James Mulva, president and CEO of ConocoPhillips, believes that saving money, cutting capital spending, and maintaining a level of transparency in his business decisions is the key to the company's success. In 1999, when Mulva became CEO, ConocoPhillips' combined assets were about $75 billion. By the end of Q1 2004, he had secured an income of $1.9 billion for the company and brought its debt down to 32% of its capital. More recently, ConocoPhillips reported Q4 2010 earnings of $2.0 billion, compared with Q4 2009 earnings of $1.3 billion.
Mulva, whose total compensation in 2010 was $11.26 million, never dreamed of working in the oil and gas industry while growing up in central Wisconsin. He attended the University of Texas and earned his BBA in finance in 1968 and an MBA in business administration in 1969. After graduation he entered the US Navy and was stationed on Bahrain Island. That's where he learned about the oil and gas industry. "The production side of the business as well as the financial aspect intrigued me," Mulva said. When he completed his tour of duty in 1973, he searched for a financial job in the oil and gas industry.
Mulva joined Phillips Petroleum Co. in the treasury department later that year. He was soon promoted to assistant treasurer and manager of foreign exchange and investment. In 1980, Mulva was then promoted to vice president and treasurer of Europe/Africa - a position he held for four years. With a strong financial background, Mulva analyzed investments and new technologies with an eye on the bottom line. His assessments allowed him to predict the long-term financial impact of each proposal. His understanding of the global market also helped him to build up the company's long-term security and assets. This strategy paid off for Mulva as well as Phillips as he helped the company meet and exceed corporate goals through his many positions with the company.
Mulva was known to be a hard worker and had a knack for finding profitable solutions for Phillips. While CEO at Phillips, Mulva took a hit to his reputation when a K-resin chemical tank exploded in March 2000 at a Phillips Petroleum plant in Pasadena, TX. The blast killed Rodney Gott, a 45-year-old supervisor, as well as seriously burning four employees and injuring 65 others. The fire produced a huge plume of black smoke that spread over the Houston Ship Channel as well as neighboring residential areas. The tank was out of service for cleaning at the time of the explosion, and had no pressure or temperature gauges to alert the workers to the danger. This blast was the third in 11 years at that particular plant.
Phillips paid a hefty fine to the Occupational Safety and Health Administration (OSHA) for safety violations. The explosion motivated Mulva to ramp up plant safety inspections, provide safety training for his employees, and implement stricter safety measures.
After that incident, Mulva focused Phillips' efforts on reducing its environmental impact while continuing a successful exploration and production program. Mulva worked to position Phillips as a leader in finding cleaner energy sources, and later he saw clean energy as the key to ConocoPhillips' long-term growth.
ConocoPhillips, under Mulva's leadership, believes that a secure energy future depends on utilizing a diverse mix of energy sources that are reliable, available, and environmentally responsible. This includes traditional hydrocarbon products, as well as alternative and renewable sources made available through improved technology. When considering future energy solutions, ConocoPhillips examines all the factors that impact energy -its use, cost and availability. Though new technology promises to change the future nature of energy supply, the company acknowledges that there still is work to be done to ensure minimal impact to the environment from the production, storage, and transportation of these energy sources.
Mergers and Acquisitions
Mulva knew that clean energy alone would not propel Phillips into the big leagues with supermajors ExxonMobil and ChevronTexaco. Thus, he set out to make the company more competitive through increased E&P and through mergers and acquisitions.
Phillips acquired the Alaskan production assets of the Atlantic Richfield Company (ARCO) in March 2000 for $7 billion. At the time of the announcement, Mulva said, "The acquisition of Arco's Alaskan assets represents a significant step in our strategy of growing our exploration and production business. We gain a substantial position in the two largest fields in North America, immediately form a new production center, and become a major merchant supplier of crude oil to the West Coast."
In July 2000, Phillips and Chevron merged their chemical and plastic operations to create the Chevron Phillips Chemical Company. A board of directors governs this 50/50 venture, which is composed of two members from each parent company. The company name was determined in a coin toss to settle which parent company name would be first.
Today, Chevron Phillips Chemical is one of the world's top producers of olefins and polyolefins and a leading supplier of aromatics, alpha olefins, styrenics, specialty chemicals, piping, and proprietary plastics. The company produces chemical products that are essential to manufacturing over 70,000 consumer and industrial products.
In February 2001, Phillips announced that it would acquire the Tosco Corporation, an oil refiner and retailer that marketed gasoline under the 76 and Circle K brands, for $7 billion in stock.
The transaction created the nation's second-largest refiner and fifth-largest gasoline retailer. While many other large oil companies were disposing of their refineries, Phillips under Mulva's leadership, in adding them to its oil exploration and production, made a move to become a more fully integrated oil company.
However, the most notable merger under Mulva's leadership occurred in August 2002, when Phillips merged with Conoco. In this $15.1 billion deal, ConocoPhillips became the largest refiner and the third largest energy company in the US behind Exxon Mobil Corp. and ChevronTexaco Corp. The merged company was worth about $35 billion.
At the time of the merger, ConocoPhillips controlled or had stakes in 19 refineries worldwide with a capacity of 2.6 MMb/d and joint oil reserves were about 8.7 Bbbl.
In comparison, at year-end 2009, ConocoPhillips was the second-largest refiner in the US, with crude oil processing capacity of approximately 2.0 MMb/d, and the world's fourth-largest nongovernment-controlled refiner, with crude oil processing capacity of nearly 2.7 MMb/d globally. Its total oil reserves were 8.4 Bboe and total worldwide production was 1854 Mboe/d.
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