Yes, Exxon finds and refines oil, but that doesn’t even begin to describe the depth and breadth of the company’s exospheric revenue production.

In a dynamic corporate landscape forever dependent on “creative destruction”- today’s innovation improving on yesterday’s, and/or rendering it obsolete- ExxonMobil (NYSE:XOM) and its antecedents have managed to stay powerful and influential for well over a century. Today, the Irving, Texas-based ExxonMobil regularly flip-flops with Cupertino, Calif.'s Apple (Nasdaq:AAPL) on the list of the two largest corporations in the world as measured by market capitalization.

Founded as Standard Oil in 1870, the company that would one day become ExxonMobil soon grew so large that the United States Supreme Court ordered it dissolved into 30-odd smaller companies. Standard Oil was so dominant that the successor of several other of those smaller companies, San Ramon, Calif.'s Chevron (NYSE:CVX), also ranks today among the 10 largest companies on Earth by market cap.

For a monolithic corporation that operates extensively on every populated continent, ExxonMobil’s structure is remarkably streamlined. The company has just three major business divisions, each with separate headquarters: Upstream (based in Houston), Downstream (suburban Washington, D.C.), and Chemical (Houston again).

Eighty Percent of Profit

Upstream” in this context is a petroleum industry term, referring to exploring for and producing oil before it enters the “stream,” i.e. gets transported to the refinery/processing plant. Upstream is also the core of ExxonMobil’s business, accounting for 80 cents of every dollar the company earns. Why are Upstream operations so important, and so lucrative? ExxonMobil has a tremendous competitive advantage that’s hard to assail. Only a handful of companies have both the capital and the technological capabilities to perform the arduous work of extracting crude oil from such diverse strata as the loose Athabasca oil sands, the ocean floor hundreds of feet below Russia’s Kara Sea or subterranean miles of inhospitable Western European rock.

Even though Downstream operations are dwarfed by ExxonMobil’s Upstream division, the company is still by far the largest oil refiner on the planet, with 32 refineries throughout North America, Europe, Asia, the Pacific and the Middle East. Perhaps just as surprisingly, the typical consumer’s interaction with ExxonMobil- filling one’s tank at the local franchised retail outlet- represents only a small part of downstream activity. In addition to its automotive products, the company also makes industrial lubricants that literally grease the wheels of commerce across multiple sectors. While you might not ever be personally responsible for the upkeep of a wind turbine or mining shovel, the people who are will spend millions of dollars daily on Mobil-branded gear oils and more.

Just Three Tankers

That Exxon lists separate Upstream and Downstream operations, but no Midstream (another industry term) shows that the company finds it more economical to let third parties handle the business of operating the pipelines, barges, tankers and trucks that get the crude oil to its Exxon-owned downstream destinations. And if mention of that makes you wonder what thus became of the infamous "Exxon Valdez," the oil tanker responsible for one of the world's worst oil spills, and the rest of the corporate fleet, ExxonMobil does maintain a small and unpublicized privately-owned subsidiary that operates a grand total of three tankers which travel up and down the North Pacific coast. As for the Valdez itself, after being rechristened several times, it was sold for scrap and dismantled in India in 2012.

ExxonMobil doesn’t exhibit the kind of gluttonous appetite that renders other huge companies slothful. Despite the company's size, it’s unafraid to rid itself of assets that don’t produce, or don’t produce enough, revenue. In 2012 the company sold some of its Upstream oil claims in Norway and Angola, and also freed up funds by selling tens of millions of dollars’ worth of Downstream holdings in Latin America and East Asia. In the last decade ExxonMobil has divested no fewer than 22,000 service stations.

That leaves ExxonMobil’s Chemical operations, which earn the company on average nearly $4 billion a year. The polyester fibers in your flame-retardant clothing and the polyethylene in your bottles and packaging films come from somewhere, and chances are good that somewhere is owned and operated by ExxonMobil. While few of us think twice about p-xylene (a major component in upholstery fabrics, x-ray film and toiletry containers), those who do are dependent on ExxonMobil’s internal supply chain: the company is the world’s largest manufacturer of both p-xylene and the compound it derives from, the ubiquitous benzene, found in countless industrial applications.

The Bottom Line

How  do you create a lasting, globally dominant company? First, notice that an economy previously dependent on ambergris and coal could be transformed by a new and plentiful source of energy- in this case, hydrocarbons. Second, be the first to market and expand aggressively. Nearly a century and a half later, you’ll have the largest (by some measure) company in the world- one that boasts countless consecutive years of profitability, no fewer than 31 straight years of dividend increases and no signs of slowing down.

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