Exxon Stock Down Ahead Of Earnings
Exxon will report fourth-quarter results before the market opens Tuesday. Chevron unexpectedly reported a Q4 loss Friday despite the rebound in crude oil prices.
Estimates: Earnings is seen plunging over 97% to a penny per share, according to analysts polled by Zacks Investment Research. Revenue is expected to fall 27.6% to $48.6 billion.
Results: EPS of 3 cents on revenue of $46.54 billion.
Stock: Shares 2% to 45.87 in premarket trading on the stock market today. Exxon stock is on a downward trend toward its 50-day and 200-day lines. Chevron rose 1.8%.
The oil giant is adamant about maintaining its quarterly dividend. But to protect its payout, the company is cutting spending and jobs. Earlier Exxon said it sees its 2021 capital program at $16 billion-$19 billion, down from the 2020 target of $23 billion.
BP (BP) fell 4.6% after its quarterly results Tuesday. Royal Dutch Shell (RDSA), which will report Thursday, was flat
Exxon-Chevron Merger Chat
The talks between Chevron CEO Mike Wirth and Exxon CEO Darren Woods were preliminary, sources told the Wall Street Journal, and aren’t currently ongoing. But the sources told the Journal the discussions could be revisited in the future.
A merger between the two oil giants would create the second largest oil company by market capitalization and production, with only state-run Saudi Aramco ahead.
An Exxon-Chevron merger also would be one of the largest in history, with their combined market caps reaching just over $350 billion. Depending on how any deal is structured, it could also top the $181 billion takeover of German conglomerate Mannesmann by Vodafone AirTouch in 2000, according to Dealogic data cited by the Journal.
Still, at around $350 billion, a combination of Exxon and Chevron would be less than half of Tesla’s (TSLA) $764 billion market cap, which has soared amid expectations for an EV boom. Meanwhile, Exxon stock was booted from the Dow Jones Industrial Average last year.
But the merger would face massive regulator and antitrust hurdles, especially under a Biden Administration that is pushing renewable energy investment.
Chevron and Exxon were among the over 30 companies descended from the breakup of Standard Oil a hundred years ago. Both are also amalgams of former Standard Oil companies
Oil majors have been on a buying spree for smaller oil companies in recent years to expand their shale assets in the U.S. Chevron bought Noble Energy for $13 billion last year.
But analysts question the value of an Exxon-Chevron merger.
“We do not see a major benefit from a merger of these two behemoths. A merger would be unlikely to drive pricing power either upstream or downstream, as a merged entity would still wield only 7% of global crude oil production, and roughly 15% of U.S. refining capacity,” wrote Stewart Glickman, energy equity analyst at CFRA Research, in a note Monday. He kept his hold rating on Exxon stock.
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