Chevron overtakes ExxonMobil’s market value for first time

Chevron’s market value overtook ExxonMobil for the first time on Wednesday, 7 October, during the same week in which it closed a $4.1 billion all-stock deal for Noble Energy.

According to a Reuters article, Chevron’s market cap ended the day around $142 billion, topping ExxonMobil’s $141.65 billion market value at the end of trading. This is noted in Refinitiv data and Chevron SEC filings regarding the Noble deal.

It is worth noting that shares in Chevron closed up 2.047 per cent on Wednesday and ExxonMobil rose just 0.3 per cent.

Chevron’s finances are stronger and its shares have performed better than its larger rival. It has shifted away from costly megaprojects favoured by oil majors and moved sooner this year to cut costs amid the coronavirus-induced sharp drop in oil and gas prices.

Reuters stated that investors shunned fossil fuel companies and the energy sector is the worst-performing on the S&P 500 year to date. Chevron’s stock is down a lesser 38 per cent year to date compared to a 52 per cent decline at Exxon, which this year was removed from the Dow Jones Industrial Average, a position it held since the index was created.

Exxon’s weak earnings have forced it to borrow to finance its nearly $15 billion a year shareholder dividend and cover spending on new projects. In part, Chevron’s finances have benefited from its faster divesting of unwanted assets.

According to Reuters, Exxon struggled to unload unwanted oilfields despite promising to accelerate sales in early 2019.

ExxonMobil officials stated that they were reviewing all its operations for cuts, but have signalled that major savings would not come this year.

To remind, Chevron completed the acquisition of Noble Energy earlier this week. The two companies entered into a definitive merger agreement on 20 July 2020.

The transaction was subject to, among other things, approval by Noble Energy shareholders which arrived on Friday, 2 October.

The positive vote came despite opposition by Paul Singer’s investment management firm Elliott Management, which in September pushed for Noble Energy to abandon Chevron merger plans, believing that the deal undervalues the oil and gas producer.