Exxon is in a hot mess. The company’s reputation is sinking, signalling a potential freefall down to a shame hole. The recent news of Dow kicking out Exxon is causing dividends to lose their trust over the oil company. Exxon’s questionable decisions and strategies to maintain money is also a hot debate around dividends.
The good times Exxon spent in the past
ExxonMobil was undeniably one of the top company in the world. CNN Business reveals the company reached the highest value back in mid-2014 with $446 billion, right when the crude prices traded more than $100 a barrel. However, the company has been commencing with dubious plans that left its dividends with question marks, and maybe some exclamation marks. Exxon is now under an unfortunate situation with their value plunging $67 billion down from the peak.
Dow kicks out Exxon from the exclusive index
Dow has now decided to fill the empty spot left by Exxon with Salesforce and Chevron. Swings in the modern economy and stock market have influenced Dow to proceed with the decision. Global warming and the pandemic are two among the causes that tremendously affected the energy sector. CNN Business quotes the energy sector now only comprises 2.5% of the S&P 500. Meanwhile, technology companies such as Amazon, Apple and Zoom, are currently benefitting a lot from the situation.
Dividends voice their disappointment over Exxon
Exxon’s effort to get into the dividend “aristocrat group” is now in vain. Exxon scored the lowest level ever in nearly 3 decades along with the plummeting US stocks on last March. From that point on, Exxon managed to show a rebound, though it is still comparably lower for more than 40% this year. Comparably, Chevron managed to sustain the decline of their stocks to 28%.
The company’s decision to buy XTO Energy is probably the start of the slump. Though bought when the natural gas prices plummet, the price is still not recovering up till now. Exxon’s deepwater drilling projects in Russia and in the oil sands of Canada also contributed nothing to the company’s financial.
Exxon now promises the investment in Guyana to become their next big hit, expected to come in 2023. A debatable decision for investors, as they focus on the most recent result, not what comes years later. Furthermore, the fossil fuels industry in the future is grey. Global warming and climate crisis are leading a change in oil demand. While companies like BP and Total are advertising their acts to invest in renewable energy and limited emission targets, Exxon has been silence. BP Energy Fund’s portfolio manager, Ben Cook comments that the strategy is more of a PR problem. It is how a company wants to be seen as a part of a solution, or a problem.
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