Exxon Mobil Shares Move Lower Amid Reports About Mega Merger Talks In 2020

Exxon Mobil Video 01.02.21.

CEOs Of Exxon Mobil And Chevron Talked About Merger In 2020

According to recent reports, CEOs of Exxon Mobil and Chevron discussed a potential mega merger in early 2020. However, the talks yielded no results, and the companies are not discussing a potential merger at this point. Both companies declined to comment on the issue.

The reports highlight the pressure felt by oil majors due to coronavirus pandemic and energy transition. Typically, a merger leads to lower costs and greater market power, but it is not clear whether gigantic companies like Exxon Mobil and Chevron can merge without material problems and attention from anti-trust agencies.

The mega merger story failed to provide any support to both stocks which are losing ground in today’s trading session despite stronger oil prices. Perhaps, some traders believe that such a merger is not possible due to antitrust concerns, while other are worried about the companies’ future in a world that tries to shift away from oil due to climate concerns.

All Eyes On Exxon Mobil’s Earnings Report

Exxon Mobil will provide its quarterly earnings report on February 2 before the market open. Analysts expect that the company will report earnings of just $0.02 per share. However, Exxon Mobil’s performance is projected to improve significantly in 2021, and analysts call for earnings of $0.56 per share in the fourth quarter of 2021.

The recent earnings report from the other company in the story, Chevron, was not inspiring as it reported a GAAP loss of $0.33 per share and missed analyst estimates on both earnings and revenue. If Exxon Mobil also reports a loss, its shares may find themselves under additional pressure.

As usual, traders and investors will also focus on dividend sustainability. Currently, Exxon Mobil’s dividend yield is well above 7% as the company refused to cut its dividend despite the major blow dealt by the coronavirus pandemic. In this light, the market will pay close attention to the company’s cash flows as it tries to evaluate whether Exxon Mobil will be able to maintain its high dividend in the upcoming years.

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