Top Five Oil Giants’ Market Value Falls to $680 Billion, Lower than Tesla’s $752 Billion

There is a delicate blend of optimism and caution as oil supermajors sail into earnings season, following one of the worst years for the industry.

According to the research data analyzed and published by Sijoitusrahastot, the energy sector was the worst performer on the S&P 500 in 2020, plummeting 37% year-over-year (YoY). Comparatively, the index had an overall gain of close to 15% in the same period.

The energy sector’s plunge was attributed to an all-out war in oil price between Russia and Saudi Arabia. As a result, the price of an oil barrel plunged below zero for the first time in history in April 2020. Lockdowns and travel restrictions simply served to exacerbate the sector’s plight. Not surprisingly, the effects were reflected in the performance of top players in the industry.

In 2020, ExxonMobil, the largest US energy firm was one of the stock market’s biggest losers. Its shares plunged by a massive 40% during the year according to S&P Global. The fall wiped approximately $120 billion from the company’s market value. At its peak in 2007, Exxon had a market capitalization of $525 billion. As of February 2, 2021, it was down to $189.59 billion.

The situation was no different for other oil giants. Chevron lost $68 billion in market value during the year and had a market cap of $164.01 billion as of February 2, 2021. At the time, BP had a market value of $75.25 billion, Royal Dutch Shell $139.67 billion and Total SE $111.44 billion.

In total, the five oil giants had a collective market value of around $680 billion. Their cumulative value was close to $70 billion lower than Tesla’s $752.19.

Exxon Reports First Annual Loss in 40 Years

The challenging market conditions in 2020 are well reflected in the fourth quarter earnings reports of ExxonMobil and Chevron.

Exxon reported its fourth consecutive quarter of losses, posting a $20.1 billion loss for Q4 2020. Revenue for the period totaled $46.54 billion, lower than The Street’s estimate of $48.76 billion.

Earnings per share (EPS) outperformed analyst expectations, at 3 cents against an expected 1 cent according to Refinitiv. Comparatively, the company had an EPS of 41 cents in Q4 2019 on $67.17 billion in revenue. Its Q4 2020 performance was, however, an improvement compared to Q3 2020, when it had an EPS loss of 18 cents and revenue totaling $46.2 billion.

For the full year 2020, Exxon had a loss of $22.4 billion compared to its $14.3 billion profile in 2019. It was the company’s first annual loss in at least four decades.

Similarly, Chevron reported a loss of $11 million in Q4 2020, equivalent to 1 cent per share. Comparatively, in Q4 2019, it had a profit of $2.8 billion and EPS of $1.49.

As a result of oil and gas price improvement and an output increase of 6% from its $4.2 billion purchase of Noble Energy, Chevron’s oil and gas earnings were $501 million. In the previous year period, it had a loss of $6.7 billion from the same segment. However, its refining and chemical business posted a $338 million loss compared to a $672 million profit in Q4 2019. Fuel sales tanked 10.55%.

Overall, Chevron reported a loss of $5.54 billion in 2020 compared to a $2.92 billion profit in 2019.

Exxon and Chevron had merger talks in 2020 according to the Wall Street Journal. If the move materialized, it would be among the largest corporate mergers in history. The tie-up would create a $350 billion behemoth based on the two giants’ current valuations.

BP Posts $115 Million Net Profit in Q4 2020, $5.7 Billion Net Loss Full-Year

BP posted its first annual loss in a decade, amounting to $5.7 billion compared to a $10 billion net profit in 2019. The expected full-year loss in 2020 according to Refinitiv was $4.8 billion.

For the fourth quarter of 2020, the UK-based oil and gas major reported a $115 million net profit. The figure underperformed analysts’ expectations of $285.5 million.

On the bright side though, the company’s net debt reduced by $1.4 billion during Q4 and $6.5 billion during the year, reaching $39 billion. It is on track to bring down the net debt to $35 billion.

Looking at the stock performance of these oil supermajors shows a measure of optimism from investors. For ExxonMobil, its share price was up 9% as of February 2, 2021 but down by 27% over the trailing-year period.

Chevron share price had gained by 2% at the time, despite being 19% down over the previous year. After tanking nearly 46% in 2020, BP share price had risen by 6% YTD at the time.