Sizing-up this Energy Goliath: Exxon Mobil Corporation (XOM), Chevron Corporation (CVX)

Threats:

Decline in US Oil Consumption: According to IEA’s World Energy Outlook 2012, global energy demand for oil is likely to grow by more than one-third to 2035. However, there will be around a 5 million barrels/day drop in US oil consumption by 2035, with respect to current levels. This might impact Exxon, as more than one-third of its revenue is generated from the US.

Intense Competition in Natural Gas Sector: Chevron Corporation (NYSE:CVX) can pose a great threat to Exxon in the natural gas sector. It has seven new projects lined up in this sector that are expected to come online during 2012-2013, and is projected to produce 115 million barrels of oil equivalent in 2013.

Government Regulations: The US Gulf of Mexico oil spill is likely to lead to stricter environmental rules and standards for deep water offshore drilling. This will ultimately increase the cost of projects in Gulf of Mexico, which is one of the regions were Exxon has projects.

Final Thought:

With a diversified business and plentiful resources to fuel its growth plans, Exxon’s long-term outlook is pretty bright. Although competitors and law-makers are breathing down its neck all the time, Exxon’s groundbreaking initiatives and aggressive expansion strategies keep it way ahead of the competition.

The article Sizing-up this Energy Goliath originally appeared on Fool.com and is written by Nikita Dugar.

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