Exxon Loses the Crown as America’s Largest Oil Company

Chevron Corp. surpassed Exxon Mobil Corp. as America’s largest oil company by market value. The first time the Texas-based giant has been dethroned since it began as Standard Oil more than a century ago.

Nonetheless, both companies are stepping back in the rearview mirror of NextEra Energy Inc. The world’s largest wind and solar power producer has overtaken Big Oil amid an energy transition that is embracing renewables at the expense of fossil fuels.

NextEra ended Wednesday with a market capitalization of $145.5 billion, topping Exxon’s $141.6 billion. Last month, the energy giant eclipsed Chevron, now valued at $142 billion.

Chevron is doing relatively well amid the oil slowdown from COVID-19, having emerged with the strongest balance sheet among its peers in the big oil companies. It was able to complete its $5 billion acquisition of Noble Energy Inc. last week.

By contrast, Exxon is struggling to generate enough cash to pay for capital expenditures. Thus, leaving it dependent on debt and putting pressure on its $15 billion-a-year dividends. The company pursued a series of expensive projects that promised growth after years of production stagnation. But it became a drag on its cash flow when the pandemic hit. So far this year, Exxon’s shares have fallen more than 50%, and its second-quarter loss was the worst in the modern era. In August, Exxon elimination from the Dow Jones Industrial Average.

Renewable energy is excelling oil and gas

NextEra has become the most valuable utility company globally, mainly betting heavily on renewable energy, especially wind. Its shares are up more than 20% this year, and it is expanding aggressively, with plans to increase its renewable energy portfolio to 30 gigawatts, enough to power 22.5 million homes.

Jigar Shah, an American clean energy entrepreneur, stated that People believe renewable energy is a growth story and that oil and gas are declining. 

Investors have endorsed NextEra’s clean energy strategy as renewable energy is becoming more common and desirable. At least a dozen states in the United States have policies that will eventually require completely clean electrical grids. Democratic presidential candidate Joe Biden proposes a green power system in the United States within 15 years.

It’s no longer a niche investment, said Kit Konolige, a utility analyst at Bloomberg Intelligence, it is a great industry.