Exxon-Mobil Merger Creates the World’s Second-Largest Company Summary

  • Last updated on November 10, 2022

The creation of ExxonMobil Corporation through Exxon’s $73.7 billion buyout of Mobil Corporation resulted in the largest integrated oil company in the world in terms of assets and revenues.

Summary of Event

At a joint news conference on December 1, 1998, Lee R. Raymond and Lucio A. Noto, the chief executive officers of Exxon Corporation and Mobil Corporation, respectively, announced the proposed merger of their companies to form ExxonMobil Corporation. Exxon and Mobil were both originally parts of Standard Oil of New Jersey, Standard Oil of New Jersey or Jersey Standard, which was judged a monopoly and broken up by the U.S. Supreme Court in 1911. Jersey Standard evolved into Exxon Corporation, and Socony Socony (Standard Oil Company of New York) became Mobil Corporation. In 1998, Exxon was a diversified company with global interests in exploration, production, refining and sale of petroleum products, coal, and minerals. Mobil was a leader in production, refining, and pipeline transportation of oil, gas, and chemicals. Mergers, business ExxonMobil Corporation[Exxonmobil Corporation] Mobil Corporation Exxon Corporation Oil industry;mergers [kw]Exxon-Mobil Merger Creates the World’s Second-Largest Company (Nov. 30, 1999) [kw]Mobil Merger Creates the World’s Second-Largest Company, Exxon- (Nov. 30, 1999) [kw]Merger Creates the World’s Second-Largest Company, Exxon-Mobil (Nov. 30, 1999) [kw]Company, Exxon-Mobil Merger Creates the World’s Second-Largest (Nov. 30, 1999) Mergers, business ExxonMobil Corporation[Exxonmobil Corporation] Mobil Corporation Exxon Corporation Oil industry;mergers [g]North America;Nov. 30, 1999: Exxon-Mobil Merger Creates the World’s Second-Largest Company[10530] [g]United States;Nov. 30, 1999: Exxon-Mobil Merger Creates the World’s Second-Largest Company[10530] [c]Business and labor;Nov. 30, 1999: Exxon-Mobil Merger Creates the World’s Second-Largest Company[10530] [c]Trade and commerce;Nov. 30, 1999: Exxon-Mobil Merger Creates the World’s Second-Largest Company[10530] Noto, Lucio A. Raymond, Lee R. Pitofsky, Robert

The companies were two of the so-called Seven Sisters, seven companies that dominated the world’s oil and gas industry during the twentieth century. After their merger, ExxonMobil would become the largest publicly held oil company in the world, with Exxon shareholders owning 70 percent and Mobil shareholders owning 30 percent of the corporation.

In their joint announcement, Raymond and Noto cited as primary reasons for the merger the falling price of crude oil, the rising costs of production, and the need for greater efficiency of operations for the companies to stay competitive in the global market. Noto emphasized that the merger was one of opportunity rather than necessity and that consolidation would allow the new company to increase exploration and production throughout the world. Greater supply would mean lower prices for consumers. Raymond acknowledged that the merger would mean cutting sixteen thousand jobs by 2002 but said that plans were already being made to soften the impact for employees who would lose their jobs.

Because Exxon and Mobil were such large competitors in the United States, the chairman of the Federal Trade Commission Federal Trade Commission;mergers (FTC), Robert Pitofsky, ordered a rigorous review of the proposed merger to ensure that consumers were protected and that antitrust laws were not violated. Before it gave approval, the FTC required both companies to make the largest divestiture in the commission’s history. Exxon and Mobil were required to sell or reassign their interests in 2,431 gas stations—1,740 in the mid-Atlantic states, 360 in California, 319 in Texas, and 12 in Guam. Exxon’s fee and leased service stations from New York to Maine had to be sold, as did Mobil’s fee and leased service stations from New Jersey to Virginia. Buyers of these stations could continue using the Exxon or Mobil brand for ten years. Mobil agreed to sell its 430 supply contracts with stations in Texas. Exxon agreed to abandon its option to buy Tosco Corporation’s gas stations in Arizona and to stop selling diesel fuel and gasoline in California for at least twelve years. Exxon also had to divest its refinery in Benicia, California, and its jet turbine oil business.

To meet additional conditions required by the FTC and consent decrees of the states of Alaska, California, Oregon, and Washington, ExxonMobil’s subsidiary, Mobil Alaska Pipeline Company, Mobil Alaska Pipeline Company agreed to sell its 3.0845 percent interest in the Trans-Alaska Pipeline System Trans-Alaska Pipeline System[Transalaska Pipeline System] and its Valdez Terminal. ExxonMobil was allowed to retain a 20 percent interest in the Trans-Alaska Pipeline System, which transports one million barrels of crude oil per day from Prudhoe Bay on Alaska’s North Slope to the port of Valdez.

The FTC required Exxon to divest either Colonial Pipeline Company Colonial Pipeline Company or Plantation Pipe Line, Plantation Pipe Line both of which served the southern and eastern United States. Colonial’s pipelines, running from Houston, Texas, across the south and up the East Coast to New York Harbor, transported eighty million gallons of gasoline, diesel fuel, home heating oil, and aviation and military fuels per day. Colonial Pipeline Company opted to repurchase all of its shares owned by ExxonMobil. Mobil was required by the Office of Pipeline Safety to submit a plan to reduce environmental and safety risks for its Patoka facility, to be implemented by 2000. Finally, on November 30, 1999, after receiving compliance agreements to all terms and conditions specified, Pitofsky announced the FTC’s approval of the merger.

Exxon chairman Lee R. Raymond (left) and Mobil chairman Lucio A. Noto at a press conference announcing the merger of their companies.

(AP/Wide World Photos)

On December 15, 1999, following the FTC’s approval, Lee Raymond, now chair of ExxonMobil, informed the media that expected benefits from the merger were greater than initially projected. He described ExxonMobil’s global organizational structure of eleven functional divisions, each responsible for its own operations in a worldwide market. The divisions were categorized as Upstream, Downstream, and Chemicals. The Upstream category included ExxonMobil Exploration, Development, Production, Gas and Power Marketing, and Upstream Research companies. The Downstream category consisted of ExxonMobil Refining and Supply, Fuels Marketing, Lubricants and Specialties, Research and Engineering, and Global Services companies. ExxonMobil Chemical Company was the sole entity in the Chemicals category. The Upstream and Chemicals divisions were headquartered in Houston, Texas, and Downstream headquarters were in Fairfax, Virginia. ExxonMobil’s global corporate headquarters remained at Exxon’s home base in Irving, Texas, a suburb of Dallas.

Environmentalist groups strongly opposed the merger. On January 31, 2000, forty-two environmental and religious groups united to form Campaign ExxonMobil. Campaign ExxonMobil Environmental activism This coalition urged the FTC to demand an environmental impact statement from ExxonMobil to examine how the merger and subsequent expansion of global exploration might affect the global environment and public health. Campaign ExxonMobil was particularly concerned about the impacts of expanded production and consumption of fossil fuels on global warming and air pollution in U.S. cities. It also noted the potential for damage to old-growth frontier forests in twenty-two countries, mangrove ecosystems in forty-six countries, and coral reefs in thirty-eight countries. Further, some groups verbally attacked ExxonMobil for funding scientific research aimed at refuting the theory of global warming.

In support of their arguments, environmentalists revived the issue of the Exxon Valdez tanker oil spill disaster in 1989. Exxon had agreed to pay $286.8 million in compensatory damages but had appealed the punitive damages verdict of $5 billion, claiming jury irregularities. In 2006, the U.S. Supreme Court decided to let stand the verdict for punitive damages.

Campaign ExxonMobil also asked the FTC to determine how many of the sixteen thousand jobs cut by ExxonMobil would be maintenance and safety positions, because a shortage of staff in those positions could lead to safety, health, and environmental problems. Contrary to the coalition’s position that by cutting jobs, ExxonMobil made safety a secondary concern to cost considerations, the European Commission reported that the anticipated doubling of renewable energy by 2010 could create up to 900,000 new jobs.


After the merger, ExxonMobil showed significant growth and improvement in financial performance. By 2003, total revenues had increased by 33.5 percent over the combined revenues of Exxon and Mobil in 1999. Total assets increased by 20.6 percent in the period 1999-2003. By 2004, ExxonMobil reported a cumulative net income of $73.92 billion and a cash flow of $120 billion. In 2005, ExxonMobil reported record profits, with 42.6 percent increase in income and 26 percent growth in number of employees, totaling 83,700. ExxonMobil’s stock rose along with oil prices, and by December, 2005, ExxonMobil had overtaken General Electric as the largest corporation in the world in terms of market value; in number of employees, it was exceeded only by Wal-Mart.

ExxonMobil’s new organizational structure allowed the corporation to develop technology and personnel specific to the needs of its operating divisions. Furthermore, the merger enabled ExxonMobil to expand exploration and production operations in the Asian Pacific, the Middle East, the Caspian region, Russia, West Africa, and North and South America. Five years after merger, ExxonMobil was recognized as the global leader in oil, natural gas, and petrochemicals, with subsidiaries operating in approximately two hundred countries. By 2006, ExxonMobil was ranked by Forbes Global 2000 as the largest company in the world when measured by market value. It was ranked by Fortune Global 500 as the world’s largest publicly traded corporation when measured by revenue. Mergers, business ExxonMobil Corporation[Exxonmobil Corporation] Mobil Corporation Exxon Corporation Oil industry;mergers

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Caragate, Warren. “Union of Giants: Exxon and Mobil Create a Colossus.” Maclean’s, December 14, 1998, 44-46. Analyzes the potential impact of ExxonMobil on the U.S. and global economies.
  • citation-type="booksimple"

    xlink:type="simple">Longman, Phillip J., and Jack Egan. “Why Big Oil Is Getting a Lot Bigger.” U.S. News & World Report, December 14, 1998, 26-28. Examines economic causes of the spate of mergers in the petroleum industry during the late 1990’s.
  • citation-type="booksimple"

    xlink:type="simple">Rowell, Andy, and Steve Kretzmann. “The New Oil Crisis.” The Guardian, December 9, 1998. Discusses business issues that led to the mergers that created ExxonMobil and British Petroleum, PLC (BP and Amoco).
  • citation-type="booksimple"

    xlink:type="simple">Sampson, Anthony. The Seven Sisters: The 100-Year Battle for the World’s Oil Supply. 1976. Reprint. New York: Bantam Books, 1991. Relates how seven international oil corporations have influenced world politics.
  • citation-type="booksimple"

    xlink:type="simple">Yergin, Daniel. The Prize: The Epic Quest for Oil, Money, and Power. 1991. Reprint. New York: Free Press, 2003. Best-selling analytic study of the strengths of oil companies and the problems they encountered in trying to meet the growing global demand for oil and gas.

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