil still remains a mystery.
 
Part of the reason is Exxon’s sheer scale. Last year the company surpassed General Electric to become the most valuable company in America by market capitalisation; it pumps almost twice as much oil and gas as Kuwait; it generated profits of $36.1bn (£19.2bn) last year – more than any US company in history – and has paid dividends continuously for more than 100 years.

Its bulk has not hampered Exxon’s performance. Under the leadership of Lee Raymond, its long-serving chairman who stepped down as chief executive at the beginning of the year, the oil giant has consistently beaten its industry rivals on almost every measure, including the key one of return on capital employed.

Today, 17 years after the Exxon Valdez disaster, when the oil tanker struck a reef off Alaska, Exxon has the best safety record in the industry.

Meanwhile, Royal Dutch Shell, its London-quoted rival, has only just managed to emerge from a scandal over the accounting of its oil and gas reserves and BP is being probed over its own safety record in Alaska.

Exxon’s expertise even extends to its succession planning. When Rex Tillerson took over from Raymond at the start of this year, investors hardly blinked. BP, meanwhile, could not keep its own succession planning out of the press.

It is now up to Tillerson to steer the company through the next few decades. Despite taking charge at a time when the industry’s fundamentals could not be better, his task will not be an easy one.

His biggest challenge will be to ensure that the Exxon juggernaut keeps on performing as consistently and as successfully as it has previously.

Rivals have long wondered about the key to its success. Tillerson himself credits the company’s strict adherence to a disciplined approach, one that is prevalent through all tiers of the organisation.

Others say it is a case of everyone pulling in the same direction for the good of the entire company and not just for an individual.

Exxon may not be the most loved company on the planet, but whatever the secret of its financial success it is a formula that works.

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