Decision Making Of The Petroleum Industry

The oil and gas business is highly competitive in the exploration for and acquisitions of reserves, the acquisition of oil and gas leases, equipment and personnel required to find and produce reserves, and in the gathering and marketing of oil, gas, and natural gas liquids. The competitors include national oil companies, major integrated oil and gas companies, other independent oil and gas companies, and participants in other industries supplying energy and fuel to industrial, commercial, and individual consumers.

The company ExxonMobil offers an interesting insight into the inner workings of an oil company because not more than fourteen years ago they were two separate and very successful companies both sitting at the top of the industry. In the year 1980 the two companies bolstered sales revenue that towards the top of their industry. Exxon with 103 million dollars worth of revenue was by far the most dominant beating out the closest competitor, which was Royal Dutch by over thirty million dollars. Mobil Oil was not nearly as dominant in revenue but still bolstered a respectable with 59.5 million dollars worth of profit placing them in the upper half of the industry.1 As the 1980’s went on the oil industry began going through a bit of reconstruction in which efficiency and profit shot to the forefront of the minds of both oil executives and the companies stockholders. As stated by and executive of Exxon, “Exxon confirms its ‘intention to run a tight ship . . . and strive to become the low-cost operator in each area of our business’. Restructuring included the sale of Exxon Office Systems, Reliance Electric Co., and its New York headquarters, and the reorganization into fewer divisions, several of them

In 2016, the crude oil price movement prices were unpredictable. The OPEC reference basket dropped 10 percent to $43.22 per pound. The ICE Brent and NYMEX WTI both went down by 8.4 percent with ICE Brent at $47.08 per pound and NYMEX WTI at $45.76 per pound. This showed that there were uncertainties in the petroleum market. The future prices were predicted for 2017 that it would move higher. The World’s economic growth predictions was the same at 2.9% for 2016 but increased to 3.1% for 2017. Because of the 3rd quarter of 2016 in Japan and US, the OCED growth went from 1.6% to 1.7%. The demand for oil growth in 2016 has been increasing slightly to 1.24 mb/d. In 2017, the demand will be predicted with a decrease to 1.15 mb/d. OECD will

The energy industry is not any different than most commodity-based industries as it faces long periods of boom and bust. Drilling and other service firms are highly dependent on the price and demand for petroleum. These firms are some of the first to feel the effects of increased or decreased spending. If oil prices rise, it takes time for petroleum companies to size up land, setup rigs, take out the oil, transport it and refine it before the oil company sees any profit. On the other hand, oil services and drilling

ExxonMobil is identified as one of the world’s leading oil and gas businesses. It manages market commodities and means countrywide. ExxonMobil is entail in “marketing, gas, and oil exploration, transportation and production in roughly 200 nations” (ExxonMobil, 2015). This company furnishes assistance and products under label names such as “Mobil, Esso, and Exxon. ExxonMobil is known as one of the biggest oil industrial installation where a substance is refined in the nation” (ExxonMobil, 2015). This essay discusses ExxonMobil’s strategic initiative from

This report presents information regarding the industry, the primary operator of oil and gas field properties. The industry fuels its key buyers, the Natural Gas Distribution (22121) and the Petroleum Refining (32411) industries, with crude oil and natural gas. The industry continuously battles a shortage of available oil. In addition, many major oil fields have been in use for decades, slowly waning. Currently, the industry grosses among the most profitable in the US despite these and similar obstacles. The benefits of investing here

Chesapeake Energy operates under the natural oil and gas industry. While government’s economic data may separate operations within this industry, the industry covers a broad range of activities and is separated into three segments: upstream, downstream, and midstream. Activities within this industry by oil and gas companies include exploring for crude oil or natural gas, drilling into wells, and such transportation of oil and natural gas. Just as any other industry, the gas and oil industry have major risks that companies take into consideration and extensively consider. These risks have the capability of drastically affecting operations, and ultimately the profitability and financial stability of a company. Three top risks related to oil and gas companies are volatile prices of oil and gas, regulatory changes, and finding new reserves or extending prior ones.

Decision-making is critical to a business helping mitigate risk and requires good judgment, considering social, humans, and ethical values before final decisions are made. Additionally, making good decisions enables organizations to identify and resolve problems, also providing organizations with the ability to identify and exploit opportunities.

Since June 2014, oil price has fallen by more than 70 percent. Price has recovered few times last year. However, it has sunk this year to levels not seen since 2003 (New York Times, 2016). This drop of price has affected several firms in the industry which we can mention Chesapeake (CHK). In fact, Chesapeake was quoted at more than $20 until late 2014. Today, it is priced below $5. The oil industry is known for its history of booms and busts. It is not the first time that this industry is shaken. In the 1985-86, supply-driven mainly caused the fall of prices. In 2008-2009, price fallen was entirely due to the collapse in demand. However, this reason behind this recent crisis is a little bit special: “price decline appears

Normally people do not break down how they make decisions, they just decide. But, for people who are making decisions for a larger group, knowing the process could be helpful. The first step in the process is to identify the problem by fully understanding and gathering all the information of the problem. Secondly, you want to think of alternatives or other options for handling the issue. Thirdly, you want to access or evaluate all the alternatives and consider the possible outcome. Finally, you go forward with the decision and evaluate the outcome (Kinicki and Williams, 2016). These steps are helpful and critical when making decisions for large groups or an organization.

discounted value to compete with other conventional oil producers in the market [6, 7]. The position of

Exxon and Chevron are no doubt some of the leading incorporated oil companies on the globe. Exxon Corp. is the second largest oil firm after Royal Dutch Shell, it is respected for getting the biggest revenue return in 2008 which no company in the U.S. have ever reported before. According to Wilson (2009) Chevron has managed to show a lot of profitability in the market despite the decease in its oil production. It graded as one of firms which made a billion dollars profit within a week in the period of July to September 2008. Regardless of profitability trends set by the two oil firms in the U.S. market, they have been facing financial decline like the rest of the companies in other industries. The two firms are like two sailing ships which are taking longer time to sink. In the last few years, the production capacity of Chevron and Exxon has decreased and their listings on the stock market have become weak. The continuation of construction and drilling which requires billions of dollars in expense of oil production might make them experience a bigger financial crisis (Wilson, 2009).

The oil industry can not be discussed without mentioning the name John D. Rockefeller. Rockefeller changed the business of oil distribution. In the 19th century Rockefeller began his humble beginnings with a small investment, along with two other partners, in the oil refining business. Eventually Rockefeller upset at the direction of the company bought out his partners. He was now buying into refining and developing kerosene and other petroleum-based products. He later named this company The Standard Oil Company which by 1872 nearly owned all the oil refineries in Cleveland. In 1882, Rockefeller took all his holdings and merged them into the Standard Oil Trust. Through smart business

There is almost nothing in this world where there is no risk involved. Risk involved is a major topic of concern in everyday life more than ever before. This report gives an overview about the risks involved in everyday life and especially in the oil and gas industry.

Currently, the conventional approach is to aggressively explore and develop new fields. This has led to a growth in drilling deeper wells and looking to ‘off-shore’ sites for new production of ‘light’ crude. However, as recent events in the Gulf of Mexico demonstrate with the British Petroleum incident and the resulting clean-up costs and loss of credibility, this approach has risks. It