Thanks for the comment, John. I don’t know if I have some of the detailed breakdowns that you are curious about, but I do believe ExxonMobil is competitive in all activities. Because crude oil and natural gas is the starting material for all three units, it is highly dependent on the global oil price/revenue contacts that Exxon has. When oil prices were above $100/bbl, the Upstream was carrying the lion-share of the profit. However, ExoxnMobil did not abandon downstream; consequently, when oil prices drop below $40/bbl, the feed stock to the downstream and chemicals becomes relatively inexpensive, so they are able to capture higher margins.
Pioneer has had a strong performance relative to the average independent oil and gas producer in 2015. You mentioned drilling and completions optimization and water/sand usage as success factors to their operating model. I am curious where the majority of their competitive advantage lies. My assessment is that the innovation in drilling/completions cycle is driving their competitive performance right now. Their choice to vertically integrate and utilize more socially responsible water usage will position them to gain a competitive advantage in the future. The significant costs with fracturing is the drilling of the well due to the large capital nature of a drill rig.
Regarding the vertical integration, I am curious how much of the process and capital they own versus contract out. It would seem that the sand and water material for fracturing would be lower in terms of priority compared to the other higher capital intensive aspects of drilling and completing a well. Are you aware of them owning and operating the entire drilling regime?
Great post, Sonali. The use of visuals and layout helped with the delivery of your message. I have a deep experience with diabetes although I do not currently have the disease. Both of my parents are diabetic, and several good friends from grade school were diagnosed with Type I diabetes. I didn’t realize the large number of individuals that are not diagnosed (50%) or that India contained the largest population of patients.
I appreciate their strategy on making economically accessible devices that can be developed quickly. Do you believe Jana Care could have been success in the United States or did it take a large constituency of resource-constrained people and a more agile healthcare system? I am also curious to see the long-term viability of Jana Care. There appears to be a trade-off between organic growth and scale. Utilizing larger hospitals, networks, and companies with more resources, you can make the argument that you can scale these products and ideas much more effectively. Balancing maintaining control of your company and growth with bigger, quicker impact is a tough decision.
I, myself, am a Vanguard customer. I am completely aligned on their strategy for low cost, passive index investing. It was interesting to learn that the research on investing has led them to favor a hands-off approach to money management; they allow the index to generate the returns. It was also a new concept that Vanguard pioneered the index funds of mutual funds. Do you think that Vanguard will be able to continually to sustainable grow in this digital age? I see a huge risk in being able to maintain their low fees with the plethora of new innovations and products that are constantly entering the market. The new services leverage technology to automate a lot of the process which further reduces the cost. Can Vanguard continue to compete with its overhead against smaller, more agile companies?