...FI561- Mergers and Acquisitions Week 5 Case Study: DuPont Divestiture of Conoco November 27, 2011 . Abstract In this paper, we are examining the 1998 DuPont spin off of Conoco by analyzing the transaction itself. Then, I look at one of the possible alternatives to the chosen transaction and compare that alternative with the actual long term impacts of the sale. I will then decide and recommend which option would have been the best utilized by DuPont over the long-term in order to generate the most revenue from its ownership of Conoco. DuPont purchased Conoco in 1981 and it was the largest merger in corporate history at that time. The purchase gave DuPont a secure source of petroleum feedstocks needed for many of its fiber and plastics operations. Conoco also manufactured profitable commercial petroleum products and coal, produced by the wholly owned subsidiary Consolidated Coal Company. (“DuPont” 2011) Introduction Over the last several years, corporate America has often turned to spin offs as a way to increase their bottom line numbers. This has proven to be an effective tool in helping a firm to both divest itself of an unprofitable division and to raise large amounts of new investment capital. This money can be used to help repurchase stocks or make strategic acquisitions that will allow the firm to adapt with the changes that occur within their market place and allow it to continue to compete within that marketplace. Additionally, after such an event...
Words: 2441 - Pages: 10
...this market because of the high entry barriers. There are many small exploration companies that contract out to the big players of this industry such as ExxonMobil and the members of the strategic group. Some small exploration companies are Continental Energy Corporation, Atlantic Petroleum, and Anadarko Petroleum Corporation. Anadarko Petroleum Corporation works hand in hand with Beyond Petroleum, and was indirectly involved with the oil spill in the Gulf of Mexico. The members of Exxon’s strategic group consist of Beyond Petroleum, Conoco Phillips, and Chevron. These members are a part of the strategic group because they explore, produce, refine and market oil and gas. A reason why we didn’t pick Royal Dutch Shell is because we found that they have a joint venture with Exxon Mobil. With the recent hunches of more regulation in the oil industry, these corporations are investing in natural gas companies. In order for these companies to remain competitive they need to always be innovative and creative. This is another reason why we picked these three members as a part of the strategic group. Conoco Phillips is the smallest one in the strategic group bringing in only $16.99 million in net income at the end of 2008 (ConocoPhillips, 2008). Even with this small number we still consider Conoco Phillips a threat to Exxon Mobil. Companies | Exxon Mobil | BP | Chevron | ConocoPhillips | Revenues | 335.09B-2006, 358.60B-2007, 425.07B-2008275.56B-2009 | 265.91B-2006284.37B-2007361.14B-2008241...
Words: 3914 - Pages: 16
...six-step approach for a successful joint venture business in Russia. ConocoPhillips also provides insight into many of the challenges still facing those who desire to do business in Russia. They prove that with a will to confront and determination to overcome these challenges, business in Russia can prove to be quite profitable. Background ConocoPhillips ConocoPhillips is the third largest energy company in the U.S. Based on market capitalization; it is surpassed in size only by U.S. oil giants Exxon Mobile and Chevron. ConocoPhillips is headquartered in Houston, TX and employees over 32,000 people worldwide in forty countries. According to its website “ConocoPhillips is known worldwide for its technological expertise in reservoir management and exploration, 3-D seismic technology, high-grade petroleum coke upgrading and sulfur removal.” The four core worldwide activities of ConocoPhillips in the oil and natural gas industries are: • Exploration and Production • Refining, Marketing, Supply, and Transportation • Natural Gas Gathering, Processing and Marketing • Chemicals and Plastics ConocoPhillips’ 2006...
Words: 7377 - Pages: 30
...THE CASE STUDY OF PETROZUATA The case of Petrozuata Petrozuata is a joint venture between Conoco, then part of DuPont, and Maraven, a subsidiary of Petróleos de Venezuela S.A. (PDVSA), Venezuela’s national oil company. It is the first in a series of development projects that are aimed at “re-opening” the Venezuelan oil sector to foreign investment. The project consists of three key components -Production of heavy oil from a new field in Venezuela’s interior -Transportation of the oil to coast via pipeline -Transportation of oil to refineries along the US Gulf Coast Once refined, the syncrude would be sold at market prices to Conoco under a DuPont-guaranteed off-take agreement. At the end of this 35-year purchasing agreement, Conoco will transfer its shares to Maraven at no cost. The sponsors agreed to use 40% of equity (40%) and 60% of debt to finance the project’s $2.425 billion total cost. The financial advisors, Citicorp and Credit Suisse First Boston, used a multi-pronged financing strategy to raise debt from commercial banks, development agencies, and bond investors. In the end, the sponsors raised $450 million in bank finance and $1 billion in Rule 144A bonds, all of which was non-recourse to the sponsors following completion of the project. The decision to finance this deal on a project basis was actually a dual decision regarding both financial and organizational structure. Risks analysis The purpose of this paper is to analyze how the sponsors...
Words: 2224 - Pages: 9
... ………………………………………….. 5 4.4 Accounting Standards ………………………………………………………. 5 4.5 Common size Income Statement …………………………………………. 6 4.6 Benchmarking with Financial Ratios ………………………………………. 7 4.7 Business Segments ……………………………………………………………. 19 4.0 Issues ……………………………………………………………………………………. 22 5.0 Recommendations ………………………………………………………………… 23 6.0 Conclusion …………………………………………………………………………... 24 7.0 References …………………………………………………………………………... 25 Appendices Appendix 1 – Key Financial Data for COP, XOM and CVX Appendix II – Financial Ratios 1.0 Executive Summary ConocoPhillips has grown into the 3rd largest Integrated Oil and Gas Company in the US ever since the merger of Conoco and Phillips Petroleum in 2002. Since then, its market capitalization has grown 5 times to US$ 101 Bil with an asset base of US$155 Bil. This report provides an insight to the Board of Directors of the financial performance of ConocoPhillips since 2002 and will be benchmarked against competitors in the industry to give a cross sectional analysis. Whilst the growth of ConocoPhillips has been impressive over the last 10 years, earnings have not performed according to its peers in the industry. During this period, the Company had reported several impairments to its major assets and its earnings were eroded by the volatility of the crude oil and natural gas prices. These results have also unfolded some new challenges to Company in terms of financial...
Words: 6098 - Pages: 25
...NORTHWESTERN UNIVERSITY WINTER 2010 COURSE 437 STRATEGIC MANAGEMENT FOR ENGINEERS SYLLABUS Professor: Teaching Assistant Donald R. McNeeley, Ph.D. Susan O’Dea, sodea@chicagotube.com Phone: 815-834-8501 Phone: 815-834-8503 E-mail: dmcneeley@chicagotube.com Course Overview: Organizations have learned that the adage, grow or die is more than a cliché. In today’s global market, maintaining the status quo is no longer an option. As the velocity of change accelerates, historic paradigms are surrendering to new. For organizations to survive in today’s competitive environment, management must anticipate the strategic inflection of organizational evolution. Engineers have played a major role in the advancement of society. Undergraduate education for engineers is thorough, precise, and understandably micronistic. At the graduate level, we attempt to couple the micro skills with the broader macro perspective or, in other words, the proverbial big picture. The management role requires engineers to be able to envision, from a broader perspective, the operation of an organization and the market one serves. You must learn to think, act, speak, and process from the “management mind.” This capstone course draws from all functional areas of an enterprise to provide strategic direction to an organization. It also provides engineers with a management perspective as a complement to the engineering orientation, which they currently possess. Strategies are offered to ensure...
Words: 1175 - Pages: 5
...ABSTRACT The purpose of this project is to determine multinational corporate sustainability within the oil industry and perform country analysis, industry analysis, and analysis of firm’s international strategies. INTRODUCTION The five oil companies that we chose from the 2010 Global Fortune 500 are ExxonMobil, Sinopec, ConocoPhillips, Petrobras, and Lukoil. In our project, we performed analysis on the 10K report of domestic companies, as in ExxonMobil and ConocoPhillips and the 20F report of foreign companies, as in Sinopec, Petrobras and Lukoil. A comparison was done on the five companies to determine if there exists a corelation between sustainability perspective and financial performance. OIL INDUSTRY ANALYSIS Oil accounts for a large percentage of the world’s energy consumption, ranging from 32% for Europe and Asia, and 53% for the Middle East. The world consumes 30 billion barrels of oil per year, with developed nations being the largest consumers. The United States consumed 25% of the oil produced in 2007. In 2009, world energy consumption decreased for the first time in 30 years (-1.1%), as a result of the financial and economic crisis (GDP drop by 0.6% in 2009). This evolution is the result of two contrasting trends. Energy consumption growth remained vigorous in several developing countries, specifically in Asia (+4%). Conversely, in OECD, consumption was severely cut by 4.7% in 2009 and was thus almost down to its 2000 levels. In North America, Europe and CIS...
Words: 4526 - Pages: 19
...CEO, is that BP has great assets, in part thanks to the deals of the past decade, such as the takeovers of Amoco and Arco and the creation of TNK-BP, but is still not managing them as well as it could. Having lagged well behind the pack of oil majors when Hayward took over, as measured by return on capital, BP is now about average, but it would like to get closer to the leader, Exxon. That is the context for all the plans B The key points of that plan are: 1. $3bn to be saved through cost-cutting and efficiency improvements over the next 2-3 years. 2. Roughly $2bn from refining, putting the emphasis on efficient operations rather than just getting the refineries running, which has been the priority. A further $1bn from better project management, resulting from the creation of a new global development unit to manage big projects, which have a tradition of over-shooting their budgets at BP, as they do at many other companies. - As a small part of that, BP is pulling out of its marketing business in Namibia, Malawi and some other southern African countries. - Production growth expected to average 1-2 per cent per year during 2008-15, and hopefully for longer. (That follows 4 per cent growth...
Words: 1759 - Pages: 8
...Strategic Management External and Internal Assessments 1 External Strategic Assessment “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.” – Charles Darwin “Nothing focuses the mind better than the constant sight of a competitor who wants to wipe you off the map.” – Wayne Calloway, Former CEO, PepsiCo 2 1 External Audit – Sources of Information •Internet •Libraries •Suppliers •Distributors •Salespersons •Customers •Competition 3 External Strategic Management Audit - The macro environment Scanning (PESTEL analyses, Scenarios) - Industry or Sector Analysis (5 forces, industry/product life cycle) - Competitors scanning (Strategic Group Map, CPM) - The Organization responses (EFEM) 4 2 Layers of the business environment 5 Key Aspects of PESTEL Analysis • Not just a list of influences • Need to understand key drivers of change • Drivers of change have differential impact on industries, markets, and organisations • Focus is on future impact of environmental factors • Combined effect of some of the factors likely to be most important 6 3 Macroenvironment – PESTEL (1) 7 Microenvironment – PEST(EL) Political Economic • Government stability (+) • Taxation policy (+) • Foreign trade regulations (+) • Social welfare policies (-) • Business cycles (-) • GNP trends (-) • Interest rates (--) • Inflation (+) • Unemployment...
Words: 2952 - Pages: 12
...Industry Analysis Oil Company Table of Contents I. Introduction and Background 3 II. Dominant Economic Characteristics 4 Market Size 4 Scope of Competitive Rivalry 5 Market Growth Rate 5 Numbers of Companies in the Industry 6 Customers 7 Degree of Vertical Integration 8 Easy of Entry/Exit 9 Technology/Innovation 9 Product Characteristics 10 Scale Economies 10 Experience Curve Effects 11 Capacity Utilization 11 Industry Profitability 11 III. Six Forces of Competition 11 Force 1: Buyer Bargaining Power 12 Force 2: The Threat of Substitutes 12 Force 3: Supplier Power 12 Force 4: Rivalry among Existing Firms 12 Force 5: The Threat of Entry 13 Force 6: Relative Power of Other Stakeholders 13 IV. Competitive Position of Major Companies and Competitor Analysis 14 Royal Dutch Shell 15 ExxonMobil 17 British Petroleum 19 Chevron 20 Total 22 ConocoPhillips 24 V. Key Success Factors 26 Oil Demand 26 Prices 26 Technological Advancements 27 Maintaining Partnerships 27 Industry Matrix 28 VI. Industry Prospects and Overall Attractiveness 28 Trends 28 Potential Threats 29 VII. Conclusion 29 References 31 I. Introduction and Background What is crude oil? Crude oil is a dark, sticky liquid which, scientifically speaking, is classified as a hydrocarbon. This means crude oil is a compound containing carbon and hydrogen, with or without non metallic elements such as oxygen and sulfur...
Words: 10673 - Pages: 43
...Strategic Research Project Analysis: NOBLE ENERGY, INC Respectfully Submitted to: Dr Shengsheng Charlie Huang Strategic Management MGMT 4309- Fall 2013 Table of Contents 1. Executive Summary 2. Introduction 3.1 Company Background 3.2 Purpose of the study 3. External Analysis 4.3 General Environmental Analysis 4.4.1 Demographic Segment 4.4.2 Economic Segment 4.4.3 Political/Legal Segment 4.4.4 Socio-Cultural Segment 4.4.5 Technological Segment 4.4.6 Global Segment 4.4.7 Summary of the General Environmental Analysis 4.4.8 Industry Driving Forces 4.4 Industry Analysis 4.5.9 Description of the Industry 4.5.10 Industry Dominant Economic Features 4.5.11.1 Market Size 4.5.11.2 Market Growth Rate 4.5.11.3 Industry Trends 4.5.11 Five Forces Analysis 4.5.12.4 Threats of New Entrants 4.5.12.5 Power of Suppliers 4.5.12.6 Power of Buyers 4.5.12.7 Power of Substitutes 4.5.12.8 Intensity of Rivalry 4.5.12.9 Summary of Industry Analysis 4.5 Competition Analysis 4.6.12 Industry Competitors 4.6.13 Rivals Anticipated Strategic Moves 4.6.14 Summary of Competitive Analysis 4.6.15 Key Success Factors 4. Internal Analysis 4.1 Organizational Analysis 4.1.1 Corporate Values...
Words: 15475 - Pages: 62
...Sanders May 19, 2011 Overview of Organization: The organization that I will be doing my project on is Targa Resources LLC. Targa is a publically held organization that is in the Upstream and Downstream segment of the Oil & Gas Industry. Targa main processes are fractionation, wholesale and logistics. Targa was formed in 2004 when it purchased two plants from Conoco Phillips. In late 2005 Targa purchased the whole midstream division from Dynegy Inc. With Targa’s purchase of Dynegy Midstream Services, Targa went from a company with 150 employees to over 1500 employees overnight. With this they needed to create a cohesive environment for both of the employees, without having much turnover. During the whole process as Targa met with the Dynegy employees that were part of the sale, they had promised many things ranging from benefits, awards, employee relations and incentives. When the purchase was complete and the Dynegy employees came over to Targa it was realized that all of what Targa’s management had said about the company and what they promised to do was inaccurate. Targa’s management was not impressed with Dynegy employees and treated them as if they had no clue what was going on. My career began at Dynegy in 1999 and I was a part of the sale to Targa. At Dynegy I was in charge of the accounting for a few processing plants. When we moved to Targa, our department became the Financial Accounting department which was in charge of the final product...
Words: 2910 - Pages: 12
...Macroeconomics A wide range of understanding about the macro-environment helps a company to maximize its position amongst the influences of the global economy. Economic, political, legal, technological, socio-cultural, international demand, supply impacts, and demographic trends are all factors that influence the macro-environment. The macro-environment is always changing, so the success of the business rides on their ability to adapt to these changes and forecast the macro economy better than their competitors (Bodie). Being proactive and making a sound macro-environmental analysis can be a means of gaining a competitive advantage, or at least not being concerned by a competitive disadvantage. In completing a top-down analysis we start with the global economy (Bodie). Technological factors play in to the macro-environment by means of new inventions and development, materials development, innovative manufacturing, distribution and logistics. This also includes changes in the way that information is sent and received. This can be closely related to the environmental impacts that happen within an economy, such as depleting natural resources (Sieminski). The variations of different countries economic performance and within their regions are considerable (Bodie). What happens in other countries’ economies will influence the U.S. economy and its markets in either a negative or positive way depending on the economic circumstance. What is originally forecasted for the...
Words: 6588 - Pages: 27
...Overview of Organization: The organization that I will be doing my project on is Rabit Resources LLC. Rabit is a publically held organization that is in the Upstream and Downstream segment of the Oil & Gas Industry. Rabit main processes are fractionation, wholesale and logistics. Rabit was formed in 2004 when it purchased two plants from Conoco Phillips. In late 2005 Rabit purchased the whole midstream division from Guilty Inc. With Rabit’s purchase of Guilty Midstream Services, Rabit went from a company with 150 employees to over 1500 employees overnight. With this they needed to create a cohesive environment for both of the employees, without having much turnover. During the whole process as Rabit met with the Guilty employees that were part of the sale, they had promised many things ranging from benefits, awards, employee relations and incentives. When the purchase was complete and the Guilty employees came over to Rabit it was realized that all of what Rabit’s management had said about the company and what they promised to do was inaccurate. Rabit’s management was not impressed with Guilty employees and treated them as if they had no clue what was going on. My career began at Guilty in 1999 and I was a part of the sale to Rabit. At Guilty I was in charge of the accounting for a few processing plants. When we moved to Rabit, our department became the Financial Accounting department which was in charge of the final product being produced...
Words: 2889 - Pages: 12
...oSlurry pump solutions for the oil and gas industry Weir Minerals Hazleton Excellent Minerals Solutions Weir Minerals is committed to delivering long term solutions to the petroleum industries’ most difficult pumping needs. When the petroleum industry expose their pumping systems to erosive materials, such as coke, catalyst, sand, ash, coal or shale the pumps selected need to be durable, reliable, and of the highest quality. Since 1916, Weir Minerals has supplied long term slurry pumping solutions focused on longevity and reliability to meet the demands of challenging applications for the petroleum industry. The petroleum industry demands performance and pump reliability. Weir Minerals specializes in slurry systems and has been able to exceed the robust demands of the petroleum industry. Our Engineered-ToOrder slurry pumps are designed with longevity in mind to deliver reduced process down time and maintenance costs by extending mean times between planned maintenance intervals. To meet the customer’s requirements Hazleton slurry pumps are engineered to order for each application and incorporate design features and standards that not only ensure durability and reliability, but also differentiate us from the competition. Some of which include: • Hydraulic design incorporates unique “Controlled Diffusion” process to minimize erosive vortices and reduce volute velocities for longer wear life Utilization of materials and specialty coatings to achieve maximum wear life...
Words: 1868 - Pages: 8
