ExxonMobil Lifts Savings Expectations from $80 Billion Merger

Strategic Insights -

ExxonMobil Corp. has seen significant progress in combining Exxon Corp. and Mobil Corp., resulting in a 65% increase in expected annual savings. The company's board has approved a share repurchase program without providing specifics. Chairman and Chief Executive Lee Raymond stated that measures to combine the two companies are moving ahead faster than anticipated, with annual savings rising to $4.6 billion before taxes.

Key Takeaways:

  • ExxonMobil expects to realize annual savings of $4.6 billion before taxes, a 65% increase from the original estimate of $3.8 billion and a 65% increase from the initial estimate of about $2.8 billion.
  • The company plans to cut 19,000 jobs, or about 15% of its original workforce of 123,000, which is more than the earlier estimate of 16,000 job cuts.
  • ExxonMobil set this year's capital spending at $11 billion to $13 billion, compared to $13.3 billion last year, with plans to boost spending back to at least $13 billion in future years.
  • The company aims to increase oil and gas output by 3% per year, from approximately 4.2 million barrels per day last year.
  • The share repurchase program is valued in the range of $3 billion to $5 billion per year, according to Bruce Lanni, an analyst at CIBC Oppenheimer World Markets.
  • The company's exploration and production portfolio is considered the best in the industry, with a focus on projects in West Africa, Latin America, the Gulf of Mexico, Saudi Arabia, and Kuwait.

Statistics:

  • 65% increase in expected annual savings from the merger
  • $4.6 billion expected annual savings before taxes
  • 19,000 planned job cuts, or about 15% of the original workforce of 123,000
  • $11-13 billion capital spending for this year
  • $13.3 billion capital spending last year
  • 3% annual increase in oil and gas output
  • 4.2 million barrels per day of oil and gas production last year
  • Range of $3-5 billion per year for the share repurchase program

Sources:

  • Reuters, "ExxonMobil Lifts Savings Expectations from $80 Billion Merger," October 26, 1999

(Exact date not provided in the source text)

  • CIBC Oppenheimer World Markets (no specific date mentioned)

(No date provided in the source text)