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 % year to date compared to a 52 % 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.
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.
