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Exxon Mobil Corporation (XOM), Chevron Corporation (CVX) – A Financial Salute to America: Part I – Black Gold

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In honor of it being the week of July 4, I thought I’d take a historical and financial look at what makes America the greatest country on Earth. After all, we’re the biggest economy on the planet, we export American culture around the world, and our companies set industry standards. Hey, we even created them.

A brief history of Standard Oil

In the early 20th century, no commodity represented the power of American business quite like oil, and no company personified the promise and the wealth of America like Rockefeller’s Standard Oil. Dominating the world of crude for four decades, it was the pioneering producer of the liquid, and thanks to great business management, horizontally and vertically, by J.D. Rockefeller, oil was made affordable for millions of people worldwide, giving rise to the motorcar and plastics industry decades later. It can be said that if it weren’t for Standard Oil, oil wouldn’t be as important to the world economy as it is today.

Exxon Mobil Corporation (NYSE:XOM

Sadly in 1911, it was victim to the controversial Sherman Antitrust Act and was broken up into dozens of smaller companies by government order. Some of the companies that came from the break-up though are still with us, such as Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX), each company owning the rights to the Standard name in some part of the country. These three are thriving companies, and continue to innovate and play in the big-money world of oil.

ExxonMobil goes north for oil…

Even though it got its start as one of the bigger “baby Standard” companies, Exxon Mobil Corporation (NYSE:XOM) is not content with just being an oil company, and in the past decade has looked to tap in to the geothermal and natural gas industries, areas in which the U.S. can excel in thanks to geography. In fact, the company’s slogan “Taking on the world’s toughest energy challenges” is a testament to Exxon Mobil Corporation (NYSE:XOM)’s quest of staying on top of the energy industry.

According to the company’s 1Q earnings reports, despite a $450 million drop off in earnings from the last quarter to $9.5 billion. This is still a healthy earnings report in monetary terms, overcoming a slowdown in Chinese demand, but the real focus of the report was to announce numerous global deals that Exxon is either completing or getting into, specifically in Russia.

Exxon Mobil Corporation (NYSE:XOM) has teamed up with Russia’s largest oil company, Rosneft, to develop refineries and research oil fields in the Black and Kara Seas and the Arctic Circle, as well as an Arctic Research Center in Siberia, focused on environmentally safe oil exploration. For the sea-based projects, Exxon will supply nearly $3 billion for a 33% interest stake. The reason for the funding is that these oil fields, according to company spokespeople, is largely untapped, and by having first-mover access to these fields, Exxon Mobil Corporation (NYSE:XOM) stands to gain big time. With Russia increasing production to 10.48 million barrels per day last month, or 12% of the world’s supply, along with increased demand from Russia’s growing middle class, there is a window of opportunity for private foreign companies to profit from new found oil fields. If Exxon Mobil Corporation (NYSE:XOM) thinks $3 billion is a good investment, then the potential for profit must be large, and being an American company, it means a greater footprint for American business in a still-new market for non-Russian investors.

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