Exxon Mobil CEO Raymond to Retire
DALLAS – Exxon Mobil Corp. (XOM) Chairman and Chief Executive Lee R. Raymond (search) will retire at the end of this year from the world's largest publicly traded oil company, the company said Thursday.
The company said the board of directors expects to name company President Rex W. Tillerson (search), 53, as Raymond's successor in both posts. The change is part of the board's succession plan developed years ago, the company said.
With oil and natural gas prices — not to mention Exxon Mobil's profits — soaring, and energy demand rising around the globe, Tillerson will be handed a company that is poised for continued short- and long-term success, analysts said. Exxon Mobil earned $25.3 billion in 2004 and nearly $15 billion in the first half of 2005.
Aside from maintaining this financial track record, the greatest challenge for Exxon Mobil going forward, analysts said, will be to expand its reserve base at a time when finding and gaining access to huge new reservoirs of oil is not as easy as it once was.
Given today's high prices, oil-rich countries such as Venezuela and Russia increasingly are making it more costly for foreign oil companies to access their natural resources. Tillerson's experience as a former Russia-based executive for Exxon Mobil is considered an important factor underpinning his ascension.
Raymond, 66, has been with the company and its predecessor Exxon Corp. for 42 years, with half of that time spent as a director. Raymond oversaw the November 1999 merger of Exxon and Mobil Corp. (search)
"That was the crowning achievement of his long and successful career," Oppenheimer & Co. oil analyst Fadel Gheit said.
The acquisition of Mobil was strategically important not just for the sake of growing in size, but because it positioned Exxon to be a bigger player in natural gas, which is the business with the most potential for growth in the 21st century for Exxon Mobil and other petroleum giants, Gheit said.
If there are any areas where Exxon Mobil is not as strong as it could be right now, it is in the so-called downstream segment of the business, or refining and marketing, Gheit said. Exxon Mobil sold off assets in these areas following the merger that created it.
"They sold almost 1 million barrels of capacity in the downstream. They could now be making billions of dollars in extra profit," Gheit said.
That said, Gheit added that "Rex is inheriting a company that is in its best financial and operational condition ever."
Raymond, 66, has been chief executive since 1993. He originally was scheduled to retire in August 2003 under company policy, but the board asked him in 2001 to delay his departure. In April 2004, he said he wasn't sure when he would retire.
Raymond joined Exxon in 1963 after he received his doctorate in chemical engineering from the University of Minnesota. He held several executive posts with the company, including president of Exxon Nuclear Co. Inc. in 1979, president of Esso Inter-America Inc. in 1983, company president in 1987, and chairman in 1993.
Tillerson, a native of Wichita Falls, Texas, was named senior vice president in 2001 and elected president and a member of the board in March 2004.
He moved to Dallas in 1992 as production adviser to Exxon and then to Florham Park, N.J., as coordinator of Affiliate Gas Sales in Exxon International.
Exxon Mobil shares fell 27 cents to $58.73 in afternoon trading on the New York Stock Exchange. They have traded in a 52-week range between $44.20 and $64.37.
Last Thursday, Exxon Mobil reported a 32 percent increase in second-quarter profits as it reaped the benefits of soaring oil and natural gas prices.
Adjusted earnings came just a penny-per-share shy of analysts' expectations for profit of $1.24 per share, according to a Thomson Financial survey. Revenue totaled $88.57 billion, a gain of 25 percent from $70.69 billion a year earlier.
Profits from exploration and production jumped $1 billion to $4.9 billion, a reflection of strong crude and natural gas prices offsetting a 4.3 percent reduction in output, the company said.